A short honeymoon for Spains Rajoy

2nd January 2012, Comments 0 comments

The new prime minister has justified his announced austerity package by citing the previous governments overspending. But with Spain still at the heart of the eurozone debt crisis and more cuts to come, he needs to share his plans with the electorate.

When Deputy Prime Minister Soraya Senz de Santamara announced the new Spanish governments battery of cuts worth 8.9 million plus tax increases, there were plenty of questions in the air. Why such heavy cuts? How will the new tax increases work? Will there be more cuts?

The deputy prime ministers answer to the first query was that the cuts are extreme because the 2011 deficit is 8 percent of GDP, rather than the 6 percent the outgoing Socialists had estimated. Public Administrations Minister Cristbal Montoro offered detail about the tax rises. And the fact that the 2012 budget has yet to be presented means yes, there will be more austerity measures later in the year, although their details are unlikely to be revealed until after the Andalusia regional elections.

But another question hung in the air as Santamara gave her press conference. Where was Mariano Rajoy, the man voted in on a landslide in November, apparently with a mandate to implement economic reform?

His absence was certainly in character for a politician who has shunned the limelight, even during the election campaign. But it was perhaps also tacit recognition that these arent the kind of measures that are going to extend his honeymoon period.

The package includes raising income tax, maintaining a freeze on civil service wages, capping the hiring of new civil servants, freezing the minimum wage and cutting funding for unions.

In fact these are exactly the kind of measures that Rajoys predecessor Jos Luis Rodrguez Zapatero employed during his last 18 months in power and which helped ensure the end of his frontline political career. At the time, Rajoy and his conservative Popular Party PP refused to back such measures. They were, he charged, Brussels-imposed recipes that wrested sovereignty from Spain.

They came over here and set us homework and as a Spaniard I dont like being told what to do, Rajoy said last February.

Some of the language used in Fridays presentation of the new measures was a euphemism-laden attempt to pretend they were something else, with the income tax increase described as a complementary and solidarity-based temporary charge.

Groundhog Day

But no one, least of all Rajoy, can pretend that his deficit-slashing second week in office was inspired by anything other than a desire to impress the European Union and distance Spain from the eurozone debt crisis. Raising taxes was anathema to the PP when in opposition and when campaigning to win the general election. But Santamara has insisted such measures are now necessary, given the unwelcome, 8-percent deficit surprise.

Its Groundhog Day, noted Pblico columnist Ana Cail as she pointed to the new measures apparent focus on trying to create another real estate boom while further eroding Spains already thin research & development investment.

The new government justifies the package by accusing the Socialists of heinous overspending while in office and the latter attack the new measures as a neo-liberal overreaction. But the real villain could well turn out to be Spains regional financing structure, which allows massive debts to be built up, leaving the central government and the Spanish people to pick up the tab.

Since winning the November election, the new prime minister has already been highly successful in one area: keeping his plans to himself and his inner circle until the very last moment, whether they be ministerial appointments or austerity measures.

Having been so reluctant to show his hand while in opposition and when campaigning for his current job, Rajoy now has no choice but to rebel against his instinct and tell Spaniards clearly and deliberately what his intentions are, regardless of the u-turns that may imply or the harm it may do to his image.

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