Mariano Rajoy’s Popular Party scored a huge electoral win in Spain over the weekend and on Monday, the European media was unanimous: it was nothing less than a "crushing victory", editorialised the French afternoon daily Le Monde.
"The euro crisis has just claimed its sixth political victim" of the year, the Parisian journal reflects: "After Ireland, Portugal, Slovakia, Greece and Italy, it’s Spain’s turn to welcome a new government."
That change of government is the third Eurozone power shift in just three weeks. Italy’s Silvio Berlusconi resigned a weekend ago, and Greece’s Giorgio Papendreou fled office two weeks ago.
In power since 2004, José Luis Rodríguez Zapatero’s socialists were crushed. "There are just two red dots in a sea of blue — the cities of Barcelona and Seville", marvels Rome’s La Repubblica. "The electoral map is a result of a day that, albeit predictable, reflects a historical turning point for a country that’s been bickering for months in the midst of an explosive economic and financial crisis."
It’s a result that may have marked the end of the Spanish Socialist Workers’ Party’s domination of power in Spain since the death of Franco in the 1970s. "After taking a look in their wallet, traditionally left-wing Spain has voted for the ‘Right’", is the analysis put forward by the Frankfurter Allgemeine Zeitung.
"After seven years of socialism during which Zapatero firstly ‘redistributed’ income, and then was left without government reserves amid the tempest of the financial crisis after that, voters left the socialists in droves", continues the centre-right paper.
Voters might be hoping that a change in government will solve Spain’s economic woes — including that notorious 22 per cent unemployment rate. Financial news on the day after the election showed Rajoy’s party is facing a tough challenge to convince the markets Spain isn’t broke.
"One day after the conservatives won an absolute majority in the Spanish elections, the yield on Spanish treasury bonds again rose on Monday to 6.33 per cent," reports Amsterdam’s Volkskrant. "And the differential between the yields on German and Spanish bonds also jumped."
That rate is close to a level that Spain can’t afford to pay. But Rajoy is receiving plenty of helpful advice from banks and financial analysts about how to fix Spain’s battered economy. While a little less than half of Spain’s young people are still unemployed, and the country is still struggling to pay interest on its debts, economists say it’s all peachier than it looks.
"The Spanish economy is in a much better state than it was in 1998." That’s the verdict of Deutsche Bank economists, reports the Spanish financial website La Economía. La Economía points to the strength of Spanish business as one of the key factors that’s shifted since the financial crisis began in 2008.
Rajoy hasn’t offered detailed policy plans on how he’s to fix the Spanish economy yet. But La Economía helpfully offers him suggestions on what he should do to fix things up. Its recipe will be familiar to many: labour market reform and spending cuts. All of the experts interviewed by La Economía want Rajoy to get rid of collective bargaining. "It’ll be necessary to eliminate the influence of the unions," opines economics professor Juan Ramón Rallo.
Any further cuts to wages as a result of labour market reforms will only increase the already high rates of poverty in Spain, according to French Catholic daily Les Échos. The paper says that even though Spain’s unemployment rate is well known, the figures on those living in poverty haven’t been widely discussed. "A fifth… that’s the frightening number of Spanish homes whose inhabitants are living below the poverty line," says Les Échos.
Why are so many everyday Spanish struggling to get by? Les Échos cites examples of what is a sadly common story in Spain: those impoverished by their high mortgage costs and low wages. The number of evictions across Spain rose to 16,500 in during the third quarter of 2011 calculates the Parisian paper — that’s an increase of a fifth compared to a year ago.
Indeed, if Rajoy wants to fix Spain, he has to start with the property sector, argues one contributor to the multilingual European magazine Café Babel’s Spanish service.
"Dear European neighbours: our problems don’t have its roots in structural problems (or at least not primarily); their foundations are literally set in stone," writes 23-year-old student and journalist Cristina Cartes.
Cartes interviews resource economist Ricardo Vergés who says the problem facing Spain’s economy today is decades of property overpricing and speculation.
Vergés traces the origins of the property bubble to the 1960s, when franquista Spain set to work building tourist retreats and retirement homes on the coast. He says that after that, the Spanish economy progressively became more and more geared toward real estate. In the 1990s, when interest rates across Europe were streamlined, "while countries like France, Germany and Austria saw [this]as an opportunity to do business…we continued to build".
Vergés says Spanish governments of all kinds loved real estate because it generated property taxes and GST without them having to borrow. And many of Spain’s politicians took kickbacks in exchange for granting building permits.
But then came the financial crisis, Café Babel continues — when the banks could no longer lend, and the property market collapsed. And, due to the property bubble "private debt was enormous … people had borrowed a lot of money to buy houses and build them, and now no one can pay that back."
Least of all the Spanish government, which after 2008 was forced to bail out many of the Spanish building societies, beset by both the collapse of the property bubble and their "exposure to American toxic mortgages". This legacy is going to be one of Rajoy’s toughest challenges, concludes Café Babel.
And though coming up with a solution to Spain’s economic problems is likely to preoccupy Rajoy, it’s not the only thing on the Galician conservative’s mind. He’s promising one of his first laws will reverse his predecessor’s legalisation of gay marriage. And that prompted some unlikely visitors to his election party, reports Madrid’s Público.
The paper links to a Youtube video on its website showing two gay students who crashed Rajoy’s victory party. With Al Jazeera’s cameras rolling, and conservative jaws dropping, the men embraced. It shows that although progressive Spain’s on the back foot, it’s not about to step back into the closet.
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