Spain’s economic problems lie neither in the financial sector nor in the budget deficit. They are only symptoms of deeply rooted institutional problems that determine a great variety of issues, from how the budget is composed to who receives a loan from the politically controlled banks (cajas). Neither banks nor public workers have ruined the country, but politicians, a separate class born out of the “Transition” from the Franco dictatorship to democracy.
Until Franco’s death in 1975, Spain was governed by a fascist bureaucracy, called “Corporate State.” It was formed by the ruling party, the only Workers Union, the only Employers Union, the Catholic Church, and local entities. During the “Transition” to democracy, a series of measures designed as exceptional were adopted to promote regime change. Politicians, out-goers and incomers, agreed on surrounding themselves with class privileges (some old, some new) to ensure the former a comfortable retirement and the latter a slew of protections and privileges.
These privileges were extended to regional pressure groups—Basque, Navarrese, Catalans, Galicians and Andalusians. They were intended as temporary and geographically limited, but over time, they have become permanent and widespread in all 17 autonomous regions and thousands of local authorities.
Since the arrival of democracy, the Corporate State has covered itself with a democratic umbrella. The single party and the single workers union have been split in two. And a powerless (except in the lower courts) democratic bureaucracy has been created, giving the country two de facto bureaucracies for the same purposes. And that has been multiplied by 18, if we count the central government and 17 regions with its governments, parliaments, ombudsmen, etc. And by thousands if we take into account the local entities. So the current status is that of a double Public Administration:
- The Corporate Administration. Legacy of the Franco regime, it is formed by political parties, especially the hegemonic People’s Party (PP), the Spanish Socialist Workers’ Party (PSOE), and the Nationalists, plus trade unions, employers unions, local power, and NGOs (previously only the Catholic Church, but now diverse).
- The Democratic Administration. Formed by the Legislative, Executive, and Judicial powers, it is commanded by politicians and served by funcionarios, such as police, judges, prosecutors, tax authorities, etc. The Democratic Administration is tied to the rule of law. It exercises power over citizens and is supposed to protect them from politicians. Its presence is mandatory when citizens´ rights are in peril.
But in practice, the Corporate Administration occupies positions at all levels within the Democratic Administration, even those that imply the exercise of power over citizens, such as judges, and despite the Law and un-executed court orders that should have ousted them. For example, a 2008 report by the Andalusian Court of Auditors “detected” that 33% of the central-services staff belonged to the “parallel administration,” as the courts have labeled it. An unprecedented request (August 2012) from the Andalusian Regional Ministry of Finance, asking other ministries about the personnel they employ directly or indirectly who are neither funcionarios nor lower-level workers, reveals how the Corporate Administration lives and spreads chaos.
However, the real numbers are likely unknown due to a lack of transparency in public and private entities, and due to the decentralized style of management and the occultation techniques that the Corporate Administration has used to survive and thrive under its democratic umbrella.
Franco’s tax and budget system having largely disappeared after the “Fuentes-Quintana” reforms of 1977, the Corporate Administration is funded through “special laws,” “special rules,” and “exceptional mechanisms.” The act to “repair union assets damaged during the war and dictatorship,” for example, paid for “repairs” to the CCOO—a Union that didn´t exist in Franco´s era. And the payments far outstripped those given to the CNT, a real anti-regime union at the time.
While special rules on pensions, unemployment, etc., established within general laws for the wellbeing of the political class, are a source of funds and power for the Corporate Administration, the main source lies (in my experience) outside the law—here, anything is possible if you are a politician.
This can take many forms through biased interpretations of rules or “exceptional mechanisms” designed for severe conditions that in practice have become common instruments. They’re exempt from control unless a scandal explodes into the open. These include Government Agreements (even secret ones are “enforced”), Social Partnership Agreements, Exceptional Grants, Nominative Grants, (false) Regulated Subsidies, (false) Conventions, (false) Concerts, (false) Open Calls for Proposals, etc. They are hiding under different names within framework agreements between politicians, trade unions, and employer unions for sharing the pie of public funds.
The Andalusian Supreme Court of Justice has repeatedly failed against the Government and its “open defiance of the rule of law.” This assertion has been ratified by the Spain’s Supreme Court of Justice (STS 29-November-2009 E.G.M.A.S.A.) and reiterated by the lower courts, the last one on September 11, 2012, with no political or penal consequences.
This may surprise outsiders, but not locals. Public opinion is rarely moved by “technicalities,” and judges and prosecutors at penal courts—except for the judge Mercedes Alaya who got involved in this by chance—shiver at the prospect of starting a process against a whole government or worse, against most Members of Parliament, when there is no physical robbery attached to it to sell the case to the media.
Finally, the European Union and its funds have not helped. The European Commission does not want to fund permanent staff in Member States´ Public Administrations but in “independent entities such as Audit Companies, Trade Unions, or NGOs”. And that “principle of partnership” has come in handy to our political class to grant themselves the money directly or through a horde of facade-entities, with the support and blessing of Brussels.
When our former Prime Minister J.L.R. Zapatero said that Spain had not finished its Transition from dictatorship to democracy, I do not think this was the problem he had in mind. But this is the one we have, and the one that politicians can, but do not want to, fix: establish a real separation of powers with an independent Administration of Justice, and get rid of the Corporate Administration inherited from the Dictatorship, ruled by a despotic oligarchy, and covered with the veil of an imperfect democracy.
Spanish Prime Minister Mariano Rajoy (PP) has a singular problem: 84% of all voters have “little” or “no” confidence in him. The fate of Alfredo Perez Rubalcaba, leader of the opposition PSOE, is even worse: 90% of all voters distrust him! Those are the two top political figures of the two major political parties, and the utterly frustrated and disillusioned Spaniards are defenestrating them both. Read.... Punishment Of The Spanish Political Class By The People.