Spain in the times of Coronavirus, Part I

Spain in the times of Coronavirus, Part I

empty beaches & a UBI

A year ago the streets of Barcelona were full of tourists partying, workers serving them, and hawkers and pickpockets trying to scrape up the scraps. A small city with over 30 million visitors a year, the economic orgy created by tourism also created a certain level of hell for its residents.

So the day after the state of alarm was declared on March 14, I thought I was in heaven when I went out and the streets were empty.

Three and a half months later we’ve entered the “new normal”, but the city remains relatively quiet. Shops and restaurants are open but masks and the use of hand sanitizer is required. Large events have been cancelled and those who can are working from home.

As I walk through the Barceloneta, the beach neighborhood, locals gather leisurely in the street to chat. I’m surprised to find the neighborhood is working class – though as I near closer to the beach the property obviously gets more expensive. The looks I get as I walk up the street are wary, and I realize these people have their neighborhood back. I think what the same streets must be like with throngs of tourists, and imagine my presence sparks fear that Northern Europeans will invade once again, driving up rents and filling the streets with drunken shouts in early morning hours.

The borders have just opened to tourists within the EU and other approved countries, but I’ve yet to see one. The tension on the streets has dissipated; you can feel it in the air, which seems purer than before. Everything has slowed down, people are friendlier, more polite, you might even see them smile at you on the street.

The exception is the shopowners, who are noticeably worried. Empty streets mean empty shops.

Tourism is a major contributor to Spain’s economy, making up about 10% of GDP.

And the relief I’m sensing could be short lived, as the news projects the economic crisis will last at least until the end of 2022.

This time around, however, a left-wing coalition is in control of the government, and so far it’s made some good moves.

Immediately, as the state of alarm was announced I was impressed with the transparency of the government in handling the crisis. Every day a televised press conference was held with ministers lasting several hours, outlining in detail coronavirus statistics, as well as any new rules and initiatives. This compared with occasional statements by Donald Trump telling people to drink poison, or a five minute waffling speech by Boris Johnson telling people to stay home.

No, the Spanish response was serious: it was based on science and with a clear concern for public health. People were ordered to stay home except to buy food or medicine, everything was closed except essential services for two months. Those caught outside without justification faced a €600 fine. After two months, businesses started opening gradually, province by province.

Spain has so far seen a high death toll of 28,000 because it has an older population, but it was successful in bringing the pandemic under control. (Like other countries, after easing restrictions it may see a second wave.)

Economically, the government’s response has also been progressive.

In March, when Spain declared a state of emergency it also prohibited companies from laying off employees and introduced ERTE, a temporary furlough scheme paid by the government. Amid a dreary forecast for summer tourism as the borders open, the program has now been extended another three months to September 30 – so millions of workers are currently enjoying paid time off.

And the Spanish government did something unprecedented last month for those who might slip through the cracks: it passed a Universal Basic Income (UBI or IMV, Ingreso Minimo Vital in Spanish). Though the benefit is only €461 a month for a single adult, and up to €1,015 for a household, with a low cost of living in Spain it should help cover basic living costs and prevent extreme poverty (it’s not the $2,000/mo being offered by Canada, but it is permanent).

The UBI was proposed by Spain’s new socialist party, United Podemos (UP), and the centre-left PSOE. However even the conservative Partido Popular (PP) voted in its favor, demonstrating the broad support the measure enjoys across different segments of the Spanish population.

“If the PP were in power, we´d all be dead,” my lawyer said to me in all earnestness. If the right were in government, these measures never would have been introduced.

Though there was no rent moratorium (there was one for mortgages), the government has established a loan program for those unable to pay.

For industry, the governments’ new economic recovery plan will include €40 billion in loans for green and digital businesses, with another €10 billion is earmarked for businesses affected by coronavirus. What’s interesting about this stimulus is that the government won’t just be bailing our, but buying shares in these businesses – a small but positive step towards public ownership.

Of course, how to finance all these programs is another question. At the moment, Spain is using emergency loans issued by the European Union. After the last crisis, the repayment of this debt ushered in a period of austerity. This time, however, so far the talk is centering around taxation – not cuts. The government is currently in the process of establishing a ‘Google tax’ of 3% on the local revenues of internet giants, and UP has also proposed a Covid wealth tax on the richest Spaniards. As you can imagine, the business associations are begging the government not to raise taxes, and the right-wing parties are using any excuse they can to try to wrest power.

However this crisis promises to be deeper than the last, and raising taxes may not be enough. Some Spaniards are bracing themselves for another prolonged crisis. Without a sovereign currency and the ability to print money, Spain is dependent on loans from the European Central Bank, and the German and Belgian bankers that set policy at the EU level. Spain’s social programs may not be sustainable, and austerity may be unavoidable unless it leaves the euro. Spanish PM Pedro Sanchez will be in Brussels this month to discuss the terms of EU loans, but its unlikely they will be favorable.

As even mainstream commentators are predicting the end of capitalism as we know it, we have the opportunity to create something completely different. Spain is making some first steps.

4 thoughts on “Spain in the times of Coronavirus, Part I

  1. It will be interesting to see how NATO puts the screws to Spain when the ECB’s loans come due. I can’t imagine Frankfurt has any warm and cuddly feelings for UP/PSOE…

      1. NATO is shorthand for the international Military Industrial Complex, the Five Eyes, and the banks they work for. Their mission is to neuter democracy in Spain, just like the in US.

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