The FinanciaTimes
Like Greece, Ireland and Portugal before it, Spain appears unwilling to make a formal request for international financial aid – beyond that agreed for its banks – unless its slide into the abyss becomes irreversible. Doubtless this reflects the government’s view that such an application would constitute the nation’s greatest humiliation since the end of Francoism in 1975.
But it also reflects the assessment of Mariano Rajoy, the centre-right prime minister, that to tap Europe’s rescue funds might prove a political catastrophe for his ruling Popular party. The electoral maulings suffered by governments in Athens, Dublin and Lisbon that were ultimately compelled to ask for aid indicate that Mr Rajoy’s fears may not be wide of the mark.
Regrettably, such calculations of party political advantage have shadowed the Rajoy government’s behaviour in the eurozone crisis since its landslide election victory last November. Early in his premiership they prompted his defiant pose against a freshly adopted set of stricter eurozone fiscal rules. They also accounted for his hesitancy in addressing the turmoil in Spain’s public sector banks, where Popular party politicians wielded much influence.
Now they are intensifying tensions in the central government’s relationship with Spain’s regions. Even those ruled by local Popular party barons suspect the party leadership of harbouring excessively centralising instincts. But more serious trouble is brewing in regions such as Catalonia that are not under Popular party control and which suspect Mr Rajoy of trying to exploit their fiscal woes to curb the autonomy granted to them more than 30 years ago.
Mr Rajoy has compounded his difficulties with an incoherent communications policy that has eroded his government’s popularity and damaged investors’ confidence in its competence. He should borrow a leaf from the book of neighbouring Portugal, whose government has made a better job of speaking with one voice and persuading the public that it is ruling in the national interest.
On Mr Rajoy’s watch Spain has made encouraging progress on several fronts, with exports buoyant, the current account deficit shrinking and unit labour costs improving. Unemployment is uncomfortably high but the government’s labour market reforms are on the right track. No less essential are the courage and consistency to govern for the good of Spain, even if this involves measures that harm the Popular party’s short-term interests.