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Spain, Ireland, Italy and Greece: Which One Doesn't Belong?

If no longer -- thank goodness -- the geo-political cockpit of Europe (caught between rival ideologies in the civil war era), Spain cannot be dismissed as a periphery or marginal country out of step with the European project. Spain has all the features of a highly efficient and accountable country, from its ability to produce majority governments from both the respectable left and right, its elaborate system of federalism, and its increased multicultural identity.
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The more I travel to the individual focal points of the eurozone crisis, the more I appreciate the difficulty of lumping these countries together. In part, this is a normative issue, as talking about the PIIGS (Portugal, Ireland, Italy, Greece and Spain) or the so-called Club Med countries becomes less humorous when you are actually on the front lines of the crisis. But it is also a question of solid comparative politics and economics.

Both of these points were reinforced to me as I went to Spain last week to attend the big International Political Science Association conference. You don't have to be an expert on Spain, or Madrid and the surrounding Castilla y Leonarea more specifically to appreciate the extent of pride that underscores the national and regional mentality. In part this pride is a function of the imperial past so evident in the grand boulevards and museums. But it is also a pride that goes hand in hand with the transformation that has taken place since the Spanish Civil War of the 1930s and the ensuing years of the Franco regime. Having been to Madrid during his regime (and even catching sight of the Generalissimo coming out of a bullfight at the Plaza de Toros), it is easy to recognize and appreciate how far Spain has come in terms of not only economic modernization but also in terms of social equality and tolerance.

If no longer -- thank goodness -- the geo-political cockpit of Europe (caught between rival ideologies in the civil war era), Spain cannot be dismissed as a periphery or marginal country out of step with the European project. Spain has all the features of a highly efficient and accountable country, from its ability to produce majority governments from both the respectable left and right, its elaborate system of federalism, and its increased multicultural identity.

The lumping of Spain in with other countries as PIIGS or Club Med is not only ethically problematic (a point that extends beyond Spain to all of the countries placed in these categories) but misses the mark about the particular problems of Spain. Spain appears to be in trouble less because it is simply another Greece (with its massive patronage-driven bureaucracy), or Ireland (with its housing bubble and short-cut economic strategy), or Italy (with its attraction to big and buffoonish individuals such as Silvio Berlusconi), but because it has elements of the deficiencies found in bigger and traditionally more successful countries. Akin to Germany and France, Spain has very rigid employment structures -- with huge disadvantages for the up and coming generation. Even allowing for the informal economy, Spain's youth unemployment (with some 1.7 million under 30 unemployed, just under 50 per cent) is scandalous especially as this cohort is well educated and outward looking. Akin to the U.S., Spain's housing market suffers from a combination of enhanced demand (including aspirational immigrants) and problematic financial institutions (especially in the regional savings banks).

From this perspective, Spain's problems do not come from an unwillingness to change older problematic habits but from excessive ambition. Having had decades of being largely poor, disconnected from the rest of Europe, and with a rigid authoritarian political system, Spain has raced ahead to be like other big, pivotal countries with ambitious citizens and companies (not only global financial institutions such as the Bank of Santander but also companies such as GrupoFerrovial which has built a series of toll roads around the world, including Highway 407 in Ontario, as well as operating airports such as Heathrow).

It is misleading to ignore the overstretch that has resulted from this ambition -- indeed in many ways, exacerbated by the size of the country. Spain's economic condition is the most serious in the Euro-zone. Not only is the bailout request (some US $125 billion) massive, so is the household debt as a percentage of annual disposal income.

Yet, to showcase this dire condition should not be an excuse for loose generalizations. Even quick glimpses of Spain showcase that not only are the causes of the difficulties different, but that its ability to be resilient in the face of these stresses will be different as well. Having witnessed the results of political polarization, extremism, and the cult of personality in the 1930s and beyond, Spain looks like a country that will be able to adapt in a more low-key, pragmatic and concerted fashion, even if it means stymieing a good deal of its pride in doing so.

This blog first appeared in Andrew Cooper's CIGI blogWorlds of Governance.

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