Ángel Collado
The President of the Government, Pedro Sánchez, has clashed with the European Central Bank over his special tax on banks, which comes on top of his failure to fulfil his commitments to the European Union on economic reforms.
The coalition government continues to fail to take measures to support the pension system or to make the distribution of European funds transparent and flexible.
Because of his populist economic policy or mere management ineptitude, according to the Popular Party, the head of the government is risking European aid for recovery in order to avoid announcing decisions on adjustment or rational spending in the coming election year.
The problem for Sánchez is that the postponement of the pending measures means that they will all come together with the request for the third instalment of aid, some 7.7 billion euros, scheduled for these days. In addition, the draft General State Budget being processed by Congress includes another 20 billion euros in revenue from the same source of European aid. It is an item that the government itself acknowledges that it is quite possible that it will not arrive in time to balance the accounts.
With the request for the third tranche of funds that closes the current financial year, the European Commission will assess the degree of compliance with the objectives committed to by the Sánchez government, which include the new contribution regime for the self-employed, the new law on occupational pension plans and some modifications in the area of energy taxation. All these measures are at the negotiation or legislative stage, but none of them have been implemented.
However, the government’s biggest breach is the lack of control over the effective destination of the aid. The commitment was to set up a computer platform called “Cofee”, which would serve as a tool for monitoring the investments made by the different administrations with European funds. It was supposed to be operational in the third quarter of last year, but this autumn it is still not fully operational.
The government has begun to recognise the accumulated delay in the distribution of aid and is seeking the support of other countries such as Portugal to press the EU for more time to approve and execute the corresponding investment plans. The original agreement was to have “legally” committed the destination of 70 per cent of these recovery funds this year.
Sánchez is running behind schedule, hiding behind bureaucratic problems despite a lack of transparency, while the opposition suggests that he may also be guided by electoral interests and leave specific investment announcements to prepare for the election campaigns of the local and regional elections in May and the general elections at the end of the year.
The other major breach of the coalition cabinet with the European institutions concerns the sustainability of the pension system. Since September, the presentation of the promised “intergenerational solidarity mechanism” to clarify the future of pensions has been awaited in Brussels and Madrid.
Instead of closing the debate and negotiations on extending the number of years of contributions by workers or raising the retirement age, the government has included in the State Budget a new increase in pensions, in line with inflation, which could mean an added cost of at least 14 billion euros.
The pension system went into technical bankruptcy years ago when the contribution of employees and companies was not enough to cover the benefits promised, and the State, through the ordinary means of the Budget.
In this context of delaying or directly failing to fulfil the economic reform commitments acquired with the European Commission, Sánchez’s government is also refusing to depoliticise the judges’ governing body, the General Council of the Judiciary, as urged by Brussels. And the European Central Bank’s recent disavowal of its special tax on financial institutions also appears now.
The coalition cabinet has taken the ECB’s criticisms very badly in a report that, according to its spokespersons, is not binding, and leaves the improvisation of its economic policy in evidence. The report in question reproaches the Spanish government for not having studied the negative impact on the credit system and the legal possibility that, in the end, the tax will fall on the citizen. These are the same criticisms made by the opposition in its day.
Sánchez’s reaction has consisted of confirming his commitment to the populist message (it is a tax against bankers for the benefit of citizens, he says) and blaming the rapapapolvo on the conspiracy of an ECB vice-president, Luis de Guindos, who was a PP minister and before that a bank manager. Although the report is signed by the president, Christine Lagarde, in person. Another pre-electoral resource for next year.