Spain: Simmering anger in Seville

 

Paul Mason reports on how the economic crisis is changing lives in Seville

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The Spanish version of the soprano cornet is tiny: it curls like a golden snail in the hand of the player. There is only one valve, and it is tweaked, like a tap, so that the melody it produces swoops and squeals.

In an English brass band there is only one soprano and its job is to add a sweet echo, one octave higher, to the main melody. In the La Pasion Sevilla brass band, all the cornets are sopranos. In fact, between the massed ranks of burly working class men playing their cornettas, and the heavy drum detachment at the back, there's only a few trumpets and horns to add harmony and depth.

The result, if you stand close as the band shuffles behind a statue of the Madonna through the humid alleyways of Triana, Seville, is an aural mixture that is at the same time saccharine sweet and physically painful.

Statue of the Madonna Many in Seville have held onto the certainty of tradition in turbulent times

Right now, policymakers across Europe have to be thankful for Pasion Sevilla and its cornets, Triana with its statues and incense, the tight knots of local people gathered at the corners of tiny cobbled streets. Because family and tradition, religion, brass bands and social solidarity are all that's holding many communities in Spain together.

One in four adults is unemployed. Half of all young people are jobless. Consumer spending is in freefall and the country has just learned that to save a single, relatively minor bank, will add a third to its already sky-high national debt. Meanwhile its top 30 listed companies have lost 40% of their market value in a year.

Spain is in trouble, on the face of it, because its small banks - known as cajas - fuelled an insane property boom that went bust. They didn't do complex structured finance deals like Lehman Brothers; indeed they were the opposite of "Anglo-Saxon" capitalism - being small and locally owned.

But behind the pure economic story is a more complex political-economic crisis that could, even now, send Spain the same way as Greece, shattering the eurozone in the process and placing the whole European project in grave doubt.

You can see how badly the crisis has hit people at the "Utopia" apartment block in Seville. It's a modern, newly-built, five-storey complex next to a busy road. The flats are small: perfect for young professionals with their taste for minimalist furniture. But the company that built the flats went bust and now the whole place has been squatted by families turfed out of their own homes due to repossession.

Start Quote

The moment people think Europe is letting us fall, people will stop complaining and start protesting.”

End Quote Raul Limon Journalist, El Pais

Toni Rodriquez leads me around the darkened corridors (the electricity company has cut the power supply).

"We had weekly meetings for four months and we realised we were all in the same situation and finally we decided to do something about it. When we took over the building I was frightened, because I've seen things on TV where they drag people out. The banks need to adapt the mortgage system to avoid kicking people out of their homes."

Toni, aged 44, is one of a tight group of women - mainly cleaning workers - who've organised the occupation. They all have working age children who are unemployed. They resent the banks for kicking them out of their homes, and the politicians for bailing them out.

Around the edges of the project move people from a completely different demographic: the so-called "indignados" of the M15 movement - anti-globalist youth with trademark tattoos and piercings. The indignados made world headlines last year after massive occupation protests in the public squares of Spanish cities, in turn sparking the global Occupy movement.

Toni Rodriquez Toni Rodriquez organised the occupation of a Seville block of flats

When you see the Utopia flats, draped with banners announcing "no homes without people, no people without homes", you see what happens when official politics abandons people. Very ordinary, indeed anti-political people have begun to turn to Spain's radical youth for help. They in turn have found a purpose, here and elsewhere, outside mainstream politics, which they despise.

For at the heart of Spain's economic problem is its political system. In the first place the system of autonomous regions, with their own budgets and right to borrow on the financial markets. That delayed Spain's budget adjustment by a year, during which the central government cut spending but the regions raised both spending and borrowing. A large part of the government's current deficit reduction plan depends on getting regions like Andalusia, of which Seville is the capital, to slash their budgets.

On top of the regions, you have the cajas. Bankia, the bank at the centre of the crisis, was created only last year through a merger of seven troubled cajas. They merged their debts, took bailout money from the government, sunk some of their bad debts into a government fund and sold shares in the merged company, appointing former IMF boss Roderigo Rato as the CEO. What could go wrong?

Well it is now clear that Bankia was hiding bad debts that will need 24 billion euros to sort out. The two biggest cajas that formed Bankia were both effectively controlled by local politicians from the ruling Partido Popular. One has recently walked away with a 14m euro payoff, despite presiding over the biggest bank collapse in Spanish history.

A demonstrator hit a pot during a protest to mark the anniversary of the Indignados movement The Indignados movement is now one year old

When opposition politicians called for a parliamentary inquiry into the bank's collapse, the PP used its parliamentary majority to squash the proposal. Ditto any attempt to force Mr Rato to testify to a parliamentary committee.

Raul Limon, the Seville based political correspondent for newspaper El Pais, says:

"The cajas were banks who used regular economic rules but with a political background - so it's like getting a politician to hold your money. That's a caja. So maybe the politicians should be answering questions in parliament - and maybe they should be on trial. They paid three or four times the true value of land. They demonstrated economic growth and people believed they used the cajas to enhance social wellbeing - we now know they were buying land and selling illusions."

If Spain's banking crisis were happening in an essentially sound economy it might be containable. But if the banks do as calculated need somewhere between 100bn and 400bn euros to staunch the crisis, then Spain will need an EU bailout. And EU/IMF bailouts come with one condition: increased austerity.

Prime minister Mariano Rajoy's entire credibility rests on his ability to avoid a bailout. Indeed only months ago he was asserting Spain's "sovereignty" against suggestions it needed European help.

So the tussle being played out behind the closed doors of Madrid, Brussels, Washington and Berlin now involves trying to engineer a direct bailout of Spanish banks with taxpayers' money across the globe, without the need for Spain to accept bailout terms similar to Greece, Portugal and Ireland.

Spanish Prime Minister Rajoy Spanish Prime Minister Mariano Rajoy is attempting to avoid a full scale bailout

They're rushing to get this done because Greece seems likely to implode whoever wins the 17 June election, and because a Spanish sovereign debt crisis would be massive: the capital flight of 100bn in January to March this year would look puny compared to the three trillion euros that could potentially leave the bond and stock markets of Italy and Spain.

But in a place like Andalusia any increase in austerity will fall hard on people. It's an under-developed region where, as in so much of euro-bolstered southern Europe, the biggest economic player is the state. The landscape is spectacular: the Sierra Nevada with a few peaks of snow even in mid-May towering above rolling hillsides of olives, oranges and wheat.

But there's a global olive oil crisis: the regional government had to inject 62m euros into olive oil cooperatives to get them through the collapse in prices. The regional unemployment rate is 30% and many farm labourers feel trapped by the current crisis, which, says Lola Alvarez, is just an intensification of a land crisis which is "always there".

Lola is a union organiser at Somonte, a farm abandoned as unworkable three years ago which has now been squatted by upwards of 50 people who are trying to revive it as an eco-farm. The directions to Somonte are "drive to a certain kilometre marker and look for the flags".

The flags, of course, display the face of Che Guevara. It's early, so the occupiers - who sleep nose to toe on the floor of two tiny farm buildings - are still stumbling into the ritual of black coffee and roll ups that attends all occupy protests. Some are farm labourers, some itinerant anarchists, some both.

"Before the crisis, because of low pay on the land, the majority of farm workers switched to the construction sector. Their jobs were taken by migrants, and also by mechanisation. Now construction has collapsed there's very little work on the land."

Spain, so far, is nowhere near as fractious as Greece. Whereas in Greece, after two years of rioting and political incompetence, you got the rise of "anomic breakdown" - social rootlessness and hopelessness - Spain has done the opposite: people have clung to their families, their village roots, their religion (and their secondary religion which is football) - or in the case of the young they have formed placid protest camps.

But the austerity in Spain has, in truth, been mild. I ask Raul Limon of El Pais if Spain could go the way of Greece:

"If Europe does not support Spain, yes. So far people think Europe cannot let us fall - and as long as we think that, people are waiting for the solution. The moment people think Europe is letting us fall, people will stop complaining and start protesting."

At a political level, for all the perennial fractiousness of Catalan and Basque politics, for all the corruption allegations, the system is holding in a way that the Greek system did not. There is no rapid formation and fragmentation of parties; no collapse of elites into warring factions. Yet.

And Spanish people know better than anybody in Europe how nasty it can get if politics fails.

On the Somonte farm, out of the blue, the occupiers are buzzed by men flying powered microlites. It's fun at first, until they spot that two of the flyers are displaying Francoist flags and realise its an airborne counter-protest.

Lola points to an old man shuffling quietly at the edge of the group of farm workers. "That's my father", she says: In the civil war the local landowners, Francoists, made him drink olive oil and eat grasshoppers to force him to vomit up the "red" that was inside him.

She draws two lines down her cheeks with stiff fingers: "He cannot tell the story without crying".

 
Paul Mason Article written by Paul Mason Paul Mason Former economics editor, Newsnight

End of an era

After 12 years on Newsnight, Economics editor Paul Mason has moved on to pastures new and this blog is now closed.

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  • rate this
    +2

    Comment number 39.

    35. Hugh Oxford

    So the Bankers are takers or makers? Venga

  • rate this
    +1

    Comment number 38.

    @ 3. Jeremy James
    Who do you think it is that is paying for the anti-EU/Euro PR campaign we’ve seen these few years? Those are the only ones who would "win" if the Euro collapses.
    The “man on the street” in former euro nations is likely to find the cost of living rising as imports/exports become more expensive as currency converters take their slice from such transactions.

  • Comment number 37.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +2

    Comment number 36.

    "People vote for left wing governments, and then they're surprised when things go wrong."

    Right... Berlusconi, Sarkozy, Brown and Merkel are left wing....

  • rate this
    -6

    Comment number 35.

    People vote for left wing governments, and then they're surprised when things go wrong.

    Still, that's the problem with democracy. The takers have the same say as the makers.

  • rate this
    +15

    Comment number 34.

    So Spanish banks are not like UK banks.
    Regional rather than mega.

    And yet they are still failing.

    Agreed then. Not the banks fault.

    Rather Bankers.

    Think about it. The common factor - Bankers.

    They simply cannot be trusted and they WILL rob us.....

  • rate this
    +15

    Comment number 33.

    Does anyone miss the Florin, sestersi or groats? One currency or another, it matters not. What matters is living decently.

    This is madness writ large. Let the banks go. They are failed and are failing the states. Let the "investors" take a kicking. It is time. When the people suffer this much it is time to share the pain and regenerate.

  • rate this
    +2

    Comment number 32.

    24

    Proudhon & Winstanley enjoin that private property used to exploit is naked theft.

    Mutual cooperation will now be more effective a solution than markets, governments and taxes. Let the people start to free themselves.

    `Paz a los hombres: guerra a los instituciones'. I hope I have spelled that right: no doubt the multiple heirs of the CNT can correct me.

  • rate this
    +13

    Comment number 31.

    Capitalism is in collapse and this is most apparent in Spain where speculating in construction got entirely out of hand.

    Endless debt & passed on down chain, no one taking responsibility for naughty behaviour. Robbing Peter to pay Paul don't work anymore & now that is entirely unravelled. The debt must stop somewhere, but not at tax payers door. The debtors must pay their debts, no one else!

  • rate this
    +1

    Comment number 30.

    I've counted three direct references to "el Caudillo" in this thread. In 27 posts, that's not too far short of 10%. I'd recommend a few people to read Paul Preston's new book, "The Spanish Holocaust." It's cautionary, to say the least.

  • rate this
    -9

    Comment number 29.

    Spain have only themselves to blame. Not only do they encourage a black economy like no other, but they penalise and force out of business people who rent out unlicensed holiday villas and flats. Now that the fine for this crime (and by the way, they don't issue licences) is being increased soon 10-fold, there will be tens of thousands more properties for sale, depressing the market still further.

  • rate this
    +8

    Comment number 28.

    There are hudreds of Spanich and Italian young folk arriving in London every day and all looking for any kind of work. Just listen along the park benches and you will hear them making calls trying to find something

  • rate this
    +10

    Comment number 27.

    When people are expected to adapt to the demands of the social infrastructure around them, rather than vice-versa, you just know that something is going horribly, horribly wrong...

  • rate this
    +3

    Comment number 26.

    This isn't the fault of the Euro, it's the fault of the banks. Only the right wing media which is in cahoots with the banking system is stopping us in the UK from being aware of this. We need the Robin Hood Tax and we need it now! For the sake of countless lives, Europeans, mainly the elite right wing British (not brainwashed) need to grow a conscience. Billionaires are tripling in number...

  • rate this
    +4

    Comment number 25.

    The answer is not long at all. The pressures placed on Spanish society in general, to say nothing about direct financial, will inexorably roll and roll quick-style. Given the heightened state of European funds the system just will not be able to shore-up in time. Sad to say there will be panic in all sorts of places.

  • rate this
    0

    Comment number 24.

    stanilic @23
    Your questions echoed

    But NO idea of 'free-for-all capitalism' can 'work for all'

    We either agree Equal Dignity, compete to create work, contribute value

    Or we challenge each other to 'compete', for bigger or ANY share

    Crisis too big to end happily, other than with 'war-time' spirit

    MUST we stock-up 'tins of beans', wait to organise locally?

    Might Paul Mason readers give a lead?

  • rate this
    +18

    Comment number 23.

    12

    Making capitalism work is not a priority: it is an indictment.

    Why is government protecting an idea of capitalism that is not being allowed to function? It is not a strategy but an absurdity.

    Why is the state using the taxpayer as a human shield to protect the interests of the apparat?

    The world is upside down: it will soon be the time to put it right side up.

  • rate this
    0

    Comment number 22.

    Rajoy can't read his own hand writing. FACT!

  • rate this
    +3

    Comment number 21.

    "It's an under-developed region where, as in so much of euro-bolstered southern Europe, the biggest economic player is the state."

    That's an unfair generalization. The state is important in Spain's poor South. In Southern Italy, instead, the failure of the State gave way to the mafia, a government in the shadows. In contrast, Catalonia, Basque Country and North Italy are heavily industrialised.

  • rate this
    +4

    Comment number 20.

    This is a form of debt forgiveness and instead of giving the money to the banks directly and hoping they will do the right thing, it in effect 'loans' it to the homeless. This goes against the way capitalism works in the west, but that model is bust and needs rethinking. The current set of politicians are just finding ways to fix it the way it was, as that is all the know. That has gone.

 

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