The Diplomat in Spain

The Spanish Prime Minister, Mariano Rajoy.

Cristina de la Hoz. Madrid.

After the celebration of the European elections, Prime Minister, Mariano Rajoy, has a busy agenda ahead of him to finish what is left of his term in office and run in the next general elections with the prospect of confirming his victory in 2011. Although it is true that these have been two years and a half of hard adjustments and the main part of the structural changes has concluded, the Executive maintains its reforming agenda, in good part because the unemployment rates in Spain are still unbearable, putting us, along with the bailed out Greece, at the head of the European Union.

Without a doubt, one reform standing out in this agenda is the one of the financial system, destined both to improve the raising capacity of our taxation system and to encourage growth and employment, according to the declaration of principles that the Government makes in the National Plan of Reforms passed in April and presented in Brussels.

Another pending issue to complete is the one of the democratic regeneration in a term marked by two great chaos of corruption that have affected and still affect PP and PSOE and have led the political class to the top of the citizens’ concerns. The papers of Luis Bárcenas, former treasurer of the PP, and the supposed millionaire fraud of Andalusia’s Labour Force Adjustment Plans (ERE in its Spanish acronym) have finished by undermining the confidence in the system. Everything combined with the deep economic crisis contributes to create some kind of “perfect storm”.

In addition to pending reforms, the Prime Minister will have to manage the difficult situation generated by the pro-independence bet of the Generalitat’s president, Artur Mas, in what is one of the biggest challenges presented to the State of our democracy. Catalonian secessionists have called a referendum of self-determination for 9 November without legal coverage and they seem willing to declare themselves in revolt.

Next, the ten duties that Rajoy has on the table for the rest of his term in office are described in detail.

Financial reform

This is, without a doubt, the star project of the Government for this year. The objective is to present it during the second semester so that it takes effect in 2015, gathering some, but not all, the contributions made by a commission of experts that have already finished their work. With this reform, they intend to modernize the taxation system; to eliminate what they describe as the discouraging slant of the employment and the low fundraising, as well as contributing to the tax consolidation, among other goals. Rajoy already announced, during the last debate of the State of the Nation, that those workers whose income is under 12,000 euros a year will be free from taxation. Besides, tax rates will be reduced in low and medium incomes, tax bases will be extended and personal minimums for children will be increased. However, taxes on assets, environment and activities of the financial system can be increased. This reform also intends to eliminate two weakness of our system: tax evasion and tax fraud, quite above the European average.

Employment

After the celebration of these European elections, the Government has announced the passing of the Spanish Strategy of Activation for the Employment 2014-2016. The Executive of Mariano Rajoy has estimated at 600,000 the jobs that will be created between this year and the next one, which will make possible, according to estimates of the Ministry of Finance, to end the term with less unemployed people than when it started. This plan includes the set in motion of specific operational plans to encourage youth employment as well as to increase the training and education levels, with a total amount of 2,360 and 2,130 million euros, respectively. In order to do that, a new model of vocational training will be implemented. There will also be regulation developments of the Law on Employment and measures addressed to link active and passive policies. In relation to the subject of fight against fraud and black economy, the drafting of a new law to order the system of work inspection and Social Security is planned, as well as the creation of a National Office of fight against fraud.

Credit for companies

Last 28 February, the Cabinet got to know the text of the draft bill for the Promotion of Business Financing, which will have to be passed in the next months. The objective is to turn the credit tap on so that the SMEs can have direct access to financing, which is being refused at the moment and which is one of the main causes for the economic suffocation. The new Law will force, for example, to establish a forewarning system when financing is going to be cancelled by the bank, the functioning of the Mercado Alternativo Bursátil will be boosted and the “crowdfunding” will be regulated establishing limits for each investor as well as the transparency of the electronic platforms where contacting investors and projects directly.

Public Administrations

Last year, the Government passed an ambitious reform for Public Administrations intended to avoid duplicities between the local, autonomous and state levels. All this was summarized in a big report made by the Commission for the Reform of the Administration, also known as CORA. Of the 221 measures contemplated by the report, 63 have already been implemented. The rest is under execution. In this section, there are two projects to develop this year: the reform of the General Law on Subsidies as well as the Law on Juridical Regime of the Public Administration and of the Common Administrative Procedure. With the first one, they intend to control the granting of public aid to private activities, improving the coordination between the different administrations. With the second one, the creation of public organizations or companies and the means provided to them will be strictly supervised.

Autonomous Financing

The Government prefers to postpone this reform despite the criticism that the current model is receiving by the autonomous presidents of the PP, who have publicly demanded Cristóbal Montoro to sit them in a negotiating table. Montoro committed to come to an agreement before the end of the year in the Council of Tax and Financial Policy (CPFF in its Spanish acronym) a new system that will eliminate the distortion of the current one. However, at this point, it seems that he will limit himself to give some finishing touches coinciding with the tax reform, which means that the changes will be reduced to the participation of the Autonomous Communities in the State revenue. Moncloa does not want to open the thunder box, so it will limit itself to make a balance of the current Law on Finance postponing the new model until next term. Artur Mas’s pro-independence bet has a lot to do with this delay, since the Generalitat would turn to the Council not only with a request of tax agreement, but, probably, with the demand of a Treasury for an independent country.

European Agenda

Rajoy has set an objective for himself: putting pressure on the community institutions to end the bank unity once the Single Resolution Mechanism is set in motion this April. Immigration also appears in the Government’s agenda, given the condition of our country as Europe’s south border with the pressure put on Ceuta and Melilla. It proposes the strengthening of the cooperation mechanisms with the countries of origin as well as the activities of Frontex and redoubling efforts in the fights against the trade of human beings. Besides, the head of the Executive will have to propose a new European Commissioner, who will also be vice-president of the Commission, once the mandate of the socialist Joaquín Almunia is finished this autumn. The appointment of Miguel Arias Cañete is considered a certainty, being considered as unblemished after his polemical words on the “intellectual superiority” when discussing with a woman. Moncloa seems also willing to fight for the presidency of the Eurogroup. The minister of Finance and Competitiveness, Luis de Guindos, seems to be born for that destiny if Spain has possibilities of aiming at that position. That would force Rajoy to tackle a new restructuring of the Government.

Fight against corruption

Last February, the Government sent two draft bills to Cortes providing for what has been called the “anticorruption package” in a term marked by the “Bárcenas’s case” and the one of the false Labor Force Adjustment Plans. One is the draft of the Organic Law on control of the economic-financial activity of the parties and the other the Regulating Law on the exercise of the government official of the General Administration of the State, which are intended to be passed this year during the second semester. With the new regulation, donations to parties made up of corporate people as well as cancellations of debt by the banks will be banned and the controlling capacity of the Court of Auditors will be increased. Besides, a gap in our system, which lacks the statute of the civil servants, will be covered. These will have no criminal record on some crimes such as terrorism and will have to make a declaration of assets at the end of their labour. But, maybe, the most striking part of this reform is the regulation of the role of treasurers in the party, who will have to appear at the House of Commons.

Reform of the Abortion Law

This is the great mystery of the legislature. For the moment, it has been kept a secret to avoid its interference with the electoral campaign, knowing full well that this is a territory where the PP, the Government and their territorial barons move with clear discomfort; some of them, like the Galician Alberto Núñez-Feijóo and the Extremaduran José Antonio Monago, very critical. As of now, there are no compulsory reports from the General Council of the Judiciary (CGPJ in its Spanish acronym) or from the Finance Ministry, although in the Council there is already a declaration against the reform of one of the speakers chosen. Until the aforementioned reports exist, the reform will not be sent, modified or not, to the last consultative body, the Council of State, where it would fall in the second section, led by Miguel Rodríguez-Piñero, former president of TC governed by Felipe González. There are also outstanding members of the Government and the PP who prefer to “bury” this reform definitively, although Justice assures that they are working on it so that it sees the light this term.

Catalonian pro-independence challenge

It is, without a doubt, the question on which the political debate will be focusing from now until the end of the term with a key date marked in red on the calendar: 9 November, the day of the unilateral referendum of self-determination and, therefore, illegal. Rajoy was conclusive concerning the last day 17 during an electoral speech in Barcelona: “all the Spanish people decide what Spain is. Not a single Spanish person can be deprived of the right to decide the future of their country, because this is democracy, this is Constitution and that is respect towards a history of many centuries of our country living together and in harmony”. In any case, they will be driven to administer an undesirable situation that, as opposed to what it seems, can have a happy solution being convinced, as they are in Moncloa and in the PP, about the fact that the pro-independence bet has taken pro-independence campaigners to a dead end. Firstly, because in the case a unilateral referendum is celebrated, it would lack of any type of legitimacy, not only in Spain, but also in Europe. Without census, without official recognition, it would just be a show for pro-independence campaigners. Secondly, because if Artur Mas is forced to bring the elections forwards for the second time having these a plebiscitary character, ERC and CiU would not reach the majority needed (90 seats) to tackle a statuary reform even in the case they added the votes of IC and CUP. These, for example, were data provided by the last barometer of “La Vanguardia”, published last 12 May.

Electoral Calendar

After the celebration of these European elections, Rajoy and the PP start to prepare the next date at the polls, which is, the local and autonomous elections of the last Sunday of May next year. Rajoy’s territorial power is immense, although now positions as important as those of Madrid and Valencia are in danger. In fact, the Spanish capital and the Community of Madrid are the ones giving more headaches to the seventh floor of Génova.  Right now, there are no clear candidates and Rajoy cannot allow himself the luxury of losing any of the two institutions. These elections have also the virtue, or the vice, of turning into some kind of primaries for the general elections, which will take place next year. However, two other referendums might sneak into the calendar, according to the forecast made in Génova: it is about bringing forward both elections in Andalusia and Catalonia, where the prospects of the party led by the Prime Minister are not at all promising.