As the Spanish government got its €65bn austerity package passed in Parliament, millions of people took to the streets in unprecedented demonstrations against cuts on July 19. The day after, as the Valencian regional government asked for a central government bailout (of 3.5bn euro), the risk premium on Spanish bonds hit a new record, while 10 year bonds were yielding 7.3%. The Spanish economy is on the verge of a full bailout.
The huge demonstrations on July 19 came after a whole week of daily spontaneous demonstrations and walk outs by civil servants, which are particularly affected in this last round of austerity cuts. Thousands of workers, in a completely spontaneous movement from below walked out on a daily basis from Ministries, state institutions, Courts, Universities, hospitals, etc and blockaded the roads. The movement started on the day the government announced the cuts coinciding as well with the arrival of the miners' march in Madrid.
The enormous demonstration which greeted the miners in Madrid on the evening of July 10 reflected the massive accumulated anger at wave after wave of cuts and austerity measures being imposed on working people. It was a show of support for the miners' struggle, on an all out strike since the end of May, which are seen as a sector fighting back against cuts with a bold and radical movement. At the same time, the fact that hundreds of thousands came out to support the miners gave millions of workers and idea that there is a majority which is opposed to these measures and that the only way forward is the struggle. It is not by chance that the first sections to come out were the civil servants at the Paseo de la Castellana in Madrid, where the miners march on July 11.
This movement is the continuation of the explosion of anger of the indignados last year, but on a higher level. It could be said that this is a working class indignados movement. One of the main slogans at the two big miners' support demos in Madrid of July 10 and July 11 was “long live the struggle of the working class” (viva la lucha de la clase obrera).
The Madrid firefighters have been at the forefront of many of these demonstrations. This is another tightly knit section of the working class with strong bonds of solidarity. They were amongst the first ones to receive the miners as they marched on Madrid, receiving them in the border of the Madrid regional community and they provided the stewarding which allowed the miners to march through the crowd on the night of July 10.
But even more significant has been the role of police officers in the protests of the last days. Starting on July 11, when the cuts were announced in parliament, spontaneous demonstrations of police officers have been taking place on a daily basis in Madrid. Police officers have even printed T-shirts identifying them as indignados. In another demonstration police officers were carrying a Spanish flag with the official monarchy symbol (not a common sight in trade union demonstrations) but they had written over it: “to serve the people, not the bankers”
This has led to situations in which unauthorised and therefore illegal demonstrations of police officers and firefighters, as well as other civil servants, have gone up to the gates of Congress where off duty police officers have appealed to the riot police protecting the fences to join the protestors.
In one instance, on Sunday 15, a fire engine was used by the demonstrators to cross through the riot police lines and allow the march to continue. In another incident, dozens of police vans (97 according to one report) had their tyres punctured on the eve of the July 19 demonstrations. This took place inside a gaurded police yard and therefore it is though that the vandalism was the action of one or several police officers.
On Friday, July 20th, during a graduation ceremony in Barcelona, 546 new police officers turned their backs on the authorities (http://www.europapress.es/catalunya/noticia-546-nuevos-policias-nacionales-dan-espalda-autoridades-aplaudir-sindicatos-20120720153115.html) and applauded a group of trade unionists protesting cuts against civil servants. In Valencia, police officers in uniform were present at the protest on July 19.
As well as enormous anger amongst police officers, there have also been strongly worded statements by the United Association of Civil Guards (AUGC) and the United Association of Spanish Military personnel (AUME) opposing the cuts, calling work to rule protests and threatening further demonstrations and protests.
The build up of pressure after the miners' demo in Madrid was such, that the unions were forced to call for a national day of demonstrations. This, which in other circumstances would have had little impact (as people realise that evening parades will not stop the cuts), now had the effect of channelling the massive anger which had been accumulating.
According to trade union figures, 800,000 marched in Madrid and 400,000 in Barcelona to a total of millions demonstrating in over 80 cities and towns all over the country. These were huge demonstrations, in most cases larger than those during the March 29 general strike. There was a mood of confidence, sí se puede – “yes we can” being one of the main slogans. These demonstrations also saw an unprecedented show of unity by all sections of the working class, and even in Galicia the nationalist and “Spanish” trade unions marched together (though this was not the case in the Basque Country where ELA and LAB did not participate, though they have announced a Basque general strike on September 26).
An opinion poll showed that 82% of the population (including 65% of voters of the ruling right wing Popular Part) think that the civil servants are right to protest.
Those who marched on July 19 did not consider the protests as just one off affairs. There is a clear understanding that only a sustained and militant struggle will force the government to retreat. As an indication of this mood, at the end of the Madrid demonstration, already 11 pm, a group of firefighters put themselves at the head of a crowd of several thousands and decided to march down the Carrera de San Jeronimo which leads to Congress. As was to be expected they were met by several lines of fences, riot police vans and riot police. The firefighters managed to break through several of the lines and engaged in hand to hand fight with the riot police. Finally they decided to retreat and after a few police charges through the centre of Madrid, they disbanded. Once again police brutally charged against demonstrators and by-standers alike in the populous neighbourhood of Lavapiés, destroying bar terraces, etc.
On Friday July 20, a delegation of United Left gathered outside Congress to issue a statement calling for a rebellion against the cuts.
At the weekend thousands came out on the streets again, in Madrid to welcome a march of unemployed and in Galicia in a protest of small investors who were mis-sold preferential shares in banks.
Panic in the markets
Meanwhile, as could have been predicted, the passing of the austerity package in Parliament did not serve to “reassure the markets”. The current package of cuts is part of a Memorandum of Understanding with the EU, which has been signed in exchange for a bail out of Spanish banks of up to 100 bn euro.
Friday July 20 was a black day for the Spanish economy in the markets. The stock exchanged collapsed by 5.8% (with bank shares losing 7%), the differential between Spanish and German bonds shoot up to a new record of 610 basis points and the yields on 10 year bonds reached nearly 7.3%.
As happened before in Portugal and Greece, every announcement of “measures to reassure the markets” is followed by further “panic”. The reason is not difficult to understand. Although there is a strong element of speculation and irrationality in the behaviour of the “markets” (financial capitalists), the truth is that this reflects, perhaps in a distorted way, hard economic realities.
Measures to cut wages of civil servants, to increase taxation of working people (through increases in the rate of VAT), to cut unemployment benefits, etc will have the inevitable consequence of deepening the recession (as houshold consumption will further contract), thus leading to a further collapse of tax revenue and an increased pressure on social spending.
The Economist Intelligence Unit explains it clearly: “The main reasons behind the current level of the budget deficit are the fall in revenue owing to the economic contraction and the rise in spending on social benefits, also a consequence of the poor state of the economy. The measures announced try to tackle these issues, but will in the end harm the economy more than help the public finances.”
This is of course only one side of the equation: cuts will deepen recession and increase the deficit and the debt, and this leads to further doubt on the part of investors as to whether Spain will be able to repay its debt, and they asked for a higher interest rate to take that risk.
The other side of the coin is, that if the government does not take measures to cut the deficit, then investors will draw exactly the same conclusion and were already asking for higher interest rates (over 7%) to lend money to Spain. In other words within the limits of the capitalist system whatever they do will be wrong and will only serve the make the situation worse.
Today, Monday July 23, is already being described as a “black Monday” for the Spanish economy. Another regional government has asked for help from the central government (Murcia), the economy has contracted a further 0.4% in the second quarter of 2012 (after a fall of 0.3% in the first quarter) and it has been announced that household consumption collapsed by 1.2% in the same period. As a result, the stock exchange has already fallen by another 5% at the time of writing, the differencial over German bonds is over 640 basis points and the yield on 10 year bonds has broken the 7.5% barrier.
All of this is putting the Spanish state finances under unbearable pressure. Already the financing and servicing of the debt will be the largest item in the budget next year, 38bn euro, 9.1 bn euro more than in 2012, but it is clear that these are conservative estimates.
This situation has plunged the right wing government into disarray. Government ministers and spokespersons lost the thread of their explanations in Congress and to journalists, could not answer questions and seemed to be completely puzzled as to what should be done. In the middle of this crisis, the President has not appeared in public for a few days. This is a reflection of the reactionary and backward character of the Spanish ruling class, but above all of the depth of the crisis of capitalism.
The current right wing government of Rajoy was only elected in November 2011. At that time some argued that it was going to be a strong goverment, with an overall majority in parliament, control of most of the regional government and the most important local councils. We already warned that, because of the particularly acute character of the crisis in Spain, this was going to be a weak government which would soon be faced with a massive wave of opposition in the streets.
The Spanish government is asking for the European Central Bank to step in and buy Spanish bonds (as it did last year) so that their price goes down. In essence this means the transfer of Spanish debt to Europe and particularly Germany. In the last few years it has proven extremely difficult to get the different European capitalist classes, and particularly the German, to agree to any proposals in this direction. The national antagonisms between the different European countries, which were smoothed over during the previous boom, are coming to the fore in an acute form during the crisis.
But if the ECB does not intervene in one way or another, then Spain will be forced to ask for a bail out from Europe. The cost of that would be massive. Estimates vary between 300 and 500bn euro. Conditions imposed on Spain would be even harsher than the current austerity package.
The crisis in Spain, and the lightning speed at which it has developed threatens the whole edifice of the euro and the European Union. After all the GDP of Spain is nearly 9% of the EU total, and larged than the combined GDPs of Greece, Ireland and Portugal, the three countries already bailed out.
In the next hours and days there will be frantic negotiations, talks, threats and blackmail amongst the different rulers of European countries. At the end of the day they might find a temporary solution which delays the inevitable by a few days, weeks or perhaps months. The fundamental problem however will not be solved and sooner than later will raise its head again, in an even uglier way.
The capitalists want to make the workers pay for the crisis, on the one hand through cuts in public spending and increased taxes on working people, on the other through driving down wages and conditions in an attempt to make the Spanish products more competitive in foreign markets. This is creating an enormous wave of discontent and questioning of capitalism and bourgeois democracy. All the institutions are discredited. The Monarchy, the Supreme Court of Justice, the banks, politicians, etc they are also seen as corrupt and alien to the interests of the people.
At some point the ruling class will need to replace this weak and discredited government. There is already talk of a technocratic government, like in Greece and Italy. The opposition Socialist Party and the Catalan bourgeois nationalists, after hinting they would support the Memorandum, finally voted against, after the massive miners' demonstration. That does not mean they are against the measures being implemented. On the contrary, the Socialist Party leader Rubalcaba has insisted that he is offering the government a “united front” in the face of Europe and the most astute bourgeois commentators are preparing the terrain for some sort of national unity government.
Such a government would not have much support for the inevitable program of austerity it would have to implement, but it would leave the terrain open for the further growth of United Left (IU), which is seen as the only consequent opposition to these policies. The left wing coalition and its parliamentary spokespersons have become extremely popular, particularly because of their conduct in parliament in the last couple of weeks, where they strongly opposed the government and used the parliamentary tribune to call for a mobilisation of the people against austerity measures.
A socialist alternative needed
Still, the trade union leaders have not yet announced what should be the next step for the movement. There is talk of a general strike (in September), a march on Madrid from all provinces, further protests in August, … The miners have gone back to their regions of origin but their demands have not been won and their struggle is not given any perspetive.
What is required now is a clear and sustained plan of struggle which would unite all sections on struggle and affected by the cuts and attacks, including a well prepared and militant 48 hour general strike. However, as Greece shows clearly, not even the most militant general strikes are enough in this context. A clear political perspective is needed. In Spain the most advanced layers of workers and youth are looking for such an alternative in United Left.
United Left's main weakness is still the fact that its leaders lack a clear alternative program to the crisis of capitalism. The National Congress of United Left in the next few months will be a good opportunity to debate what program is required. What is needed is first of all to recognise that what we are facing is a crisis of the capitalist system and the starting point of any alternative must be the idea that the workers will not pay for the crisis of capitalism.
Instead of bailing out the banks (the immediate reason for the current Memorandum) they should be nationalised without compensation and put under democratic workers' control. Payments of the debt should be stopped and the state debt itself (a massive burden on the state's finances) repudiated. Of course this would only be possible as part of a socialist program of expropiation of the largest banks, transport and industry in order to incorporate them into a democratic plan of production. Only in this way, the economic and human resources of the country could be harnessed to fulfill the needs of the majority as opposed to serve the profits of a small unelected minority of parasites, thieves and especulators. The Marxists of Lucha de Clases will be arguing for this program, which would connect with the concrete experience of millions of workers and youth.
What we are witnessing in Spain is the process of political radicalisation of wide layers of the population, many of which had never been interested in politics before. Under the hammer blows of the impact of the capitalist crisis they are groping towards a revolutionary solution. The most farsighted bourgeois analysts recognise this and are extremely worried. The Economist Intelligence Unit put it in the following terms: “Spain is therefore more likely than ever to see renewed social unrest, potentially leading to some disruption to the economy and political stability.”The attempt of the ruling class to make workers pay for the crisis is already provocking a massive movement. The Spanish working class has proud revolutionary traditions, which a new generation is now rapidly rediscovering. Spain has now jumped to the front of the queue of the process of the developing European revolution.