Spanish EU presidency marred by economic crisis

Spanish EU presidency marred by economic crisis

1st July 2010, Comments 0 comments

Analysts say Spain's ambitious presidency of the EU was overshadowed by the Greek debt crisis and fears that it could spread to other European countries.

Spain's ambitious presidency of the EU was eclipsed by the European debt crisis which thrust the country's fragile economy into the global spotlight and weakened the Spanish government, analysts said.

Socialist Prime Minister Jose Luis Rodriguez Zapatero had planned to use the six-month presidency of the 27-nation bloc, which wraps up on 1 July when Belgium takes over, to bolster his international stature.

But nothing went as planned as the eruption of the Greek debt crisis, and the subsequent fears that it could spread to other southern European nations like Spain and Portugal, caused stock markets and the euro single currency to plunge.

Under pressure by EU heavyweight Germany, the Spanish government adopted unpopular austerity measures, including public sector spending cuts, aimed at slashing a public deficit that hit 11.2 percent of gross domestic product in 2009, the third-highest after Greece and Ireland.

The government also adopted an overhaul of its rigid labour market as recommended by the International Monetary Fund to fight an unemployment rate of 20 percent.

Spain's Prime Minister Jose Luis Rodriguez Zapatero (C) arrives for a parliament session in Madrid on 23 June 2010, in which he defended his country's turn at the helm of the EU presidency

The reforms, which make it easier and less expensive to fire workers, put an end to Zapatero's honeymoon with the nation's unions, which have called a general strike for 29 September, and caused his popularity to drop.

Spain was ending its stint as EU president as a "protectorate" of the bloc with its "economy managed from abroad", the leader of the main opposition Popular Party, Mariano Rajoy, charged last week during a debate with Zapatero in parliament.

"The circumstances of the Greek crisis and the widespread problem of fiscal deficits overtook Spain as they would have overtaken any rotating presidency," said Ignacio Molina, a Europe analyst with the Elcano Institute think tank in Madrid.

"But Spain also emerged as one of the weakest countries in this scenario. It found itself without a margin for manoeuvre, being in the position of judge and litigant at the same time. It was difficult for other countries to consider it a neutral president," he added.

Hierlemann Dominik, a specialist in European affairs at German's Bertelsmann Foundation, said all other priorities "such as relations with the Maghreb, the rights of women, were swept away by the crisis in the euro, they were marginalised."

On the diplomatic front Spain's presidency of the EU was marked by the cancellation of two key summits, one with the United States in May and the other with the Mediterranean Union in June.

The EU-US summit was called off after US President Barack Obama cancelled the trip citing his busy schedule while the Mediterranean Union summit was postponed to give time for progress in indirect talks between Israel and the Palestinians.

The death of Cuban dissident Orlando Zapata in February torpedoed Spain's bid to get the EU to soften its common position regarding the communist island.

AFP PHOTO/Luke Sharrett/POOL
Toronto : German Chancellor Angela Merkel (L) and Spanish President Jose Luis Rodriguez Zapatero join other world leaders on stage before posing for the 2010 G20 Summit family photo in Toronto, Ontario, Canada, on 27 June 2010

Spain did achieve its goals for the EU-Latin America summit held in May with the announcement of a free trade agreement between the bloc and Central America and the relaunch of free trade talks with South American trading bloc Mercosur, which is made up of Argentina, Brazil, Uruguay and Paraguay.

Zapatero defended Spain's performance during the EU presidency, saying it had been "satisfactory" and "useful".

He pointed to the approval at an EU summit last week of Madrid's proposal to make bank stress tests public -- which he said would be "fundamental" to restore calm in the markets -- as an example of the success of the Spanish presidency.

"We had to deal with difficult circumstances for the European Union and also for our country," he added.

AFP / Pierre Ausseill / Expatica

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