Tag Archives: Spain

Spanish Scandal Could Force Energy Strategy Change

ImageAfter a turbulent first year of cuts aimed reducing a crippling deficit, Spain’s energy sector could see a shift in direction as a corruption scandal threatens the current conservative government.

Since taking office after early elections just before the New Year in 2011, the government led by Prime Minister Mariano Rajoy has led a campaign of cuts and adjustments meant to drive down an energy sector deficit that greeted them around $30 billion.  Attributing the daunting amount to unsustainable government subsidy programs, Rajoy and his Minister of Industry, José Manuel Soria set out a series of cuts that have spurred appeals to the European Commission and lawsuits from investment firms.

However, the fate of Mariano’s party leadership in Madrid has recently been cast into doubt amid allegations that senior officials had received secret cash payments after the practice was made illegal in 2007. Rajoy denied any wrong-doing following an extensive report published in Spain’s national daily, El Pais detailing payments to him as late as 2008. The El Pais report was quickly followed by calls for Rajoy’s resignation and denials from party officials.

While it is not yet clear whether a return to the Socialist leadership that led the country for eight years before Rajoy would signal a change in pace, it is even less clear whether voters would hand the reigns back to the left should the conservatives be forced from office. Recently, both of the country’s largest political parities have seen support erode thanks to their handling of the economic crisis. On the local level, this has allowed support to shift to smaller, less centrist parties.

However, even if Rajoy remains in power – which regional observers expect he will – the government’s approach to the energy sector will likely see a change in the New Year. Despite the government’s cuts and general deficit reduction strategy, the energy sector’s deficit has continued to rise in recent months casting doubt on their approach. While Soria and company predicted a slowdown as a result of the cuts, which have focused on solar and wind subsidies; the deficit has actually grown at double the expected rate. Soria has signaled a different approach in the coming year and insisted once again that further cuts will not include retroactive actions.

This expected reversal reflects a broader trend in Spanish economic improvement, which has largely relied on cuts in spending and services across the country’s seventeen communities. With unemployment continuing to rise and economic growth stagnant, Madrid and Brussels alike have suggested an approach that does not focus so much on austerity and may include additional efforts aimed at growth.

Image: Iberosphere.com

Originally Posted: Newsbase Euroil Monitor

Tagged , , , , , , , ,

Spanish Oil and Gas Adjusting to New Reality

Facing a sustained economic crisis and unfavorable legislative responses, many in Spain’s energy sector are working furiously to adjust expectations and strategies for what could be a very different domestic marketplace.

The country’s new energy reality became a bit clearer at the end of last month as a collapse in local demand and stronger than expected needs from across Europe helped make Spain a net diesel exporter for the first time on record, according to a Reuters report. The shift was also the result of 5 billion euros in refinery upgrades over the last few years, increasing Spanish capacity and helping avoid one facility closure. While this development stems from Spain’s diminished domestic diesel market, reflecting slower growth and demand, it has provided a way for needed revenue from stronger diesel demand elsewhere in Europe.

Meanwhile, larger firms, including Repsol and Gas Natural, have worked to insulate themselves against the diminished Spanish and wider European demand by attempting to expand their footprint in emerging markets in South America and North Africa. Despite these efforts, many have faced further challenges at home thanks in part to exposure to the domestic market and the weight of the country’s sovereign debt challenges. In early October, Standard & Poor’s downgraded energy giant Gas Natural from stable to negative as concerns grew around a possible sovereign bailout appeal by Madrid.  On October 19th, Reuters reported a slight reprieve for the energy sector as the government sidestepped a lowering to junk rating on sovereign debt, though considering the government’s current energy debt and status, this development hardly brings them out of the woods.

For the country’s natural gas actors, further adjustments may soon be necessary thanks to a revised national tax program that will apply a 6 percent flat rate on power generation, as well as an additional “green tax” for gas-fire generation. Alongside the government’s recent cuts in energy subsidies, this new tax is part of an effort to ease Spain’s current energy deficit of around 24 billion euros.

Image: Eurogascorp.com

Originally Posted in Newsbase’s Euroil Monitor







Tagged , , ,

Spanish Economy and Transport Limitations Keep Medgaz Low

After a year of delivering Algerian natural gas to Spain, the Medgaz pipeline continues to face significant challenges to full capacity, with traffic running lower than expected due to a number of factors in Spain and beyond.

The pipeline connecting Algeria with Almeria has the capacity to transport “8 billion cubic meters annually, or 22 percent of Spain’s gas needs,” according to a Reuters report. Sonatrach currently owns 36 percent of Medgaz, with Iberdrola, Abu Dhabi’s Cepsa, Enel’s Endesa and Gaz de France on as project partners.

Algeria’s role as one of the largest natural gas importers in the world has been hurt recently thanks to the country’s sustained economic downturn, which shows little sign of improving in the near future. Even after announcing an EU-level bailout for Spain’s ailing banking system this past weekend, Prime Minister Mariano Rajoy warned that the country’s economy faced a difficult year ahead, suggesting further economic contraction and a longer path to recovery.

Such sentiment gives little confidence to the country’s natural gas actors who are dealing with a decrease in demand so significant that Spain’s newest LNG plant will be hibernated as soon as it is completed in December. Complicating the matter further, Spain’s limited connection to other European natural gas customers has hindered the country’s ability to off-load excess supply. Spain’s minimal pipeline network to France is likely to remain limited due to long-standing political opposition to new transport lines from France.

Still, Medgaz appears confident that Spain’s increased dependence on natural gas will continue beyond the country’s current economic woes, with company reports pointing to steady growth despite recent financial troubles.

For their part, Algeria and their state-backed firm Sonatrach have been working to increase their natural gas efforts, announcing an $80 billion euro plan to expand their resource base over the next five years.

Image: Arabian Oil and Gas

Originally Published in Newsbase’s Afr Downstream Monitor – All Rights Reserved

Tagged , , , , , ,

Catalonia’s Immigrants Face Lonely Road Ahead

Cross Posted at: http://iberosphere.com/2012/04/spain-news-6031/6031

Sitting across the table from Xavier Alonso Calderón, Catalonia’s Head of the Immigration and Labour Relations, it was hard not to feel for everyone within a hundred paces of his office. In one of many sweeping cuts to government spending since coming into office late last year, the Partido Popular-led government had targeted Spain’s immigration and integration fund to nearly nothing. Established under the Zapatero government in 2005, the fund had set aside up to 200 million euros to be distributed to Spain’s autonomous communities to help fund programs aimed at reporting, educating and integrating the country’s foreign born population – a group that had exploded over the past decade, accounting for over 16 percent of the 44 million national population.

In immigrant-heavy communities like Catalonia, the funds had paid for Calderón’s department and their efforts to draft a new, sweeping Law of Reception, outlining the responsibilities of officials at every level of the foreign-born communities and establishing a reporting system that would be used for all those applying for permanent residence. While the reports would be non-binding on the national level, they would help normalize education and outreach efforts and get the community more involved in the integration process.

Nearly two years on since our first conversation, the law had been passed and over 26,000 reports had been filed since the program was put into place in June of last year, all completed by Calderón’s team of 26. This week, Calderón faced a decidedly different set of circumstances. With the national fund reduced to next to nothing, the department would be cut in half, leaving a baker’s dozen to do what is being asked of more and more across Spain these days – do more with less.

While this is hardly a novel concept in light of Spain’s current budget woes, it does signal a new and rather absolute approach to the country’s foreign-born population – if you want to stay, its not going to be easy.

It’s hardly a new concept that in times of economic woe, a country’s foreign-born populations stand to suffer, but Spain and especially immigrant-heavy communities like Catalonia may provide exceptional cases. Beginning in the mid-1990s, Spain’s immigrant population began to grow on the back the country’s real estate boom, attracting mostly low-skilled workers to Spain. Those arriving found steady supply of vacancies left behind by a near simultaneous spike young Spaniards seeking college degrees. The population continued to grow throughout the 90s and naughts, peaking in early 2007. Tied as it was the country’s economic expansion, the influx of foreign-born workers and their families ebbed a bit as the economy slowed from 2008 on. The numbers from several countries, especially Morocco and Latin America began to fade as revere migration took hold and economic development grew in other places. However, a mix of momentum and the global nature of the economic crisis kept people coming. While the flow from countries like Argentina may have leveled or decreased, the economy in places like Pakistan have not proven to be enough of a pull to make much of a dent in Catalonia’s nearly 40,000 residents that hail from there.

Readily accepted and welcome for much of the period of Spain’s growth, these groups increasingly became political fodder during recent elections, with local and national parties making cautious forays into immigrant-targeted rhetoric during campaigns. One conservative candidate in Catalan elections showed up in an immigrant-heavy suburb of Barcelona with citizenship contracts shortly before regional elections. While Spain’s foreign-born population has so far escaped the kind of direct attacks by political figures in Italy, the Netherlands, Greece and France, the election season and dour economic outlook has left them on the defensive as they look to the next few months.

This feeling was compounded by the PP’s reduction of the national fund, a move that will likely result in far-fewer opportunities for education and integration among Catalonia’s foreign-born communities. Calderón stopped short of suggesting that the reduction of the national fund, or even the total cut in medical care available to “irregulars” last week, were motivated by anything more than budget constraints, but he did allow that the ideology of the current leadership both on the community and national level made it clear that funding would not likely come back soon. In practice, this reduction is going to mean fewer workers to implement Catalonia’s integration law and less overall support for those in search of the requirements needed to qualify for residency.

Still, Calderón remained upbeat despite the coming months. “We just have to be more efficient,” he said, adding that there were still options for offsetting some of the lost fund from EU funds. Echoing the sentiment of more and more state workers now faced with a sudden absence of funding and support across Spain, Calderón looked at the challenges ahead and simply said, “We have to do it, we have no choice.”

Image: Undhimmi.com

Tagged , , ,

Southern European Energy Looks for Footing in New Economic Environment

As governments across Southern Europe struggle to adjust to a new and limited political reality, many state energy policies are reflecting a more conservative planning approach. While most attention has been paid to how these new policies stand to affect renewable sectors in Spain, Italy and Greece, state strategies to conventional energy resources will also be influenced by fiscal limitations and new political leadership.

At the heart of most energy policy decisions from Madrid to Athens is the effort for new governments to reign in spending and reduce budget deficits to meet goals laid out in conjunction with stakeholders on the European and international market level. This environment has increased uncertainty among foreign investors, a sharp reduction in the amount of government funding available for any new energy endeavors and an almost across the board increase in energy prices for consumers.

In the case of Spain, a precarious energy landscape and daunting 27 billion euro sector budget deficit has been met with a pledge by industry minister José Manuel Soria that the financial burden will be shared across the industry. While that pledge has so far only affected renewable and coal subsidies and an increase of consumer prices of 7 percent for electricity and 5 percent for gas, there is worry that it could soon spread to more traditional efforts. Heavily dependent on foreign resources, Spain has seen new domestic exploration projects in the form of shale efforts in the north and offshore drilling near the Canary Islands.  

Similarly dependent on foreign resources, Italy and its technocrat government led by Mario Monti has pledged a wide-array of cuts to existing traditional and unconventional energy endeavors, though they have so far not seen a spike in consumer prices thanks to a steady decline in demand brought on by economic pressures. Having faced a steady decline in available energy resources as a result of both foreign challenges (Iran, Libya) and those closer to home (offshore bans, the failure of nuclear resurgence), Italy has signaled a focus to shift support towards less traditional energy support as opposed to revisiting conventional options. Last week saw the Monti government introduce the idea of a carbon tax aimed at providing funding for sustained support for green energy options.

In Athens, the government’s aim of debt reduction has spurred a move away from state-backed energy endeavors with a host of privatization efforts planned for this summer. After signaling a willingness to seek investment for a sprawling 20 billion euro solar farm project, the appointed Greek government announced an effort to sell off state holdings in Hellanic Petroleum and the state natural gas firm DEPA. The move comes as many in the region have expressed strong interest in further investment in natural gas discoveries in the Eastern Mediterranean.

In all cases, such privatization efforts come at the very real risk of losing out on significant future revenues in favor of short-term fiscal relief.

David Parker, Emeritus Professor of Privatization and Regulation at the Cranfield School of Management told Reuters, “We are certainly going to have a risk that the government sells off industries without really thinking about the long-term implications.”

Tagged , , , ,

Spain’s Energy Sector Dodges Deficit Pressure

As Spain’s new government struggles to deal with an energy deficit before it begins to affect investor confidence and the country’s overall borrowing costs, the country’s varied production sectors have come under new pressure.

Although much of the spending cut attention over the last month has centered on Spain’s renewable sector, with subsidies on new projects halted in later January and reports suggesting further action on even existing projects, solar and wind are not the only energy sectors coming under closer scrutiny by the government. Facing a 24 billion euro energy deficit, accrued over the last few years thanks to poor subsidy planning and domestic energy prices that did not reflect new pressures, the new Industry Minister Jose Manuel Soria has stated that the cost of closing this funding gap must be shared throughout the country’s energy sector.

The energy deficit reduction goal is especially important given the fact that the amount is not currently included in national figures, but would be if not dealt with soon. Spain is currently dealing with EU pressure to reduce the overall deficit to 4.4 percent of GDP in 2012, though the new government has conceded that it will more likely only reach 5.8 percent given the impact further cuts would have on the struggling economy.

However, the last two weeks have seen a heavy push back from both the country’s utilities and lobbyist representing Spain’s oil and gas actors. Intent on shifting the burden of the overall costs away from traditional energy resources, leaders have coordinated pressure on Soria, though analysts have stated that the pressure is sure to be felt throughout the energy sector, especially given the overlapping roles of energy and utility companies. For example, Spanish utility Fenosa was bought by Gas Natural in 2009, which is partly owned by oil and gas giant, Repsol.

For now, Soria and the new government still have the opportunity to look beyond their own budgets for aid, including the possibility of tapping into European Union funds to help expand the country’s much-needed grid connection program. Long delayed thanks to opposition from French industry and political leaders, Spain’s natural gas pipeline connectivity to the north will likely be addressed in a new EU energy grid plan to be released later in the Spring.

Image: http://www.renovablesverdes.com

Tagged , , , , ,

Spain Moves Closer to French Connection

Following long delays thanks to French political critics, Spain has moved closer to the possibility of more access to the European natural gas network with an European Union push this spring.

The natural gas connection between the two countries has long been viewed as insufficient by Spanish energy actors, with pipeline systems across the Pyrenees meager in comparison with the large transport systems connecting Spain with North Africa. This connection expanded still further with the opening of the Medgaz pipeline linking Algeria with Southern Spain. Furthermore, the country’s LNG capacity has continued to expand despite a lack of adequate connections to the European energy grid, keeping supplies high. This environment has left Spain and Portugal isolated, especially when it comes to aiding in the EU push to reduce dependence on Russian exports over the last few years.

Energy actors in Spain have largely blamed the lack of progress on the issue on French companies who do not want to open their lines to the Spanish market. However, regional observers have pointed to France’s imports from countries like Norway and suggested that it is not yet economically viable to pursue expansion projects across their southern border given their current connections.

Spain’s case is expected to receive some support this spring with a planned EU energy strategy report that analysts in the region expect will address the transport deficit with political and possible financial support for expansion. The report is expected to address a larger challenge of European grid connections, including the France-Spain case.

Any such support is likely to be well received in Madrid, where the new government led by Mariano Rajoy now faces the daunting task of addressing a 24 billion euro energy deficit, forcing a broad re-evaluation of the country’s energy sector. So far, the review, led by Industry Minister José Manuel Soria López, has resulted in suspensions and planned reductions in renewable subsidy opportunities, alongside pledges to not add new taxes to gas, nuclear or coal programs.

Tagged , ,

Rajoy, Reform and the Burden of Employment Expectations

As thousands took to the streets this past weekend, it quickly became clear that the Partido Popular’s approach to job creation had more than a few critics. Focusing their anger on reforms passed on the 9th of February, critics called out the new government’s efforts to reduce mandatory severance pay from 45 to 33 days per year worked and allowing what they felt was an unfair freedom for companies to opt-out of collective bargaining agreements and adjust wages and hours according to their unique financial standing.

Explaining their approach, the Rajoy government explained that “it wants to give firms the ability to modify workers’ hours in response to demand rather than simply laying them off, bringing an end to the rapid rise in temporary contracts that has helped push youth unemployment to just shy of 50 percent.”

Really, the reforms proposed and passed by the dominant Rajoy government, who earned a powerful legislative majority during November elections, should not have come as much of a surprise. They are, after all, the country’s conservative party so supply-side reforms to the labor market should have been an expected part of the package. Alongside promises of widespread cuts in public spending, business-friendly labor reform seems as much a part of the conservative platform as reversing anything that offends the Catholic Church. Prior to early elections, Rajoy and company promises such an approach and with a strong parliamentary majority, they delivered.

Still, now that the reforms have passed, it should be asked, is that all they have to offer? Its hardly a novel observation that massive cuts, no matter how much they are required by Brussels and Berlin, are not a sure fire way to spurring growth.

“They don’t have much of a strategy apart from the typical laundry list of structural and labor market reforms, which is fine, but that is not going to deliver much in the short-term,” Guntram Wolff, deputy director of Bruegel, a Brussels think-tank told Reuters. “It’s become clear that this focus on austerity and fiscal consolidation is not enough, so they need the economic growth and employment element.”

So, are Rajoy’s labor reforms the only other solution they are offering to resolve Europe’s worst unemployment rate?

The short answer is no. Rajoy and his PP-controlled parliament have pledged that more should and will be done. Though, this promise has come with few actual specifics and a warning that given the country’s current trajectory, things will likely get worse before they get any better. Indeed, analysts at BBVA predict an increased 24.4 percent unemployment rate by the end of this year and a likely 24.6 in 2013.

Specifics on this pledge have been light, though Rajoy and EC President José Manuel Barroso have both called for additional funds from the European Regional Development Fund (ERDF) and the European Social Fund (ESF) to be put aside specifically for job creation programs. Of the countries with accessible funds, Spain boasts the most with 10.7 billion euros.

Perhaps a more relevant question for analyzing the Rajoy approach is will the reforms do enough to address the structural challenges that led to such a daunting 22.9 percent unemployment rate in the first place. Will it be enough to reverse what Profs. Samuel Bentolila, Juan Dolado and Juan Francisco Jimeno call Spain’s “insider-outsider” labor economy? In a report published just days before Rajoy presented his labor reforms, the three argued for greater attention to the country’s temporary contract economy, which accounted for 1.4 of the 1.6 million jobs lost since 2007 and efforts to combat the country’s nearly 50 percent youth unemployment rate.

The answer to this question comes with a deeper look at Rajoy’s proposed reforms aimed at providing tax breaks for hiring workers under the age of 30 and reducing the time needed to ensure a permanent contract from 3 to 2 years. While straying slightly from the party’s supply-side approach, the reforms do little to address issues of training, education and diversification in a labor market previously led by now dormant industries.

Rajoy has been quick to defend his government’s approach, stating that it will not only increase Spanish employment, but also put the country’s economy on equal footing with the rest of Europe.

“We are planning an economic policy which coincides substantially with what is being planned at the European Union level — so we support that and will be at the forefront in all these things, particularly in budget consolidation and structural reforms,” he told a press conference in Madrid last week in response to labor reform criticism, according to Reuters.

However, even he has warned that the results will be slow to materialize. Echoing the aforementioned BBVA predictions, Rajoy has stated that the country’s employment numbers will likely rise before falling. That warning may sound dour for those hoping for a rebound this year, but it may just buy the new government some time and tapered expectations to allow for his labor reforms to start showing progress. Once that time is up, it’s difficult to imagine even his supporters in Madrid and Brussels to stay quiet for very long.

Image: Libre Mercado

Tagged , , ,

Getting to the Bottom of Spain’s Daunting Unemployment Numbers

Of the many bits of bad economic news Spain has received this past year, including finding deficits were higher than expected and growth rates much lower, perhaps no other figure has proven as weighty and daunting as the country’s unemployment rate. Reports released at the end of January saw that number rise to 22.9 percent adding another dismal headline to the Rajoy government’s first official month. Nearly 5.3 million out of work with declines in available positions across the board, from services to the country’s still collapsing construction sector.

Capturing the dour outlook of the country’s current situation, The Atlantic’s Derek Thompson sadly summarized the statistics facing the new prime minister, noting “The overall unemployment rate is in the mid-20s, industrial production and services activity have both cratered, construction indicators like cement consumption have been devastated after doubling between 1998 and 2007, retail is in a free fall, and export growth (most of which go to Europe) is falling is slowing.”

Amid all the other sour news facing the new government and their recovery efforts, 22.9 percent stood out, dwarfing the rates of fellow EU member states, even those thought to be perilously close to very dark territory. Among those countries most troubling in the eyes of Brussels, Berlin and the global markets, Italy registered 8.9 percent, Portugal 13.6 percent and even Greece – so worrying to so many, managed to come in under Spain with 19 percent.

Still, while weakened by slow to stagnant growth, Spain has remained an economic force in Southern Europe, especially when compared to damaged economies in Greece and Portugal. So, the exploding rate of job-searchers does not make as much sense when viewed in the larger context of the Euro crisis. Sure things are bad from Barcelona to Cadiz, but does 22.9 percent really reflect the state of the Spanish job market? To be clear, the unemployment number broadcast to the world is undeniably important to how the country’s current economic challenges are perceived by outside forces. Indeed, the consequences are far-reaching, chipping away at the country’s fragile confidence and spreading the blame across the economy, including applying higher and higher borrowing rates to banks, no matter how sound an institution might actually be. However, upon closer inspection the number that looms so heavily over the country’s ability to rebound does not really tell the whole story.

First, Spain’s traditional approach to reporting work on a local and national level go a long way to explaining why the country’s numbers remain so high in relation to the rest of Europe, even in the best of times. After rebounding from a 1993 jobless high of 24.5 percent, Spain was driven by a booming construction sector and cheap borrowing opportunities brought about by further integration into the Euro economy. Building on that fresh access to capital and real estate development that dwarfed efforts in Italy and Portugal, Spain emerged as force of growth in Europe, though even then, as the economy exploded, unemployment remained high, bottoming out at a 2006 low of 8.1 percent.

The reason for this inconsistency of economic performance and fiscal statistics comes down to two factors as far as economists are concerned. First, Spain has historically had a sizable under-the-table market of unreported or part time workers that are not counted as a part of the country’s workforce. In an OECD study conducted in 2006 Francesca Froy and Sylvain Giguere found that Spain’s unregistered job market accounted for almost 22 percent of the country’s GDP in 2002. While recent policies aimed at bringing more of these positions into the light have been introduced, it’s difficult to imagine that they have been successful enough to erase any impact on the country’s jobless numbers.

More recently, others have pointed to the country’s conservative tradition of over reporting unemployment numbers as a way to explain its high numbers in comparison to Greece or Portugal. Vanessa Rossi, an economist at London’s Chatham House think tank, told the Voice of America, “The Spanish unemployment rate might actually be slightly lower than these figures,” adding “That’s quite in contrast to many other countries that have the opposite problem – they under-report unemployment.”

Second, and perhaps more importantly, the 22.9 figure does little to truly show who is most affected by Spanish unemployment. For that, the more important number is 48.6, representing the number of jobless between the ages of 16 and 24. To be sure, this is the number that plays most heavily into the country’s ability to not only avoid a second recession, but also ensure long-term productivity and competitiveness.

Despite being the country’s most educated workforce in the nation’s history, Spain’s young workers have found themselves locked out of a labor market that strongly favors older workers thanks to the high cost of firing employees. Overly equipped for the few jobs available or under-employed in positions with little pay, many are shifting their attention towards Northern Europe and the United States. While Spain may have experienced this sort of emigration during past economic slow-downs, they have never risked the type of brain-drain of their best and brightest as they do now.

Again, this is not an attempt to downplay the importance of this number. No matter how its broken down or explained, the effect is the same, leaving investors and regional regulators with waning confidence in the ability of Spain to grow out of the hole it is currently in. Instead, this closer look at Spain’s job numbers is meant to provide more focus on how solutions can and should be applied by the new government, implementing targeted approaches rather than policies aimed at the population as a whole.

Image: Reuters

Tagged , ,

Europe’s Old Guard Pushes Back, Pt. 1: Trial and Treason

Over the last few months, there have been countless stories demonstrating the difficulty much of the Northern Mediterranean faces when it comes to introducing and actually implementing political, economic and cultural change. At the heart of too many of these stories is the region’s aging population, not because they may be more politically conservative and less eager to embrace necessary change – though they very well might. Instead, it seems they are the ones with the largest slices of the populations invested in the past – those with the most to lose should existing systems be scrapped in favor of more efficient but ultimately unfavorable solutions or those whose egos would be most called into question if national governments finally confessed that they were misguided or simply unsustainable. It can be difficult to admit that you got it wrong and in top-heavy countries like Spain, Italy, Greece and even Germany, getting some momentum behind questioning the status quo can be downright impossible. Recently, there have been a few stories coming to light that do well to demonstrate this challenge, as countries’ old guard have begun pushing back against reform efforts, occasionally in transparently desperate ways.

In Athens, amid loud charges that any call for greater oversight or financial transparency is a conspiracy by EU powers to consolidate power in Brussels, this push back has even resulted in charges of treason. Brought into the Greek government to provide a semblance of order after the country’s deficit was found to be double original reports, Andreas Georgiou set about trying to create what he hoped would be a functional, honest and ultimately boring Hellenic Statistical Authority or ELSTAT. Once the head of the International Monetary Fund, Georgiou was offered up as a technocratic solution to investor worries about the validity of Greek economic information, meant to calm nerves by offering the clearest picture of Athens’ fiscal standing and how much help was actually needed.

Once in place, Georgiou found the task to be far more difficult than first thought but after some effort, he was able to present a firm deficit number with 15.8 percent of GDP, up from the 13.4 percent the statistics office had previously offered up. Sure it was higher than what was expected but it provided a firm place to start working. The reaction from the country’s old guard – namely the ones who had previously and erroneously reported the rate to be around 6 percent – was not what he expected, but possibly should have. According to a Planet Money report, the office first demanded that the report should have been subject to a vote by a statistics department board and union, suggesting perhaps that the figure was up for discussion. Following a possible hacking of his computer, Georgiou was informed that he would face treason charges for actions against the state and could face life imprisonment. For providing a figure that called into question the absolute authority of a body already shown to have provided dangerously faulty economic statistics, Georgiou could face a lengthy stint in prison.

For some the charges fit into a larger narrative of EU overreach, with the new figure meant to allow for greater oversight from Brussels and forced, painful austerity measures but the message of the charges was clear – despite being at the helm when the country got into this mess – when these grand mistakes were made – we are not to be questioned.

Not relegated to financial problems, this old-guard push back can be seen in Spain with the on-going trial of Judge Baltazar Garzon. The controversially crusading judge, who has previously gone after Augusto Pinochet, members of Galician drug smugglers and the Basque separatist group ETA, finally pushed too far when he aligned himself with family rights groups intent on pursing investigations into disappearances during the years under Francisco Franco. First joining with the groups in 2008 as a part of a push to excavate mass graves believed to exist from the Franco period, Garzon immediately ran into resistance from members of the government who pointed to mass immunity agreements passed during Spain’s transition to parliamentary democracy in the late 1970s. Not only that, these campaigns would be chasing ghosts as many, if not most of the perpetrators in question were long since dead.

At first persuaded against continuing thanks to political pressure in 2008, Garzon again took up the mantle and opened an investigation into the death of 114,000 people during the Franco period. As an investigating magistrate, Gazon can initiate cases rather than just oversee them. In response, the political pressure has evolved into charges out outright abuse of power, perverting the course of justice and most recently, of accepting bribes while on sabbatical at New York University. The message seems clear – do not question the actions of our recent past – there are to many with investments in keeping the past where it belongs.

I know it may strike some as a stretch to connect these stories but I believe that both demonstrate an unwillingness by the old guard to face up to the questionable actions of some to the detriment of the country. If these events are not addressed, is it fair to expect them to be avoided again in the future? And should that old guard retain the ability to bury those events firmly in the past?

Image: Baltazar Garzon in El Mundo

Tagged , , ,