SPANISH REACTION:IN 2008, when the euro zone debt crisis was still just a storm on the horizon, the Spanish prime minister at the time, José Luis Rodríguez Zapatero, said Spain had "perhaps the most solid financial system in the world".
The country was not a member of the G8, but its banking might, led by the likes of lenders Santander and BBVA, was one of the main arguments Zapatero used to persuade the members of that group of nations to include Spain in future summits.
Four years on, and Spain has had to request a bailout from the European Union, with the country’s once-vaunted financial sector the beneficiary.
The rescue package may not be as all-encompassing as those offered to Greece, Ireland and Portugal, but it is seen as every bit as necessary, due to the vulnerability of the Spanish banks and the size of the sector.
It confirms a dramatic fall from grace for an economy that had for so long been seen as an example to the rest of Europe.
“This rescue isn’t going to help Spanish families, who are the ones suffering, it’s just help for the banks,” says charity worker María Andrade, who points to an unemployment rate of 24.4 per cent. “We’re supposed to be a big economy and yet we have to ask for a bailout. It’s . . . humiliating.”
Economist David Gomez of Rey Juan Carlos University believes Spain should not be embarrassed about its banking problems, particularly the bad assets on lenders’ books. He points out that many other European countries have had to inject funds into their banks to stop them from going under.
“The problem in Spain,” he says, “is it’s been very late.”
The struggling financial sector – particularly the woes of nationalised lender Bankia – is a major reason why Spaniards have watched as their country has been buffeted by the international markets in recent weeks, despite an aggressive programme of austerity and reforms by the government of Spanish prime minister Mariano Rajoy.
A poll by Metroscopia, just days before the bailout was confirmed, showed that 64 per cent of people expected an EU rescue.
For some, the announcement came as a relief. “As far as I was concerned, Spain already belonged to the group of countries that have been bailed out,” says Pedro Antequera, who sells vehicle parts. “Every morning recently we’ve been waking up to bad news about the country’s risk premium.
“The fact the bailout has finally been confirmed makes me think ‘thank goodness, maybe now all this uncertainty will stop’.”
The crisis has brought an abrupt halt to three decades of economic modernisation in Spain. The most recent boom, which started under the government of José María Aznar in the late 1990s, is blamed by many for laying the foundations of the banking debacle by encouraging a property bubble.
The troubles continued to brew as Zapatero also refused to cool an overheated real-estate sector. His policy of denying the seriousness of the crisis and maintaining social spending only changed in the spring of 2010, when he performed a dramatic turnaround at the behest of EU authorities.
“The truth is, the Spanish economy has been the subject of intervention for months,” says right-wing commentator Fernando González Urbaneja.
He was summing up the feelings of many across the political spectrum in Spain, who feel their economy, once the toast of Europe, has lost both sovereignty to Brussels and prestige.
