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The Tale of the Two Spains

The financial crisis has split Spain into two: a Spain that works and one that doesn’t.

November 12, 2012

The financial crisis has split Spain into two: a Spain that works and one that doesn't.

There are two Spains. By that, I don’t mean the traditional division between a modern country and a retrograde one, or between an “official” one and a “real” one. Rather, we have a Spain that works and one that doesn’t.

The first Spain consists of leading companies, large, medium and small, that innovate and export. It also includes a tourism sector that remains very competitive.

The second Spain is linked to the housing construction sector, which has been in crisis since 2008. Today, the feeling predominates that Spain is all about the latter, when it really is not.

Rising unemployment and other adjustments made by companies to overcome the crisis are having a positive impact on Spain’s recovery. But this progress has not translated into improvements in the minds of people. Rather, the opposite is happening: gloom dominates.

This is very understandable. In recent decades, Spain has experienced enormous economic, political and social progress. Its one-directional process has now been broken.

Spaniards are not so much stuck feeling they have moved from being “new rich” to “new poor.” Rather, they feel that the country has run out of options and see nothing promising on the horizon.

This has even led some of the erstwhile protagonists of Spain’s transition to democracy and modernization to wonder if it was all worth the effort. Essential elements of those reforms — such as strengthening autonomy to a level never seen before in this country — are now being questioned. There also is the loss of credibility of many prominent institutions.

The demoralization is also due to the fact that no politician really dares to tell the truth. Spain has a government that prefers to operate in a step-by-step manner and shies away from articulating any grand visions that people find inspiring.

The political opposition is not doing much better. It tries to sell proposals that are really small-scale remedies.

“What we should be doing instead of all this incrementalism is to go ahead with laying out the truth, and then come up with a plan to seize the future,” says Carlos A. Zaldívar, the former diplomat and essayist.

Politicians need to say clearly that there is indeed a span of a relatively few years that will be the worst so far — but that we will only make progress if we are prepared to face them without sugarcoating.

Simply continuing to drag our feet until who knows when will not help. And it will only ensure that Spain will catch the old Latin American malady: complaining about the inequities of the present and dreaming about a better future, but without ever doing anything real to get there.

It would be doubly ironic if Spain falls into that trap. After all, much of Latin America is finally exiting from this self-imposed prison of dreaming about one’s potential and making real progress.

In other words, Latin American countries are now seizing the path that we Spaniards were on for decades after the end of the Franco dictatorship.

The example of Finland may be instructive in this regard. Finland experienced a true moment of crisis when its economy nearly collapsed after the fall of the neighboring Soviet Union in 1991.

It found a path out of the crisis because its government was able to build a broad social and political consensus around a strategy for success. Spain, however, is a more complex society.

But like Finland, to get over its current bout of depression, Spain needs to develop a comprehensive national agreement that results in a future-oriented strategy.

Unless it manages to do this, the net outflow of capital — which by August 2012 had reached 247 billion euros, a sharp reversal from the surplus of the same period a year before — will continue.

This means that not only are foreigners no longer investing in Spain, but many of the Spanish themselves are divesting and taking their funds abroad.

To reverse this trend, many of the holders of capital need to have reason to start believing in Spain again. Whether this change of mind happens or not will have major ramifications: If Spain’s elites do not believe in the country’s economic future, how can citizens at large believe in it?

Also weighing on people’s minds is Spain’s loss of stature in the world — and especially in Europe. For many years, Spain’s prestige rose. The crisis has changed that.

The clearest evidence is visible in Latin America. Any paternalistic attitude on the part of the Spanish simply has no place any longer. It’s almost the opposite: It is Latin America that is viewed as helping Spain.

None of the required changes will come easy. Fernando Vallespín, emeritus professor of political theory at the Autonomous University of Madrid, has argued that “citizens do not see politicians as capable of solving their problems. This inevitably raises the question of the legitimacy of the democratic system as it is designed, and it opens the door for the emergence of populist speeches on the right and the left.”

What adds to the country’s demoralization is that Spaniards feel that the big decisions about the country’s future are made outside Spain.

The real danger, therefore, is that Spain will regard itself not just as (currently) demoralized, but as (principally) defeated. If that feeling takes hold, it will take many more years to recover.

The sudden explosion of the issue of Catalonia’s independence is also adding to Spain’s sense of gloom. That is not the case in Catalonia itself, however, where the move has galvanized a large sector of the electorate, thinly disguising the pain of other, very real problems — such as the deep cuts in welfare spending that the Catalonian government has had to make.

Spain is now living through a crisis of political leadership. This has to be seen as part of a wider leadership crisis in Europe, if not the West in general. But in Spain, it is more acute.

Editor’s note: An earlier version of this article appeared in El País.


If Spain's elites do not believe in the country's economic future, how can citizens at large believe in it?

Spain risks catching the old Latin American malady — dreaming about a better future without ever doing anything real to get there.

Weighing on people's minds is Spain's loss of stature — and especially in Europe. For many years, Spain's prestige rose. The crisis has changed that.