Candidates play the Euro card

Date: 15/02/1996

By Pedro Lopez de Pablo

NEVER before has European policy been a subject of primary importance in a Spanish electoral campaign.

But things are different this time around. The candidates themselves have put the subject on the agenda, because the government elected on 3 March will be the one charged with taking the necessary steps to ensure that Spain qualifies for economic and monetary union.

Except for Communist Julio Anguita, leader of the Izquierda Unida (United Left), nobody has questioned either the EMU project or Spain's need to be in the first group in 1999. There is virtually no debate about the conditions for joining EMU, and neither of the two main parties has challenged the timetable or the convergence criteria.

Both the Partido Socialista Obrero Español (PSOE) and the Partido Popular (PP) appear to agree with Banco de España Governor Luis Angel Rojo that it would be absurd for Spain to exclude itself from EMU by speculating on whether the criteria will be applied flexibly, or whether the timetable will change. Rojo argues that Spain must do for EMU what it should do for its own economic health, and the country's economy is now at the centre of the electoral debate.

With no great foreign policy differences between the PP and PSOE, Spain has been ruled more or less by consensus in recent years. But that unanimity vanishes when the measures needed to qualify for EMU are at issue.

In its January report, the Organisation for Economic Cooperation and Development (OECD) said Spain might qualify for the single currency if it succeeded in reducing social spending and cutting the costs of firing or laying off workers.

Both Prime Minister Felipe Gonzalez, the PSOE's candidate, and his rival from the centre-right PP, José Maria Aznar, while acknowledging the need for cuts, are concealing their reform strategies. Given the unpopularity of the measures, they feel that talking about them will only translate into lost votes.

But Gonzalez preaches that the welfare state is untouchable and boasts that retirement benefits and social protection have never been as generous as under his rule.

The PSOE also claims that the PP's economic platform, which is based on a tax cut, is incompatible with the EMU goal of reducing public deficit to 3&percent; of GDP.

Anzar has been fighting back. He used a lightening trip to Brussels last week, during which he was elected vice-president of the centre-right European People's Party, as an opportunity to declare he would apply the policies needed to attain the convergence criteria because they were “common sense criteria”.

Aznar's possible finance minister, Rodrigo Rato, insists a PP government could make tax cuts and cut the deficit at the same time if it reduced spending, adding that this should be easy after years of waste by a socialist administration. He also recommends privatising some healthy public enterprises, as well as making “structural reforms” to facilitate investments and create jobs. But he declines to reveal what he means by “structural reforms”.

The PSOE responds by saying the 'right' simply wants to dismantle the welfare state. If the PP wins, it says, workers will be fired without compensation, social benefits will be cut and Spaniards will revolt the way French workers did two months ago.

To fend off those criticisms, Aznar has announced that if he emerges victorious from the polls, he will spend his first day in office talking to the social partners about how to boost the Spanish economy. But Gonzalez is not waiting that long. The day after Aznar's statement, he organised his own meeting with union leaders.

The PSOE is playing the Europe card for all its worth, arguing that no one can doubt that if Gonzalez was a good EU president in the second half of last year, he should certainly be a good prime minister for Spain.

It makes much capital of the fact that Gonzalez, premier since 1982, has been rubbing shoulders with Europe's leaders for 13 years and claiming the less- experienced Aznar would look lightweight next to his colleagues in Germany and France - something Spain does not want in the very years when the 'new Europe' is being designed.

Gonzalez hopes his EU successes can help override the darkest episode of his rule, the scandal of the dirty war against ETA which involved his former Interior Minister José Barrionuevo.

So far, the polls do not suggest that Gonzalez' triumphs in Europe have helped, with even the most favourable putting the PSOE between 6 and 10 points behind the PP.

But the war of words is set to continue right up to polling day, now less than three weeks away.