reports on Spain's economic crisis and a new resurgence of struggle.
A SWEEPING $80 billion austerity program pushed by Spain's right-wing
Prime Minister Mariano Rajoy has been met by a new surge of workers'
resistance, with miners leading the way and public-sector workers
joining the battle with street blockades in the capital city of Madrid.
|Miners with tens of thousands of supporters in León during the Black March to Madrid (Raúl G. Villalón)|
The public workers' protest came nine days after 200 striking coal
miners from Asturias arrived in the capital after marching along with
their supporters nearly 250 miles to Madrid to protest the withdrawal of
government subsidies from their industry.
The miners got a huge popular reception in Madrid.
An estimated 150,000 people--many of them organized by Spain's two main
union federations--turned out on the streets around midnight to greet
the miners after their march.
The miners' strike, which began May 31, has been regularly attacked by riot police in Asturias,
but the miners have fought back by blocking roads and even using small
rockets to push back the cops. So it wasn't surprising that police in
Madrid gave their own "welcome" to the Austurian miners with a vicious attack that left 76 people injured.
Nevertheless, on July 16, workers were back in the streets, as groups of government employees
blocked key roads around Madrid to protest pay cuts imposed by Rajoy.
Other groups set up picket lines outside the offices of the ruling
conservative Popular Party. They carried signs that read, "Let a
parliamentary representative be the next one out of work" and "No
cutbacks, Rajoy resign."
Those actions came a day after thousands of public-sector workers
demonstrated without a permit in central Madrid to protest the
cancellation of their annual Christmas bonuses as well as cutting paid
personal days from six to three.
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THE GOVERNMENT'S social spending cuts and regressive tax
hikes--implemented under pressure from Germany and other European
governments after they announced a $150 billion bailout fund to support
Spanish banks--are the latest phase of the debt crisis that afflicts the
eurozone, the 17 nations that share the euro as a common currency.
Under the terms of the "rescue" deal, Spain must cut its government budget deficit
from 8.9 percent of gross domestic product (GDP) today to 2.8 percent
in 2014, a goal that will be impossible to reach without wrecking
Spain's social safety net.
Thus, the austerity measures, announced on July 11, target Spain's most vulnerable. Rajoy's "reforms" include limiting benefits for the unemployed to six months, cutting benefits for retirees and the elderly, and reducing employer contributions to social security funds.
Other cutbacks include the elimination of mortgage deductions on
personal income taxes and a big jump in the country's consumption tax,
known as the value-added tax, from 18 to 21 percent. For many cultural
activities, such as concerts, theaters and films, the value-added tax rate will jump from 8 to 21 percent, which will have a devastating impact on the arts.
The Spanish austerity program also puts the squeeze on the country's
regional governments, which have enjoyed considerable autonomy since the
end of the decades-long Franco dictatorship in 1975.
Under the Rajoy plan, budget-strapped regional governments can apply for financial aid from the central government. But in order to get the money,
they will have to give officials from Rajoy's government oversight over
key budget decisions--just as the central government itself must bow to
the edicts of European Union officials.
Rajoy's Greek-style cutbacks follow two earlier rounds of austerity
in Spain. The first came under former Prime Minister José Luis Rodriguez
Zapatero of the Socialist Party, who in May 2010
announced cuts equivalent to 1.5 percent of GDP. His measures included a
wage cut for public-sector workers, abolition of subsidies for infants,
a pension freeze, an increase in the retirement age, a 2 percent hike
in the value-added tax, a rise in tobacco taxes and the passage of a law
that made it easier for companies to fire and hire workers and gave
employers advantages in collective bargaining.
Zapatero abandoned hope of reelection as the Socialists popularity plunged amid the rising protests of the Indignado movement, led by young people who occupied the main public squares of Spanish cities for weeks in 2011.
When Rajoy took office in November 2011, he pushed the austerity agenda further with $19.3 billion in spending cuts and tax increases.
Even so, Rajoy--eyeing the collapse of the establishment parties in
economically ravaged Greece--was at this point still unwilling to meet
the demands of the eurozone's German-led austerity camp, declaring that it was impossible for Spain to meet its target of cutting its budget deficit to 4.4 percent of GDP in 2012.
But then the Spanish government was forced to bail out the big bank Bankia for $32 billion and counting. Created through multiple mergers of regional savings banks, known as cajas, Bankia became, as the Financial Times
put it, "the bank that broke Spain." Interest rates for Spanish bonds
skyrocketed as investors concluded that the Spanish government would
soon be forced to absorb the losses of even more big banks. Rajoy had no
choice but to turn to Europe for a new bailout.
Spain was supposed to be spared the public humiliation visited upon
Greece by the so-called troika of the European Union, European Central
Bank and International Monetary Fund. But at a European summit,
politicians agreed to the European Union assuming oversight of Spanish
banks, a huge loss of sovereignty.
Thus, Spain was strong-armed into Greek-style austerity in social
spending while raising taxes on working people. The cutbacks come as
Spain's recession is expected to worsen, according to the International Monetary Fund,
which predicts that the Spanish economy will shrink by 1.5 percent this
year and decline by another 0.6 percent next year. That means
unemployment could hit a stunning 25.3 percent next year.
With the economy already unraveling, Rajoy's agenda, if fulfilled,
will lead to the same level of social catastrophe seen in Greece. As writers for the Spanish socialist website Viento Sur put it, the program "constitutes an attack on the social majority and is a declaration of war against the working population."
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GIVEN THE scale of the attack, it was no surprise that the Asturian
miners' struggle captured the imagination of working people who are fed
up with the misery of long-term unemployment, highlighting a growing
radicalization of Spanish society that goes beyond the young people who
spearheaded the Indignado movement.
After years in which labor protests have been focused mainly on
stage-managed demonstrations and the occasional one-day general strike,
the miners' determined fight has set an example for workers--like the
public-sector union members who undertook confrontational tactics like
blocking key streets in Madrid. Unlike top union leaders--who have
called for a general strike, but not until September--these groups of workers are trying to rally resistance before the cuts can take effect.
But like in Greece, the Spanish government has made its message
clear: the cuts will keep on coming until workers are organized and
powerful enough to stop them.
As in the case of Greece, the authors of Spain's austerity agenda are
blaming the victims. They claim the problem was irresponsible Spaniards
who borrowed too much money to buy houses that were too expensive for
them. When mortgage loans couldn't be repaid, the banks got in trouble
and had to be bailed out by the state. So now the taxpayers have to be
squeezed to keep the government budget under control.
This scenario is familiar to anyone who's followed the establishment
claims about the U.S. housing boom and bust. It's the wrong argument in
the U.S., and it's wrong in Spain as well. The housing bubble was
created not by individual homebuyers, but by banks eager to pump up profits on the basis of easy money made possible by the eurozone's low interest rates.
The key players were the cajas, which acted as funnels for big banks in
Spain and across Europe looking to make a fast and easy return on their
Both the Zapatero and Rajoy governments tried to keep the system
afloat by encouraging mergers into larger banks, which led to the
creation of the Bankia Frankenstein monster. But when Bankia went under,
it took with it the savings of people who'd bought stock in what they
thought was a solid investment. As the Wall Street Journal reported:
Thousands of Spanish citizens are preparing to see some of the savings
they invested in local banks wiped out, as their government begins a
grand overhaul of those lenders, a central condition for a large bank
bailout from the eurozone. Higher up in the creditor pecking order,
however, owners of senior bonds issued by the same institutions appear
to be in the clear, according to the leaked terms of the bailout deal.
In other words, big bondholders are first in line to extract money
from the Spanish working class even as decades of social advances are
eliminated by Rajoy.
The Spanish crisis marks a new phase in the European debt crisis.
Despite the severity of the budget cuts, it's far from clear that
lenders will be satisfied with Rajoy's austerity measures. Plus, the two
European financial funds--the European Financial Stability Facility and
the European Stabilization Mechanism--despite totaling nearly $1 trillion, aren't big enough to bail out both Spain and Italy, the other big debt-plagued European country that may need assistance.
But as Spain spirals downward, big multinational corporations are poised to grab Spain's main corporate assets, taking advantage of European Union rules that limit state ownership of private corporations.
Since the Spanish government, having bailed out big banks, is now part
owner of several key companies, it will have to sell its stock in those
companies at cut-rate prices.
All this will sting Spanish politicians and capitalists, who, like
their Greek counterparts, are being forced to accept the German-driven
austerity agenda. But Spanish employers, like those across Europe, are
united in their intent to make the working class in Spain and beyond
accept the elimination of decades of social gains and a severe cut in
However, the Asturian miners, like the Greek workers who waged years
of mass struggle, are drawing a line. Resistance such as theirs is the
only way to stop the devastating austerity drive.
Source: Socialist Worker