Spain’s “Government of Scoundrels” Stokes Diplomatic Row

By Don Quijones, Raging Bull-Shit.

Since taking office in November 2011, Mariano Rajoy’s government has done pretty much everything within its means to alienate the Spanish public. Even before completing its maiden year in office, it had broken almost all of its key election pledges. Taxes would not be hiked, it had promised; but they soon were. Banks would never be bailed out with public funds, public spending on vital services would not be cut, unemployment would be a priority, the economy would improve, public hospitals would be safe… all turned out to be lies.

And that was just the first year. In the second year, things got really interesting when almost the entire senior rank and file of Rajoy’s government, including Rajoy himself, was implicated in the mother of all scandals, the Bárcenas affair.

Since then the government’s rap sheet has just grown and grown. Among their myriad crimes, misdemeanors and transgressions, Rajoy’s top lieutenants have solicited bribes from property developers and consorted with smugglers and drug traffickers on luxury cruises; they have persecuted judges and pulled bankers out of jail; they have brought religion back into the classroom and exploited the country’s deep-seated social, economic and political divisions for its own short-term gain. And yet not a single minister has walked!

However, in the early summer of this year it seemed that, at long last, its sordid past had finally caught up with Mariano’s merry band of mercenaries. And this week was to be the week, as a number of Rajoy’s most senior, most trusted colleagues lined up to take the witness stand in the trial against Luis Bárcenas. Surely this time round, enough dirt would cling!

But if there’s one thing you’ve got to hand to Rajoy’s team of ministers, it’s that they don’t throw in the towel — at least not when it comes to their political careers! No matter what charges they face or how much evidence stacks up against them, they refuse to resign.

Whereas most other governments from most other civilized countries would have abandoned office a long time ago, with their heads bowed and their tails dangling between their legs, the Rajoy government soldiers on, its confidence undented. With the survival instinct of a cornered rat on a sinking ship, it will do whatever it takes to survive.

Tit for Tat

And that’s precisely what it did this week. In the most cynical and least subtle way imaginable, it sought to divert attention from proceedings in the Bárcenas case by engineering a new diplomatic crisis with the United Kingdom over its overseas colony Gibraltar.

Rarely has Samuel Johnson’s adage that “Patriotism is the last refuge of a scoundrel” seemed so apt.

Naturally, Her Majesty’s Government — one of the most adept and devious scoundrels of modern history — has milked the crisis for all it’s worth. To the usual patriotic fanfare it dispatched three war ships to Gibraltar, and even threatened to lodge a complaint with the European Commission about Spain’s decision to increase border controls and introduce a 50-euro fee to enter the colony.

Spain, meanwhile, has threatened to take its grievances to the United Nations and even join forces with Argentina over the Falkland Islands dispute.

The diplomatic crisis, which began with a dispute over fishing rights in Gibraltarian (or as Spain claims, Spanish) territorial waters, risks aggravating already strained relations between Spain and the UK, two of Europe’s biggest economies. In May reports of Spanish hospitals refusing to treat British tourists without health insurance — in direct contravention of European law — provoked outrage in the UK. Rajoy’s government has also alienated many of its expat community, including thousands of British retirees with second homes in Spain, by demanding that they declare all their overseas assets.

One can perhaps understand Spain’s desperation to reduce spending and raise taxes — anything to keep the Troika off its back (see Greece) — but by targeting British expats and tourists, it risks doing untold damage to its tourist industry, one of the last-remaining sources of economic growth it has left.

That’s not to say, however, that the worsening tensions are all Spain’s doing or that Spain doesn’t have justifiable grievances vís á vís Gibraltar; after all, where there’s tit, there’s usually tat! In May this year, for example, the Daily Telegraph aroused Spanish tempers when it published an unflattering editorial piece provocatively titled “Spain is Officially Insolvent, Get Your Money Out While You Still Can,” which, as you can imagine, hardly went down well south of the Pyrenees.

Spain is also rightly aggrieved by Gibraltar’s refusal to outlaw the practice of bunkering — the sale of fuel from vessels in the Strait of Gibraltar, which it claims is harmful to the environment (as well as, no doubt, Spanish sales of fuel to shipping fleets) — or tackle the widespread smuggling of tobacco through its diminutive territory.

A Dangerous Game

Three long centuries have passed since The Treaty of Utrecht ceded Gibraltar to Great Britain. Even so, for many Spaniards Gibraltar is every bit as Spanish as it was in 1713. And by tapping into this deep-seated nationalist sentiment, Rajoy & Co have managed to energise its base while also scoring cheap points against one of Spain’s largest European trading partners.

While many on the left in Spain have rightly dismissed the government’s provocations as a smokescreen for the PP’s sordid political scandals, many on the right — in particular, the PP’s natural base — have predictably rallied around the cause of Spanish territorial integrity.

Just last week, the Daily Telegraph published a poll asking readers whether Gibraltar should belong to Britain or Spain. Once news of the poll went viral in Spain, a “digital armada” burst forth from the Iberian peninsular. The result was that over 10 times more Spaniards than Brits participated in the poll, giving a massive majority to the pro-Spain position.

It is testament to just how effective nationalism can be as a diversionary tactic — something that shrewd kings, queens and tyrants have known and exploited throughout European history. Franco himself frequently used Gibraltar and Anglophobic sentiment as an effective rallying tool. And now Rajoy’s PP — whom many on the left view (not wholly unfairly) as Franco’s rightful heirs — is following the same tired old script.

But in provoking a diplomatic crisis with one its most important European trading partners and opening up many of Spain’s deepest political and social scars — scars that have festered under the surface of Spanish society for decades – Rajoy’s government risks doing irreparable harm to the country’s economic and social cohesion. And all for the sake of its own political survival, one miserable day at a time.

And while the risk premiums on Spanish debt may be at their lowest point for two years — to the delight of the financial markets — the reversal is owed exclusively to Draghi’s empty promise to do “whatever it takes” to save the euro and is no reflection whatsoever of the bleak economic reality here in Spain. When reality returns this autumn one can expect the spreads to once again widen very quickly.

Autumn will also bring a whole new set of threats and challenges to Rajoy’s government, far beyond the legal implications of the Bárcenas case. In September the Catalonian separatist movement is expected to hit the streets in bigger numbers and with greater passion than ever before, to commemorate the 300th anniversary of its ultimate humiliation and loss of independence to Spain (another direct consequence of the Treaty of Utrecht).

There is also the foreboding prospect of Rajoy eventually agreeing to apply the Troika’s latest round of austerity medicine (higher VAT and reduced salaries), along with the inevitable detrimental effects it will have on the country’s internal demand (lower), business closures (higher), unemployment (higher) and tax revenues (lower)

And all the while, Spain, with its failed government of determined scoundrels, edges that little bit further toward economic and societal collapse. By Don Quijones.

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