21 July 2012

Spiraling Down

This text was prepared only a year ago as part of the Introduction to an edited book provisionally titled 'Spain in Europe: Not the same as it was?'. The frantic dynamics of events has made the book already obsolete (and unpublishable). Yet the topic makes now worldwide front-pages so these words may help thinking and understanding what is going on.

Some aspects of Spain’s current crisis have their roots as dating back as far as two-centuries ago. The modern history of Spain is different from other European powers to a great extent because Spain was both very early in losing its overseas colonies and late in joining the European Union. As is well known, Spain had once been a great imperial power whose dominions expanded through Europe, the Americas, Asia and Africa. But in contrast to the colonies of most European powers, most Spanish territories declared independence very early, during the first half of the nineteenth century. Spain was defeated by Great Britain and by France, as well as by the newly emerging United States at the end of the century. 
        For many decades Spain remained critically isolated from the rest of the world. A series of internal revolutions, coups d’etat, civil wars and dictatorships punctuated the trajectory of the country from the early nineteenth century on. For some foreign visitors of the time, “Africa began at the Pyrenees”. By the late 19th century the Conservative leader and Prime Minister Antonio Canovas del Castillo, apparently depressed by the erratic turnabouts of the country, quipped that “Spaniards are those who cannot be anything else”.
       Already in the 1910s a Spanish philosopher, speaking for many, summarized that “Spain was the problem and Europe, the solution”. But Europe ended at the Pyrenees for a long while. Spain did not participate in either of the two World (actually mostly European) Wars, while it was engulfed in its own internal conflicts. When the European Community was founded in the 1950s, Spain, subsided then by dictatorial rule, was disqualified as a potential member. As most European states began to lose their colonial empires overseas --partly as a consequence of their own rivalry and conflicts--, they began to build a kind of internal, continental empire among themselves for economic and military cooperation. The fading of most of the European colonial empires overlapped in time with the building of the European Union (actually such colonies as French Algeria or the Belgian Congo, among others, were European Community territory before obtaining their independence). With this, most European states were saved from continuous inter-state wars and further mutual destruction. In contrast, Spain, long-deprived of the Americas and excluded from Europe, went whither for a long time like a castaway between two empires.
         Finally, during the last quarter of the twentieth century durable freedom and democracy were established for first time in Spain –about thirty years later than in most of Western Europe. The new Spanish democratic regime initially attained broad social and political support and it was consolidated after threats of new violent upheavals were curbed in the 1980s. The building of democracy led to the integration in the North Atlantic Treaty Organization and the European Union. This certainly saved Spain from the risk of plunging again into a process of self-destruction. But the integration of Spain in Europe, as well as its parallel process of internal decentralization (partly stimulated by the former), have greatly eroded the foundations of the Spanish state’s sovereignty.
        For about twenty years the Spanish economy obtained great benefits from European tourism, consumption and investments. It also received massive amounts of financial aid from “regional”, “cohesion” and “structural” funds of the European Union, equivalent to three times (in purchasing power parity, PPP) the amount of the Marshall plan implemented by the United States at the end of the Second World War to rebuild Western Europe (from which Spain was excluded)1. Modern highways, high-speed trains, energy windmills, local airports, provincial universities, municipal theaters and multisport centers proliferated. Likewise, public health insurance was extended to everybody and for the most varied incidents, free nurseries and scholarships were made available to all, public subsidies were given for housing rent, the birth of a child and nursing care. Consumption exploded, private debt skyrocketed, millions of young people contracted unaffordable thirty or forty-year mortgages.
       Thus, Spain joined the European Union not as a founding member, but as a late, relatively poor, and in need-of-protection partner that became a net recipient of benefits rather than a contributor, in a similar way to smaller Greece and Portugal did at about the same time. Membership of the European Union saved the Spanish nation from what could have been its ultimate shipwreck. It triggered huge levels of borrowing and debt against the expectation of genuine prosperity and well-being. The Spanish state economic policy, nevertheless, was subjected to Europe-wide budgetary and fiscal restrictions and controls which would eventually show that much of the aforementioned public and private expenditure was exorbitant.
       The situation began to change when, once the Cold War had vanished, the European Union doubled its membership with the admission of new Northern and Eastern states. Successive enlargements of the Union in the mid-1990s and the mid-2000s redefined the periphery and indirectly relocated Spain farther away from the European center and in a less beneficial position, as the country actually became a net fiscal contributor and relatively weaker decision-maker. Deprived from special protection from the European Union and relatively less appealing to foreign investors, Spain revealed certain latent flaws in its economy, society and politics more visibly than in previous decades.
        Traditional structural traits that appear relevant in explaining the current Spanish crisis include a relatively small working population and low work productivity, as well as widespread corruption in both private business, political parties and local and regional administrations. In this context, many Spaniards just aspire to get a plum job. All this goes hand-in-hand with deep-rooted values sanctioning work as a divine condemnation, the confusion of leisure with idleness, customs of systematic tardiness, long lunch breaks, late night schedules and everyday rudeness. The cultural atmosphere is largely shaped by extensive ignorance of English or any foreign language, endogamous universities, negative political campaigns, and ignominious TV shows.
       Thus, the Spanish state is not, of course, what it once was, the core of a multi-continental empire, but neither is it something it could have been, a modern, sovereign nation-state. In the early twenty-first century Spain struggles to decouple itself from the problems of other EU countries on the verge of bankruptcy, such as Greece, Ireland and Portugal. But for some Spaniards it has taken a while to realize that Spain is now also a peripheral and relatively deprived partner of the European endeavor, alien to the core of decision-makers.

1 In per capita terms, the average Spaniard received about 3,000 euros from the EU over a period of twenty years, while the average West European had received fifteen times less, that is, about 200 dollars over a period of three years. In other words, the average Spaniard received two times more money from the EU every year during twenty years than the average West European had received from the US annually during three years, always in PPP. The EU transfers may account for about 1% of annual growth of the Spanish economy during twenty years. (Author’s calculations from data and comments in Gonzalez and Benedicto 2007, Juliana 2011).


Rein Taagepera said...
If the date of losing most colonies made a difference, Portugal and Spain should look now quite different, but they don't. We must look elsewhere.
I have in front of me a map of "competitivity" of the 27 EU countries.
It looks like a map of traditional religious areas.
Ratings 5.50 to 5.77: 3 cases, 100% Protestant.
Ratings 4.60 to 5.50: 9 cases, 34% Protestant, 61% Catholic.
Ratings 4.00 to 4.60: 12 cases,88% Catholic.
Ratings 3.76 to 4.00: 3 cases, 100% Orthodox.

Even the Soviet impact has become muted: Estonia 4.74 > POR,SPA,ITA 4.59 to 4.30. And Romania 3.76 close to Greece 3.95.
Exceptional Catholic countries: Austria 5.33>GER 5.28 through language contamination, and France 4.98, thanks to Albi Cathars and Huguenots.
So the advice for Spain might be: Convert to Protestantism, and then, in 100 years or so, maybe...

Rein Taagepera
U. California, Irvine, and U. Tartu, Estonia

Eric Hershberg said…

Very nice essay, Josep.

I've been blogging as well:  CLICK 

American University
Washington, DC

Gustau Alegret said...
Hola Josep -- Complementari al teu darrer artícle:
"Spain has frittered away its chances for economic development for the second time. The first was after it discovered the Americas in 1492, and the second was after it joined the European Union in 1986. The anti-economic thinking that has dominated Spain is rooted in its history and culture. 
More Excerpts by Sebastian Schoepp: CLICK


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