Ángel Saz-Carranza is a lecturer at the Madrid ESADE Business and Law Schools and director of the Center for Global Economy and Geopolitics (ESADEgeo). Carlos Buhigas-Schubert is a specialist in European policy and member of the European Commission's Team Europe in Spain.
"In light of the fact that political processes and traditional communication channels at the trans-European level have clearly proven inadequate, with this letter we wish to share some opinions and establish a dialogue with you.
Media coverage of the economic crisis has generally focused on the immediacy of the problems and been practically monopolised by the 'national sentiment' – a notion that obstructs a true understanding of the crisis and never fails to generate misunderstandings and prejudices that further feed the frustration and rage that divides us. Our political elites, unfortunately, have been unable to correct this trend.
We believe it is imperative that we now undertake an exercise of deep, collective reflection, with all parties willing to listen as well as explain, informed by historical perspective, prudence and good sense, in order to find the best solutions for the future. Our ultimate goal is to overcome simplistic national narratives – the free-spending Italians, the unsupportive Finns – and contribute to a shared vision of Europe.
We’d like to begin, therefore, by presenting the case of Spain, a country undergoing a dramatic yet necessary process of self-criticism and sacrifice.
As everyone knows, Spain has benefited enormously from its full political integration in the EU and has been regarded as one of the 'miracles' of the past few decades.
Since Spain joined the EU in 1985, it has increased its per capita income four-fold, strengthened its institutions considerably, improved welfare and equal opportunities, generated numerous economic experiences worthy of admiration (Inditex is the only European Fortune 500 company to be created after the 1970s), and become a second home to many Europeans. The Spain of those years was able to make the most of the EU’s undeniable 'pull' effect and considerable solidarity. Our most highly developed cities are among the world’s greatest, and even our more disadvantaged areas enjoy excellent infrastructure.
But Europe has benefited from Spain’s integration as well. Once a problem, today’s politically stable Spain gradually became an opportunity – one which, at a population of 45 million, increases the size of the European single market substantially. Companies from other EU member countries discovered in Spain a quasi-virgin market due to the weakness of the existing business community. But just as importantly, they found important partners in Spain’s businesses and workers.
Despite our success story, we have committed major errors. The first was our decision to abandon the deeply European approach that characterised Spain’s entry into the EU under Felipe González. The zero-sum negotiation approach of José María Aznar and the indifference of José Luis Rodríguez Zapatero helped neither Spain nor Europe. We hope that the government of Mariano Rajoy is able to reposition Spain more favourably and adopt a much more proactive role for the country.
In addition, we have not been able to sufficiently modernise our institutions, which generally remain excessively corporate. Although we have made important advances, our public institutions need to be more accountable, our trade unions need to get with the times, and our business associations need to embrace a more long term perspective. As compared to other eurozone countries, Spain still has a low-quality administration, out-of-touch trade unions, and companies that invest too little in R&D.
With regard to today’s crisis in particular, we failed to stop the growth of a bubble that led us to live beyond our means and get stuck in low-added-value sectors such as construction. It was our obligation to pop the bubble. Doing so, however, would have required facing two difficult challenges simultaneously. On the one hand, Spanish politicians lacked the courage to stop a trend – easy credit and low unemployment – that benefited them, as well as businesses and ordinary citizens. In parallel local and regional governments were becoming 'addicted' to the tax revenue generated by real-estate development.
On the other hand, the single currency was no help to us, either. Throughout the first decade of the 21st century, Spain was among the countries with the most rigorous fiscal discipline. In this regard, we were second to none. Unfortunately, when the large eurozone economies – Germany and France – needed stimulus, our economy needed exactly the opposite. As a result, while Spain’s politicians failed to pop the bubble but did succeed in maintaining a budget surplus, private debt – which is much more difficult to control – was financed to a large extent by savings from other parts of Europe, travelling through the unified financial space in search of higher profitability.
Although widespread in the media, the stereotypes of despotic northerners and lazy southerners have no place in today’s Europe. Despite the criticism heaped on the government of Angela Merkel, we believe that the Germans have always been committed to Europe, as reflected in their net contribution to the EU budget. The EU, in turn, aided in the unification of Germany and provided a large market for the country’s capable companies. The result was a trade surplus that has never ceased to grow. Germany made enormous sacrifices with its Agenda 2010, and Europe supported the country by forgiving its failure – and that of France – to comply with the Stability and Growth Pact.
Likewise, we believe the stereotype of the unreliable Spaniards is equally mistaken. Spain has played an important role in building the EU as we know it today. Like the other countries of southern Europe, it has fully acknowledged its mistakes and submitted itself to a drastic reform agenda – one which other countries may not have accepted. Despite this, southern Europe is still frequently bombarded with moralistic arguments that overlook the fact that we were not truly the originators of this crisis.
In this difficult, thankless process of perseverance, sacrifice and effort, almost nowhere on the continent has there arisen a common horizon based on an understanding of the present circumstances to make sense of what is happening and inspire a better and more hopeful future.
For Southern Europe, and Spain in particular, some difficult years lie ahead. Despite an enormously deteriorated social situation, the behaviour of the citizenry offers a fine example of integrity and generosity. Thanks to this, neither extremist nor populist initiatives have prospered in the political debate. We know that this is the time to “reinvent” our country and correct persistent wrongs.
In this journey, we are firmly committed to Europe and willing to take on any and all who succumb to the dangerous virus of nationalism and disengagement, which is sparking an internal process of withdrawal to nowhere.
The future is putting us to the test. The decisions made in the coming months will affect us to a much greater degree than we can presently see or understand. We dare to predict, however, that those who one day study this crisis with the necessary historical perspective will focus not on the debt- and deficit-related debates that monopolised headlines on a daily basis, perhaps not even on the euro, but on our willingness, intelligence and strength to address our problems together."