Opinion

Corralito in the distance

photo_camera AFP/JOHN THYS - El presidente del gobierno español, Pedro Sánchez (izq.), el presidente francés, Emmanuel Macron (der.), y la canciller alemana, Angela Merkel (der.), examinan documentos durante una cumbre de la UE en Bruselas el 20 de julio de 2020

The disbursement of the first advance of European funds for Spain unleashed euphoria. It was the expected manna with which the government and companies wanted to counteract the gale of pessimism that flooded the country since the pandemic broke out. 9 billion euros, 13 per cent of the 69.5 billion euros in non-refundable transfers from the Next Generation EU funds. The rest of these funds will come over seven years, provided that the European Commission's requirements are met, which include a series of non-ideological structural reforms that are currently nowhere in sight. What is more, it would seem that the projects approved in the Council of Ministers are going in the opposite direction to the demands, not only of the European Commission but also of the so-called "frugal countries", the main savers and taxpayers in the EU, and therefore the ones that will be looking most closely at Spain's accounts to continue releasing this non-refundable money, the only one requested by Madrid, which for the moment has not requested the other 70,000 million euros for which it could be eligible, these in the form of loans to be repaid. 

As chance would have it - or perhaps not - the Bank of Spain published the amount of public debt as of June at almost the same time. And it turns out that what is owed by public administrations (government, social security, autonomous communities and local corporations) increased in that month alone by 23,478 million euros, reaching the astronomical figure of 1.425 trillion euros. A figure that is not the real public debt, as it subtracts what is owed to public administrations from the gross public debt. This is a correct accounting operation, but it serves to hide the fact that the debt of public administrations is actually 1.7 trillion euros. 

Although the figure is huge, we should also add the debt contracted by entities whose guarantors are precisely the public administrations, but which are not accounted for: AENA, ADIF, RENFE or the ICO guarantees. No data is provided on this, but various estimates put it at a further 600 billion. In total, therefore, the real total public debt would be around 2.3-2.4 trillion euros, equivalent to all that Spain produces in a period of almost two years. 

Almost simultaneously it has also been announced that Spaniards have managed to save more than ever before: specifically, as of July they had 942.8 billion euros deposited in banks and savings institutions, the highest figure in the historical series that begins in 1989, and 50 billion euros more than in July 2020. Fear of what might happen in the near future seems to have encouraged this popular movement to save something for tomorrow, at least among those who can tighten their belts even more and put something aside at the end of the month. 

Chilling comparisons

It is very tempting to compare all these figures, and the first thing that jumps out is that all the savings of the 47 million Spaniards would not even cover half of the gigantic public debt incurred, increased by more than 20% in Pedro Sánchez's three years at the helm of the Spanish government. 

A second consideration is that the amount of European aid funds does not cover a truly significant percentage either, and this, moreover, with the demands of the European partners. The second EU disbursement of a further 10 billion is scheduled for the end of 2021, but unlike the first instalment, the second will require positive verification of what the funds will be used for. Organisations such as Ecologistas en Acción are already warning that these funds, charged to the Recovery and Resilience Mechanism, are neither green nor will they lead to the ecological transition that is so often advertised; what is more, they consider that they are already fattening new bubbles within the globalised extractivist model. 

In this extractivism, the savings of Spaniards are already suffering severe cuts, affecting all social strata. The meteoric rise in electricity and fuel prices is spreading to all other economic sectors, many of which are unlikely to withstand such a brutal onslaught. The political industry, the only one that is growing at an unbridled rate, whether under the auspices of commissions, observatories, expertise, consultancy or academic consultancies, which sprout from the very numerous institutions, is spared from the cuts. Nor are there any official figures quantifying the turnover of this industry, whose productive capacity is more than doubtful, but not its infinite reproductive multiplication.

There is not the slightest doubt that the rise and appearance of new taxes will, along with inflation, put a squeeze on Spaniards' pockets, reducing their ability to save. It is quite possible that this will not be enough, insofar as runaway public spending will be impossible to balance with income. It is then that the temptation might arise to look for imaginative formulas, already tried on numerous occasions and in numerous countries, always with the same result: a corralito, in which the money deposited is exchanged for paper money for a future that never arrives. A situation, by the way, which nevertheless tends to give birth to a new class of privileged and opportunistic billionaires who emerge from nowhere as if by magic.