The shops that generally remain open on Saturday afternoons in the Barrio de Salamanca, Madrid’s most upscale neighbourhood, did not bother changing their opening hours on March 10, even as an estimated 500,000 demonstrators converged on the nearby Plaza Colón for an anti-government demonstration.
The owners calculated that the crowd, which included little girls with ribbons in their hair, would be well-behaved. They were right.
Following a speech by opposition leader Mariano Rajoy, head of the Popular Party (PP), against prime minister José Luis Rodríguez Zapatero’s policy towards Basque terrorist group ETA – in particular against the early release from prison into house arrest of hunger-striker Iñaki de Juana Chaos, an unrepentant ETA member convicted on 25 charges of murder – the demonstrators filed out peacefully at 7:30pm.
The demonstration, in the majority, consisted of PP members but also included the participation of 200 civil society groups, evidence of the socialist government’s increasing unpopularity. The PP’s calls for early general elections, however, look misplaced as despite the governing Partido Socialista Obrero Espanol’s (PSOE) fall in the polls, the electorate appears to be evenly divided along party lines. The wide differential in the partisan estimates of the turnout underline the gulf between the parties: the PP-dominated Madrid government estimated more than two million, the PSOE estimated 342,000. The police estimated half a million. General elections are due in less than a year; local and regional ones in May.
Meanwhile, the economy continues to boom. A majority of the shops in the Barrio de Salamanca sported ‘Staff Wanted’ notices in their windows. The chances are that those posts will be filled by immigrants, like the Colombian man in the demonstration who told the television interviewer that he had joined the protest because in his country they had had enough of terrorists and he could sympathise with the demonstrators. Immigrants in Spain now number about four million, 10% of the population. The country was ranked first in percentage job creation among the members of the Organisation for Economic Co-operation and Development (OECD)in 2006.
Financial consensus
What the demonstration also showed was that Spaniards do not fear that disruption and a change of government might spell the end of gross domestic product (GDP) growth which has averaged 3% a year over 1994-2005, came in close to 4% in 2006 and is forecast at upwards from 3.4% in 2007. On fiscal policy, privatisation and the like, there has been a cross-party consensus for the past two decades.
In fact, what really needs to be feared, said Miguel Fernández Ordóñez, governor of the Bank of Spain, in a speech a few months ago, is “complacency”. The governor said Spain “must keep reform firmly on the agenda”. He emphasised social security reform, improving the levels of education and also cautioned that the devolution of budgetary powers to Spain’s regions meant that fiscal conservatism on the part of the central government was less important than spending by regional governments. Their public expenditure is more than two and a half times that of central government.
Currently, though, Spain is in the enviable position of having a debt to GDP ratio of less than 40% and a public sector budget surplus of 1.8% of GDP. Conversely, the worrying economic statistics are inflation at 2.7% and a current account deficit of about 8% of GDP – both numbers are the highest among OECD members – underpinned by a property boom and a big increase in household debt. Additionally, Spain has one of the lowest rates of productivity growth in the EU.
The deceleration of the Spanish economy looks like leading to a soft landing, assuming the benign external environment persists, say economists. On the political front, though, the rest of 2007 will be marked by rancour and bitterness – albeit in a civilised way.
