Next Up, Podemos in Spain: European Officials Will Have to Change Course

March 09, 2015

Mark Weisbrot
Fortune, March 9, 2015

en español

View article at original source.

The electoral victory of Syriza in Greece on January 25 marked the first government that was elected with a strong mandate to finally say no to European officials who have been trying to remake Europe since at least 2010. While many thought it was impossible for a small country with just 2 percent of the economic output of the 19-nation eurozone to change the course of Europe’s history, it is already happening. On Friday, February 20, European officials backed off from their threats and assaults on the Greek financial system, which had already caused more than $13 billion dollars of deposits to flee the country in January. They agreed, for the first time (and for the first country) since Europe’s post-crisis austerity began, that the terms of Greece’s financing could be renegotiated. On Monday, March 9, officials are expected to present their proposals to eurozone finance ministers. If these are eventually rejected, Greece is considering calling new elections or a referendum over its deal with lenders.

This is a milestone on the way to renewed civilization for the rest of the eurozone. The country that has been the next hardest hit, with 23.7 percent unemployment, is Spain. And after years of mass unemployment and “reforms” that have hacked away at public services, pensions, labor and civil rights – a political rebellion has been born in Spain that promises to bring the next democratic alternative government to power.

The new alternative is a political party called Podemos (“we can”), which was born in January 2014 and within four months surprised everyone by winning 8 percent of the vote in the European parliamentary elections. The organizations that had presided over Spain’s heretofore two-party system – the PSOE (center-left Socialist Workers’ Party) and the PP (right-wing Popular Party) – took less than half of the vote, as compared to 81 percent in the prior (2009) election. By November of last year, Podemos was leading all other parties in the polls. It was truly a seismic political shift – for comparison, imagine a third party in the U.S. pulling ahead of Republicans and Democrats less than a year after its founding.

A large and vibrant social movement known as the Indignados, or 15-M, had paved the way for this electoral revolt with massive street demonstrations and local organizing against the abuses of austerity, winning popular support far beyond their numbers. Just as the Occupy movement in the U.S. put inequality on the national political agenda (even Jeb Bush is talking about it) for the first time in decades, 15-M changed the political debate in Spain – only much more so.  The man who is now Podemos’ Secretary General, Pablo Iglesias, also reached millions of people over the last few years on major television shows, skillfully debating establishment opponents. A series of corruption scandals involving the current government also put the public in the mood for something clean and untainted. Iglesias is a 36-year-old professor of political science who speaks eloquently about the need for Spanish citizens to reclaim their democracy.

The ruling PP, which has its roots in the fascist dictatorship that ruled Spain for nearly four decades until 1975, is trying to counter the new challenge by arguing that Spain has returned to growth, and that its policies are working. But this is unlikely to sway many voters. The Spanish economy grew by just 1.4 percent in 2014, and current unemployment of 23.7 percent is not that far from its peak two years ago of 26.3 percent.  Youth unemployment is more than twice the overall rate. Unemployment is what matters most; there is substantial evidence that long-term unemployment has numerous social costs besides loss of income, including on mental and physical health, suicide rates, life expectancy, and the well-being of the children of the unemployed.  

The International Monetary Fund (IMF) projects unemployment to still be at 18.5 percent in 2019. This is assuming that things go according to plan, and ignoring that IMF projections have tended to be over-optimistic in the past few years. But the most outrageous part of this forecast is that the IMF is also projecting that the Spanish economy in 2019 will be very close to full employment.  In other words, the Fund – and by extension the European authorities— are saying that something like 18 percent unemployment is basically full employment for Spain.  European officials are telling Spanish citizens that there is really not much of a future for the country, especially for young people.

Podemos promises a better future by rejecting the fiscal austerity that dragged Spain down. Its proposals to lower the retirement age and reduce the work week would also help open up jobs for the unemployed. In a country where there have been hundreds of thousands of evictions, and where – unlike in the United States, people still have to pay their mortgages even after they lose their homes – it also proposes reforms for the housing sector. And Podemos wants to make the European Central Bank – the most important decision maker of the eurozone – accountable to the European Parliament, as well as changing its role to enable it to promote full employment.

A 2009 consultation between the IMF and the Spanish government stated that “empirical evidence also suggests that recoveries from economic crises often serve as an opportunity for reform.” The kind of “reforms” that they were referring to were those that the current Spanish government has already implemented or tried to implement: cutting pensions, weakening labor’s collective bargaining rights, cutting public services.  This has been the agenda of the troika —the European Commission, the European Central Bank, and the IMF — for the past five years in the eurozone.  Syriza has put its foot down to demand an end to this torment, and now Podemos has risen even more quickly than Syriza to join them. This is what democracy looks like – even the rigid, unaccountable structure of the eurozone will not be able to stop it from spreading.

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