In a shadow reckoning in the sunny climates, Spain’s Socialist Party has become the latest casualty of the rolling eurocrisis, with the ruling Socialist party, led (until recently) by Jose Zapatero losing power to the centre-right People’s Party headed by Mariano Rajoy. The PP managed to gain an outright majority, winning around 185 seats in the 350 seat parliament.

Zapatero, who had handed over to his deputy, Alfredo Rubalcaba, is the third centre-left leader to be wrecked by the wave of euro-debt, joining Portugal’s Jose Socrates and Greece’s George Papandreou in the loser’s club. The crisis has also claimed three right-wing leaders – in Iceland, Ireland, and most spectacularly of all in Italy, with Silvio Berlusconi.

In several of those countries, the crisis has gone well beyond an electoral switchover, effectively driving large wedges into the established party systems. In Iceland, Ireland and Italy, established parties have been thrown into crisis, and a more substantial crisis is in the offing in Greece. Only Iberia has survived with its party system intact.

Nevertheless, the results were reasonably devastating for the Socialists, who have led since 2003, and went from a 44% share of the vote, to 29%, losing nearly 60 of their 169 deputies in the 350 seat parliament.

But it was not all bad news on that arid square, that fragment nipped off from hot Africa. Firstly, not all of these went rightwards, as the ‘People’s Party’ gained only 30 or so of those seats. They otherwise went in left, or left-nationalist directions, with the United Left going from 2 to 11 seats, another left group going from 1 to 5, the Catalonians going from 10 to 16, and a Basque left party start-up, gaining seven seats (only one of which was taken from the mainstream Basque party).

So for the left en masse, the final result is far from disastrous – if you add in left nationalists, they still have 150 or so seats, and genuinely left parties have gained at the expense of the socialists. The pattern thus follows elections in Denmark, Australia, and polling in Greece – centre-left parties are losing to both sides.

The other menacing fever, precise and alive, is that this was a great election to lose, and the Socialists, casting a wary eye over the fate of Papandreou and PASOK in Greece, may well have had this in mind. Whether he does it soft or hard, Mariano Rajoy will have to sell an austerity package of some description, at the behest of the EU and the ECB, and the left will be able to mobilise against it in unity.

That there will be a mobilisation is unquestionable. Spain already has real unemployment that is topping 25%, and youth unemployment, across the board, heading towards 50%. Those numbers, especially the latter, are extraordinary, and they were around that level even when the country had a lot of easy money sloshing around.

So, soon, regular as the exchanging of tips on the breeding of terriers, we will be hearing the same story as we have heard across Europe over the past three years, tailored to local conditions – it will be about Spanish laziness, corruption, profligacy, about lifelong public service jobs, and retirement at the age of 12 and so on.

It will be repeated, especially in Australia, it seems, by a self-satisfied commentariat too lazy to reflect on the obvious truth – that most western economies had inefficiency, immobility and low productivity built into them in the post-war years, and the economy still grew by 5% a year, year-on-year.

Things only got sluggish, growth-wise, when productivity and efficiency increased. One day, the geniuses churned out by the economics schools to mismanage the west ito disaster will work out that this is not an anomaly.

Yet Spain, with relatively low-levels of corruption, capital off-shoring and public debt cannot be shoe-horned into this morality tale so easily. It is the neatest example yet of the real structure of the eurozone – enforced peripherality.

Held-back for decades by a deliberate policy of low development under Franco, Spain grew steadily after opening out, and in the interim period of EC/EU membership, prior to the creation of the eurozone.

Once it entered the euro, any monetary flexibility was lost, and the money that flooded in became the world’s most spectacular real-estate bubble, excepting of course Florida. And China. Oh, and Melbourne.

Having in many ways skipped from agriculture straight to services, ie tourism and expat retirement, the euro has been disastrous for its competitiveness, and it is too far behind to competitively develop other sectors, such as high-end manufacture.

Like all of southern Europe, its post euro-entry boom came largely from increased consumption. Indeed, in all these countries, it is the consuumer boomlet of the 2001-2005 period that has set them up to fail.

So what can Rajoy do now? In the crudest process, he would slash social services, remove all legal barriers to slashing wages, and use those as leverage to seek nore favourable terms from the EU.

But unless he is a fool, he will realise the political impossibilty of such an act. There will be plenty of caricatures of lazy Spaniards floating around, but this will work for external consumption only. Like Greeks, Spaniards work hard in a low-produtivity environment.

For the millions of poor in their fireless lodgings, going backwards from the frugal gains made over recent decades will not be on. Hence the significance of the drift leftward, and to progressive nationalist parties, which preserve political traditions resistant to the centre.

And in that respect, Spain, more than Italy, may become the fumbled and unsatisfactory embrace before hurting – because, like Greece, but unlike Italy, it will rapidly turn any austerity drive into a grassroots political fight, in a period when the viability of the euro will rely, to a rare degree, on the question of whether the peoples of Europe are ‘under control’. Poltically, financially, the continent is gradually exploring all the octaves of radiation.

And – oh well, let the man take it over:

We are left alone with our day, and the time is short, and
History to the defeated
May say Alas but cannot help nor pardon.

Peter Fray

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