2006 was the peak year of consumer frenzy in Spain, with the country in a state of unprecedented euphoria. More than 800,000 homes were built that year - more than in the rest of the European Union (EU) countries combined - despite the fact that only 300,000 homes actually were needed to fulfil Spain's demographic requirements at the time. Since 1995, the country's economy has grown at a faster rate than the EU average of 2.9% and that of the eurozone (2.7%). In 2007 Spain's economy grew at a rate of 3.8% and, for the third year running, grew more than that of any other member of the elite economic club, the G-7. Although symptoms of economic deceleration had already started to emerge in 2007, both the Finance Minister at the time, Mr. Pedro Solbes (who served as EU Commissioner for Economic and Monetary Affairs between 1999 and 2004), and the President, Mr. Rodriguez Zapatero, downplayed the situation, arguing that the economy was strong enough to overcome any real threat.
Spain, apparently, was not in trouble at all. The entire country was in party mode. Clearly, since the era of Philip II, the Prudent King, now five centuries past, the country had not experienced such a period of continual growth. During Philip II's reign, the Spanish Empire became, for a sustained length of time, the world's chief European power. The Spanish Empire became a global empire because, for the first time ever, Spain had assets that spanned the continents. That is, in contrast to the vast and mighty Roman Empire, Spain's Empire extended across not only land, but seas and oceans as well.
After waiting five centuries, it is logical that Spain would think about reaching for the sky once again. Finally, by 2006, Spain had achieved sustainable growth and was considered a key player within the European Union. Spaniards were enjoying a strong currency. They had finally left behind the peseta and adopted the euro, and they could see, miraculously, Spain's purchasing power edging closer to that of the other EU countries. Spain was walking on air.
Then suddenly, in 2007, the party was over. Now, the Spanish Ministry of Defence is unable to pay for the tanks, aircraft and frigates procured over the last few years, leaving a deficit of 26,000 million euros. The social security fund of the Autonomous Community of Castilla la Mancha owes local pharmacies in excess of 150 million euros. As if this debt isn't enough, Madrid City Council's lack of liquidity has resulted in a debt to waste collection and cleaning companies that is close to 300 million euros. These businesses, in turn, threaten to suspend their services to the city.
So what has happened to Spain? Evidently the governments the country has had over the last decade cannot be compared to the court of Philip II. The economic and political growth in Philip II's time was real, whereas that of the last few years is clearly fictitious. Spain hasn't grown; it has simply mortgaged itself, and these days it's down to the citizens to pay.
On the 20th of November 2011, Spain will hold its general elections. Most probably, the government will turn rapidly to the right. Surprisingly, the right wing frontrunner Mariano Rajoy, has kept relatively silent for the last eight years. It is assumed that when the time comes, Mr. Rajoy will finally speak out about his economic adjustment plan. Mr. Rajoy, like Philip II, is a prudent man.
With much skill and at a steady pace, Mr. Rajoy has selected his closest allies extremely well. By carefully controlling his actions and keeping an extremely low profile, Mr. Rajoy has remained at the forefront of the Peoples' Party (Partido Popular) over the past few years. Clearly, within his own party, Mr. Rajoy is a skilful and charismatic leader.
Much has been said about Philip II's monarchy, but it is clear that XXI century Spain is not the same as XVI century Spain. Now, apart from wisdom, a candidate will also require a substantial amount of charisma to help rid the country of its tremendous economic unrest. Taking into account the bewildered state of contemporary Europe, this moment is, without a shadow of a doubt, a golden opportunity that Spain absolutely cannot let pass by. It would be good for Spain, and for all of Europe, if Mr. Rajoy would reveal to the nation his wisdom and charisma, which has shone brightly within the Spanish Peoples' Party and which Europe now desperately needs.