Spain leader vows hard line as hundreds of thousands protest austerity

Fed-up Spaniards took to the streets in a national strike Thursday, as Prime Minister Mariano Rajoy struggled against waning political support for his unpopular economic policies. 

Hundreds of thousands of Spaniards marched Thursday in the first general strike against strangling austerity, only the most recent challenge to the new conservative government of Prime Minister Mariano Rajoy fending off resistance from all sides.

“We can’t take this anymore,” says Eva Cañamares, a station manager in Madrid’s subway system. Her 11 and 9-year old children were passing out union flags beside her in the central Puerta del Sol plaza, where tens of thousands chanted against government economic policies.

“I’m here for my children. They are taking away all our rights and this also affects them,” Mrs. Cañamares says, echoing the strike’s slogans. “They want to do away with everything.… The government just wants to take away everything and not even negotiate."

By early evening, there were more than a dozen injuries, dozens of arrests, and violent clashes reported throughout Spain, but these were the exceptions to the mostly peaceful march.

The strike was long expected and almost certainly won’t be the last. Many stores in Madrid shut down and transport was limited to 30 percent of its usual service, causing chaos. But support for the strike was also far from universal.

Still, patience is thinning after more than three years of budget cuts and ever-growing unemployment. It will likely be at least two more years before the economy hits bottom. 

And the austerity pains are unlikely to abate anytime soon. Despite Spain's contracting economy amid years of austerity, the European Union has been emphatic that it will not budge on its order that Spain cut its deficit to 3 percent of GDP by 2013, although it has been flexible about targets for this year.

The political costs of being in government

But toeing the EU line now comes with political costs. Mr. Rajoy, whose party handily won national elections in November, is losing political support on several fronts.

In March 25 regional elections, his Popular Party failed to boot the Socialists from power in their historic bastion of Andalucia, Spain’s most populated and second-biggest autonomous region. Polls suggested a landslide victory from Rajoy’s party and the government went as far as defying Europe by delaying its 2012 budget proposal and its most severe cuts until after the vote to secure the win.

In the end, though, most of the votes the Socialists lost went to other parties, exposing the political cost of the economic reforms Rajoy's party instituted in its first 100 days of government.

Rajoy is also facing internal dissent from the more conservative wing of his party, which is demanding even more austerity, on top of a reversal of the hallmark liberal social policies of the previous government, including abortion and education reform.

But the government, through Labor Minister Fátima Báñez, made it clear it will not backtrack just hours before tomorrow's 2012 budget presentation, when it will reveal the details of its budget.  

“The reformist path is unstoppable,” Ms. Báñez said. The party already won an absolute majority in Parliament, “the home of dialogue and negotiation,” she said, suggesting the government has no need to negotiate.

“This is not going to stop,” says Fermín Bouza, sociology professor in the Universidad Complutense de Madrid, and an expert in voter sentiment and public opinion.

“People were faced with an economic crisis, and they threw out Socialists. They would have replaced any party. Spain has always swung between center-left and center-right, but now that they were faced with a more conservative government, they are balking.”

The hard road to austerity

Spain, like the rest of Europe, over the decades built a strong welfare state, with inexpensive education, free healthcare, unemployment benefits, and a robust pension system. But the global financial crisis that started in 2008 burst the real estate bubble that fueled Spain’s formidable economic growth for more than two decades. Millions of unskilled laborers lost their jobs. Spain needs not just economic growth, but an entire makeover of its economic model.

The previous government implemented one of Europe’s strongest austerity drives, cutting public salaries, extending the retirement age, raising taxes – all to cut the deficit from 11 percent in 2009 to 8.5 percent in 2011. But a lagging global recovery is forcing even stronger austerity measures that are eroding Spain’s welfare state.

Rajoy will cut between 30 billion and 40 billion euros in 2012 to reach the EU revised target of a deficit of 5.3 percent of gross domestic product, up from a 4.4. percent target set in 2009. Final figures will be released tomorrow. 

Of all the measures, the changes to labor policies introduced in January have been the toughest sell. Spain’s 5.3 million unemployed, in a population of 46 million, is Europe’s highest by far. They basically allow companies to fire employees more easily, quickly, and cheaply than before, which the government admits will increase unemployment in the short term, but spur job creation in the long term.

“Spain already had a dictatorship. People forgot too quickly what it was to live without rights,” says Tamar Awad, a 31-year-old architect in the march. “It will create more jobs, yes, but they will be precarious and that is not the way to recover."

Squaring off with the unions

Indeed, labor disputes are not new.

“Spain is an old country with a long history of labor struggles. People will not easily accept this reform,” Dr. Bouza, the sociology professor, says. “People would accept it if there was no other choice, but they believe there is one.” 

The country’s biggest labor unions have given the government until May 1, Europe’s Labor Day, to revise its labor reform or face more strikes.

Bouza says unions in Spain are trying to buy time to allow a resurgence of support for the left unfolding elsewhere on the continent, particularly France and Germany, to take root. Their hope is that with more regional support from neighbors, Spain's Socialists and unions will be in a stronger position to negotiate with Rajoy. 

What seems certain is that while Europe makes up its mind how to return to growth, pressure on Rajoy from all sides is only bound to increase.

What happens after that is uncertain, but Ms. Awad is not optimistic. “This won’t change. It’s not just Rajoy and the [Popular Party]. It’s the Socialists, and the other parties. And also the unions, which are so politicized. They don’t represent the majority.”