Thursday, September 23, 2010

Most People Have Left The Floor, But Zapatero's Still Dancing

The agreement between the Spanish government and the Basque nationalist PNV to support the 2011 budget means that Zapatero's administration now has a fairly strong chance of lasting its full term. By this time next year there will only be 6 months of the parliament left anyway, and a failure to pass the budget is the one thing that most threatened the stability of the government. However, we won't be hearing much anymore about the variable geometry which Zapatero has used to keep a minority government going. The parties to the left of the PSOE have been estranged by the adoption of a right wing economic agenda, and the Catalan nationalists of Convergencia are far more interested in winning the forthcoming Catalan elections than they are in extracting concessions from the national government in return for support. It was more or less the PNV or nothing.

The agreement with the PNV means that the Basque Country will receive additional powers from the national government, most notably the control of employment policy. Despite the predictable howls of protest from the right wing press in Madrid, the deal involves transferring powers that many other autonomous regions already possess, and which are long overdue in the case of the Basque Country. Partido Popular leader Mariano Rajoy knows all about making such deals, when Aznar's first government needed support Rajoy more or less announced that he would concede whatever was necessary to get the PNV's votes. However, when the boot is on the other foot. Less comfortable with the deal will be the minority Basque administration by the PSOE's Patxi Lopez which relies on the PP's support. The PNV get the credit for extracting concessions and will be strengthened as the opposition to a regional government that is in any case far more popular outside of the Basque Country than in it.

Tomorrow we should know more about what next year's budget means, but we can be fairly sure that it will bring cuts, cuts and more cuts. The talk is of 15% cuts in government departments. Another consequence of the deal being done with the PNV is that all the talk from prominent government members of the wealthy also paying their part of getting the country out of crisis remains just There may be a new income tax band for those declaring annual earnings over €120000, but this leaves untouched much of the barely taxed wealth that was pocketed by a tiny minority during the boom years.

I was reading today about the very real possibility of Ireland being forced back into recession as a result of the slash and burn economic recipes that are being applied across Europe. This, of course, is the country that did everything the markets and our distinguished economic analysts said had to be done by applying very drastic cuts. Now the poster boy of the neoliberal "solution" is being punished by the same markets because of doubts about the capacity of the economy to grow. I can't wait for someone from those responsible to come out and say "nobody warned us this would happen". I was also reading yesterday the comments on the Wall Street Journal's interview with Zapatero and it struck me just how many people evidently desire the continuation of the crisis. They are either sick or making a lot of money a lot of money out of it. Or a combination of the two.

1 comment:

ejh said...

I think there's something else, though, which is that wealthy people, or come to that well-off people in general, don't really suffer in a recession. They don't lose their money, they don't lose their homes. They aren't generally coining it in on the scale they were before, and they don't like that, but they are not, personally, very much affected.

So this leaves them free to demand things that suit their prejudices, emboldened by the fact that there is a lot of anger and confusion about which they will feel themselves entitled to respond to.

I think the solution will be to privatise everything. I think that's what they want and I think that's what they'll try and do. Local, regional and antional governments of the right will be trying to do this throughout Europe and those that try it will be the recipients of much, much publicity and praise. And if it doesn't work, it doesn't matter because they people who rely on services and state pensions don't matter.