Tag Archives: Spain

EU banking union a product of the euro crisis but also its solution?

bankia-protestThere is a dirty little secret at the heart of the euro crisis and it concerns Europe’s banks. Many politicians and much of the media have focused their attention on the role sovereigns – particularly in southern Europe – had in triggering uncertainty and economic instability in the single currency area but the part banks played in laying depth charges at the euro’s foundations has been largely absent from public debate.

Yet, most places you look, eurozone banks have left their mark through a mixture of risky practices, undercapitalization, and over-exposure to government bonds and the US subprime market. Ireland is the most obvious case, where taxpayers have been asked to stump up about 70 billion euros to bail out reckless and troubled lenders. Spain has just asked for a 40-billion-euro bailout for its banks, which fuelled an unsustainable property boom through cheap credit in the previous years. The most prominent example of the short-termism and entangled interest that led to this imprudent lending was Bankia, formed by the merger of seven savings banks, or cajas, in 2010.

Bankia has so far absorbed 19 billion euros of taxpayers’ money, shed 50 billion euros of assets as part of a restructuring and cut 6,000 jobs. French-Belgian bank Dexia found itself in a similar situation. France and Belgium have so far spent about 15 billion euros rescuing the lender and provided up to 85 billion euros in state guarantees after it was caught short by its reliance on short-term financing in 2008 and then to Greek debt in 2011.

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Our age of extremes

Historian Eric Hobsbawm, who died at the age of 95 on Monday, had the advantage of living through many of the momentous events he wrote so eloquently about. But his strength as a chronicler of the world’s major turning points was not derived just from his firsthand experience. It was Hobsbawm’s fine ability to understand and explain the context and consequence of developments that made him stand apart as one of the world’s great historians.

The analysis provided by Hobsbawm in the masterful “Age of Extremes” — an account of the turmoil that shaped the world between 1914 and 1991 — comes to mind in this era of uncertainty we’ve entered. Yet, despite the obvious connections that can be drawn between the failures of today and other periods of our relatively recent history, policymakers are showing an alarming disregard for the past. Hobsbawm would not have been surprised by this myopia. Writing in “The Age of Extremes,” first published in 1994, he lamented that history was so often expunged from people’s minds.

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A tragic common fate looms for Greece, Portugal and Spain

Even from a Greek perspective, the austerity measures the Spanish government adopted last week were alarming. The cuts to pensions and unemployment benefits, the rises in VAT and the rest triggered the shocking realization that yet another country is about to walk the same treacherous road of abrupt fiscal adjustment that Greece has been stumbling along for the last 2.5 years. But it was the sight of riot police clashing with protesting miners and their supporters in Madrid that really drove the chilling reality home. Whereas Greece has been suffering a painful but largely lonely death, Spain seems poised to commit a spectacular mass suicide. The reasons that led the two countries to this point are not exactly the same but it is now clear that the miserable realities they face are absolutely identical.

While Greece’s rotten public finances have pushed its banking system and the country itself to the edge of collapse, it is Spain’s overexposed and undercapitalized financial sector that is threatening to raise public debt to dangerous levels and destabilize the country. Ultimately, taxpayers in both countries are suffering. Spain’s decision to adopt a new round of austerity measures, though, makes it more urgent than ever to answer the question of whether this suffering is part of an effective strategy to exit the crisis.

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The World Cup: a measure of life

Illustration by Manos Symeonakis

“I have measured out my life with coffee spoons,” wrote T.S. Eliot in one of his poems. I know exactly what he means. I have measured out my life with cups, World Cups.

The significant moments in my life – meeting special people, saying goodbye to others, obtaining academic qualifications and reaching career milestones – all seem to have coincided with international football’s top tournament every four years. Obviously, things have happened in between World Cups but my recollection of them is a little blurry – like vaguely remembering the name of someone you met at a party while on your way to greet another person you actually wanted to talk to.

Every four years, I become the object of ridicule as I read up on the participating teams like a scientist preparing for a job interview at NASA, check the TV schedule with the fastidiousness of a railway stationmaster and spread out my World Cup wall chart like a general preparing for battle. I go through this ritual each time because I have always regarded the World Cup as a unique learning experience. “All that I know most surely about morality and obligations, I owe to football,” wrote Albert Camus. To paraphrase him, most of the important things I have learnt about life, I owe to the World Cup.

My first memories are of the 1982 tournament in Spain, when I would rush home from school during gloomy English summer afternoons to watch the teams play in the brilliant Iberian sunshine. The first incident that made an impression on me was in the Kuwait v France group game when the French, already 3-1 up, scored a fourth goal. Bizarrely, the Kuwait defenders stood still, allowing the French to hit the back of the net. They immediately remonstrated with the referee, claiming they had heard him blow the whistle during the build up to the goal. A sheikh who was president of the Kuwaiti federation stormed onto the pitch and demanded that the goal be cancelled. The Russian referee eventually caved in. I watched agog – this wasn’t the World Cup, this was my playground game being broadcast on TV. It was at that point that the tournament taught me my first lesson: there are no children and adults in this world, just small children and bigger ones.

Spain 1982 was also my first experience of Brazilian brilliance. The 1982 team is regarded by some as the most beautiful side never to have won the tournament. Echoing the remarkable Brazilian World Cup-winning team of 1970 – generally deemed to be the most entertaining to have won the trophy – the Brazil of 1982 played with panache and abandon, radiating optimism. Watching their yellow shirts dart across the screen felt like liquid sunshine was flooding into the room. Years later, I would read a book written by Garry Jenkins about Brazil’s 1970 victory, and his memories of watching the team on small colour TV in a tiny Welsh Village. “All coffee browns and ebony blacks, cobalt blues and canary yellows, their players and their playing came in shades I had never seen before. They have occupied a sun-kissed corner of my mind ever since,” he wrote in “The Beautiful Team.” I knew exactly what he meant.

The Brazil of 1982 would succumb to the eventual winners, Italy, in an epic game that finished 3-2. This match provided me with two more useful lessons. Firstly, Brazil’s defeat at the hands of the less imaginative but much more functional Italians made it clear that the most worthy are not always rewarded. Secondly, I came to realise that no boundaries, be they geographical, social or emotional, can contain the unifying power of sport. We were driving through what was then Yugoslavia when the Italians were taking on Brazil. We stopped at a village for something to eat but found the streets completely deserted. Like extras in a spaghetti western, we searched for signs of life before stumbling on the locals ensconced in cafe, watching the game together in absolute fascination. Ten years later, this same group of people would be torn apart by ethnic war.

In 1986, the football world gathered in Mexico and I was given special parental dispensation to stay up to watch the games being played in exotic-sounding places like Guadalajara and the Azteca Stadium in Mexico City. Two memories stand out from this summer – the first is recreating scenes from the World Cup on the football pitch with my schoolmates. We were all given names of the players we resembled and lunch breaks immediately became flights of fantasy in the afternoon sun. The other memory is more of a childhood trauma, which involved sitting on an Athens balcony on a hot summer night and watching Argentinean midfield genius Diego Maradona punch the ball into the net to set his team on the way to knocking my beloved England out of the tournament. Aged 11, I was in a complete state of shock. I did not for a second believe that authorities would let this stand and was convinced that the next day football’s world governing body, FIFA, would order the game to be replayed. When this didn’t happen, I started a petition. I only ever got around to collecting three signatures – two of them were my parents’ and the other was my grandmother’s. She had no idea who this dastardly Maradona chap was but he had clearly upset her grandson and that was all the reason she needed to sign on the dotted line.

My indignation at Maradona’s cheating blinded me to the sublime nature of his second goal against England that day, as he danced passed player after player to score what many believe is the best World Cup finals goal. Years later I would be able to marvel at how his balance and strength were for a few seconds in complete harmony with his improvisation and creativity. But in the summer of 1986, I was too busy coming to terms with the fact that cheaters sometimes get away with it and that fairness can prove as elusive in life as a stocky man from the slums of Buenos Aires weaving his way towards goal.

In Italy four years later, there was more anguish for England as they were eliminated by West Germany in the semi-finals. The match became synonymous with the tears of young English midfielder Paul Gascoigne, who was inconsolable after England’s defeat. I shared in his tearful dejection. The obliviousness of youth meant that I had never considered defeat was a possibility for the team I was supporting. Coping with its reality proved a test of my emotions. Coming a few months after my mother’s death, England’s loss revealed to me that pain and disappointment don’t come in neat packages but that they can crash in on you like waves, one after another, and you either stand up to them or face being swept away. Gascoigne, known simply as “Gazza” in England, never fully recovered from his disappointment in Turin in 1990. Although his career lasted almost another decade, it was blighted by injury, controversy and drink and drug problems. Gascoigne is still struggling with his demons in retirement and is a stark example of how fame can destroy people as well as create stars.

It was Gazza’s tears that first made me aware of the fact that I was not the only one experiencing moments of clarity thanks to the World Cup. It was also happening on a collective level. England’s unlikely run to the semi-final in 1990 and its unjust defeat to the Germans prompted a rare awakening of people’s conscience back home. It led to England increasingly trying to establish and project its identity through sport. More importantly though, the English had recast themselves in the role of gallant losers who wanted to be loved rather than aloof snobs. The game against the West Germans inspired a play, a film, a documentary and a host of books suggesting that England had emerged from the embarrassment of the hooligan- and Thatcherism-filled 80s with a new creative, positive energy.

At this point, I began to join the dots and connect the significance of what was happening on the field of play with what was taking place beyond the confines of football. This link was described most eloquently by journalist Arthur Hopcraft in his 1968 book “The Football Man”. “It [football] has more significance to the national character than theatre has,” he wrote. “What happens on the football field matters, not in the way food matters but as poetry does to some people – the way we play the game, organise it and reward it reflects the kind of community we are.”

My first visit to a World Cup was in 1998 when France hosted the tournament and the local team’s victory was certainly taken as a reflection of the successful integration of different ethnicities and nationalities in the country’s social fabric. Such powerful symbols are too important for politicians to ignore and it was at this tournament that I became acutely aware of how desperate leaders are to bask in sport’s glory. French President Jacques Chirac – who along the country’s other politicians had been largely oblivious to the tournament until France started to do well – attended the final with a France scarf awkwardly draped over his shoulders, looking as if he had mistakenly put on one of his wife’s shawls for the evening. If the Brazilian strikers had displayed the same opportunism against France in the final, he would have little to celebrate and no opinion poll “bounce” to enjoy after the match.

The enthusiasm displayed in Germany eight years later was much more genuine. I experienced first-hand a nation that embraced the event – not just its own team – and used the World Cup as an opportunity to break down stereotypes. This attitude was reflected in the country’s national team, which played with a freedom and attacking spirit that was untypical of its predecessors as it progressed to the semi-finals, where it was beaten by Italy. The Italians defeated France in the final, where it’s captain and the epitome of racial equilibrium, Zinedine Zidane, was sent off for headbutting an opponent.

Zidane’s dismissal proved to be the moment when French harmony began to disintegrate. Just as the team imploded at this year’s World Cup amid a bitter exchange of insults between players and coaching staff, so France appears a society ill at ease with itself and in search of a collective identity.

Germany is another country which is going through turmoil – political rather than social. Once the spiritual and physical driving force of the European Union, Germany is now suffering a crisis of conscience. So, it was no surprise to see Chancellor Angela Merkel in the stands of South Africa’s stadiums, cheering on her country’s young, effervescent team, hoping some of the positivity would rub off. In their progress to the semifinal, their determination to attack games rather than to rely on the all-out defensive tactics that have been popular with many teams helped to dispel the image of Germans as cautious conservatives who could not inspire others to admire or respect them. “In the history of German football, there have been many successes but they were expected, hard-fought and enforced. Achieved with limited skills, with accomplished destroyers who made life difficult for the star opponents, with iron feet, iron calves and an iron will,” wrote Die Welt daily after Germany’s historic 4-1 win over England in the second round. “Often our national team was strangely alien to us. We wanted to love them but we were unable to. They often found their way into the semi-finals and finals but rarely into the hearts of fans.”

The performance of individual teams apart, South Africa’s World Cup has taken football’s significance to another level. First of all, there was an opportunity for Africans to come together, especially when Ghana were the continent’s last remaining representatives in the competition. “Ghana’s exploits, and the team’s epically tragic exit, arguably did more for grassroots African unity in a few days than the African Union did over decades,” wrote Simon Tisdall in The Guardian on July 7. “It also re-focused attention on the lack of African coaches and under-investment in the sport and the young people that play it.” FIFA certainly wanted to make this last aspect – offering young South Africans an opportunity to learn football – to be a lasting legacy of this World Cup, The efforts that have been made so far have been laudable. Whether they will have a lasting impact remains to be seen. However, one of this tournament’s greatest legacies will be something that FIFA could never plan. It’s the fact that thousands of Europeans, Asians, North and South Americans have had first-hand experience of the huge divide in living standards that exist in South Africa and of the barriers that still exist in this beautiful country. It’s the thousands of foreigners who have visited Robben Island over the last few weeks and have been reminded or made aware of the damage that hate can wreak. It’s the fact that outsiders have had an opportunity to contribute to South Africa’s future, like the group of England fans who built an orphanage in the Valley of a Thousand Hills. The World Cup won’t make South Africa a fair or equal society but if it can help push it in that direction, then it’s been a worthwhile effort.

So, now we look to Sunday’s final between the Netherlands and Spain, which will no doubt also provide plenty to absorb. The winners will see at as confirmation that their country is doing something right while the losers will hold an inquest into what they are doing wrong. For the rest of us, there will be something very tangible to take away from the game – it will be less than 1,460 days until the next tournament begins in Brazil, when we can all attempt to measure out our lives, individually or collectively, again.

Nick Malkoutzis

And now, for my next trick…

Illustration by Manos Symeonakis

To many people, the European Union is a fantasyland whose very existence and enduring success defy logic. It’s like an old magic trick that continues to captivate audiences, even though everyone’s seen it many times before. But the EU does what all good tricks do: It encourages onlookers to suspend their disbelief and look at the bigger picture rather than the details.

This unique quality was underlined on January 1, when Spain, a country whose economy is disintegrating, took over the presidency of the 27-nation bloc in the middle of a staggering financial crisis with the promise that it would lead the EU to recovery. The spell which the EU has cast over its audience was highlighted by the fact that hardly anyone batted an eyelid at the incongruousness of this situation.

A number of years ago, a Nigerian general whose army had just invaded another African nation appeared live on the BBC World Service to declare that his soldiers had “brought democracy” to the country in question. “That’s great, will you now bring it to Nigeria as well?” was the sharp response from the radio presenter.

Something similar comes to mind when reading the message posted on the official website of the Spanish EU presidency. The country’s prime minister, Jose Luis Rodriguez Zapatero says Spain’s main challenge will be to help Europe build an economy that is “more productive, innovative and sustainable.” But surely if the Spaniards knew how to do that, they would already be applying it to their own economy.

While we in Greece are caught up in our own economic crisis, it’s easy to overlook the dramas being played out in other EU countries, such as Spain. The country’s public deficit for 2009 exceeded 70 billion euros – five times as much as the previous year – to stand at 6.79 percent of gross domestic product. It’s still only about half of Greece’s but nevertheless up 1.2 percent on the 2008 figure.

And like Greece, Spain recently had its credit rating downgraded. Standard and Poor’s lowered the country’s rating from “stable” to “negative” and warned that it faced a prolonged period of sluggish economic growth. But Spain’s most dramatic problem, and an area where even Greece’s disaster of an economy cannot match it yet, is unemployment. The jobless rate stood at almost 20 percent at the end of last year, which is the second-highest in the EU after Latvia. Incredibly for Europe’s fifth-largest economy, unemployment among Spaniards aged 16-24 has reached 42 percent.

All this makes Spain’s task of providing leadership on economic recovery seem far beyond its capability, while its promises of guiding the EU onto the path of financial security ring hollow. Zapatero’s announcement on December 30 that he was introducing a package of measures to help ailing farmers in his own country will have been of interest to our prime minister, George Papandreou — who faces the threat of farmers blocking highways this month — but is unlikely to have convinced Europe’s economic giants that Spain has creative answers to the Union’s economic dilemmas.

In fact, Spain’s challenge is even more complex than it first appears. During its presidency, the Union needs to agree on a replacement for the bloc’s long-term growth strategy, known as the Lisbon Agenda. The plan was meant have made the EU the world’s most competitive economy by this year. It has patently failed and a new 10-year plan, known as the 2020 strategy, is likely to be adopted at an EU leaders’ summit in March.

Before then, on February 11, the EU will hold a special summit on the economy, when Greece’s crisis and the danger it poses to the euro will be at the forefront of discussions. It’s then that Zapatero and his government will truly be tested, since, beyond having to solve economic riddles at a time of extreme turbulence, Spain will have to deal with an institutional conundrum as well. Its presidency is the first since the Lisbon Treaty took effect last month, creating the posts of President of the European Council, which has gone to former Belgian Prime Minister Herman Van Rompuy, and Foreign Policy Chief, which is being filled by British politician Catherine Ashton.

Normally, Zapatero, who is experiencing his toughest year since taking office in 2004, would be looking forward to taking over the EU presidency, as it gives him the opportunity to boost his plummeting popularity at home and cultivate his image of being Europe’s Barack Obama – a title several of his EU colleagues, including Papandreou, have staked a claim to. But the fact that he and his foreign minister, Miguel Angel Moratinos, now have to tread a fine line between asserting Spain’s will on the EU and conceding ground to Van Rompuy and Ashton, means the Iberians could lose more than they will gain over the next six months.

Moratinos has pledged that Spain will fulfil its role with “modesty and discretion” but it already appears that Madrid is determined to shape events over the next six months according to its aims and needs. For instance, the Zapatero government has already organized seven summits between the EU and international partners, most of which have a clear relevance to Spanish interests: North Africa (Morocco on March 7-8 and Egypt on June 5), Central and South America (Mexico on May 15-16 and Latin American and Caribbean countries May 18-19) and with Mediterranean countries on June 7.

By using its unique position in the world to bridge the gap between Europe and other regions, Spain is in a sense augmenting the rotating presidency and underlining the value of having different member states set the EU agenda. However, the new institutional setup means Madrid may have set itself on a collision course with the EU’s supremos.

Although Van Rompuy is meant to represent the EU in international meetings at head-of-state or government level, all the summits mentioned earlier will be held in Spain, so Zapatero will undoubtedly want to play a significant role. Likewise, Moratinos has organized an informal meeting of foreign ministers in Cordoba on March 5-6 even though foreign policy is now Ashton’s responsibility.

Furthermore, despite the introduction of an EU president and foreign policy chief, the country holding the rotating presidency still retains significant influence: It continues to chair the weekly meetings of EU ambassadors, when the groundwork for many policies is carried out, and it presides over many committees that prepare Union initiatives in a range of fields.

If the EU magic trick is to continue wowing audiences and not to be exposed as a cheap stunt, Zapatero will need to display immense skill to ensure that Spain’s role dovetails with those of Van Rompuy and Ashton. Managing this while also reviving his country’s economy and getting 27 member states to agree on a common strategy for future growth requires a sleight of hand that seems too incredible even for the fantastic world of the European Union.

This commentary was written by Nick Malkoutzis and first appeared in Athens Plus on January 8, 2010.