Spain: Corruption, Capitalist Crisis and a regime in Crisis

On 31 January the Spanish paper El País published several documents showing top leaders of the ruling Popular Party receiving regular payments in cash from the party. The money was illegal donations by top businesses, particularly in the construction and private security sectors.

This is the latest in a series of corruption scandals affecting political parties and institutions in Spain and severely damaging the reputation of bourgeois democracy as a whole. As such, it is only adding to the anger amongst the masses, which has been accumulated under the imposition of the austerity measures aimed at making the workers pay for the deep crisis of Spanish capitalism.

Barcenas secret books revealed by El PaisThe documents published by El País, showing the secret accounting kept by former party treasurer Luís Barcenas, confirms information published previously, by El Mundo newspaper, about PP leaders being paid regular amounts in brown envelopes. This information comes to light as Barcenas is being investigated for tax fraud in relation to secret bank accounts in Switzerland where he held 22 million euro. To add insult to injury, Barcenas, a long standing PP member, who acted as the party's financial manager for 20 years and then as its treasurer for one year in 2009, was able to repatriate some of that money under a tax amnesty offered by the PP government last March. When this latest scandal broke out, the PP leadership tried to distance themselves from Barcenas, alleging that he no longer played any role in the party. But soon it was revealed he still had an office in the national PP headquarters.

The most recent information published by El País about payments to party leaders involves current president Mariano Rajoy, all the party general secretaries for the period covered in the documents (going back to 1997), the party's deputies for the same period and other prominent leaders like Rodrigo Rato and Jaime Mayor Oreja.

The first reaction of the PP leadership has been to deny everything, energetically protest and threaten all those who are “slandering” them. However, the case is unravelling very fast. Graphology experts have declared that the handwriting in the documents published by El Pais corresponds to that of Luís Barcenas. The president of the Senate, García Escudero (PP), has also admitted having received a “loan” from the party which he then paid back. This should have been the reason for an entry about him in Barcenas bookkeeping published by El País.

Even more interesting than the payments written down in the documents, is perhaps where this money comes from. Important Spanish businessmen, including CEOs of companies in the IBEX35 stock exchange index are listed as having paid hundreds of thousands of euro to the party. Many of these companies benefited from government contracts at different levels, particularly in public works. Those mentioned include Luís del Rivero, a former CEO of construction group Sacyr Vallehermoso; the marquis of Villar Mir, former Franco regime official and owner of OHL construction group (involved in toll road and highway concessions and also the building of the famous Real Madrid Sports City sky scrapers); José Mayor Oreja, the brother of PP leader Jaime Mayor Oreja and CEO of construction group FCC, also heavily involved in public works and the building of the Real Madrid sky scrapers.

Barcenas bookkeeping also involve payments to the Basta Ya! Group, which later became the UpyD political party. UpyD is a right wing populist group, which presents itself as being “neither right wing nor left wing” but only concerned with “the struggle against corruption”. Also mentioned in the papers as receiving donations from the PP is the vocal extreme right wing internet portal Libertad Digital.

This is not the only corruption scandal in the headlines of the Spanish papers. A leading MP from the Catalan bourgeois nationalist CiU party, Xavier Crespo, is being investigated because of allegations, that he received money from the Russian mafia when he was the mayor of Lloret de Mar. A series of former officials in the Catalan government have been tried and charged with diverting unemployed training funding to their own party UDC (part of the CiU coalition). Those involved in this case, known as Pallerols after one of the main accused, were given lenient sentences (which means they will not go to jail) in exchanged for giving back part the money stolen, which was then paid by the party itself. None of the party leaders resigned.

Meanwhile, the investigation into King Juan Carlos son in law, Urdangarin, has seen him accused of using his royal credentials to extract money from public institutions, regional and local governments for the personal enrichment of himself and his associates. The scandal has affected the Monarchy as a whole, which has now deleted Urdangarin from their official website. This has added to the growing questioning of the Monarchy as an institution.

It is not just the corruption scandals and the fact that ever higher up people and institutions are being tainted by them. These are the same people and institutions which are imposing tens of thousands of millions of euro in austerity cuts, privatising health care, destroying state education, bailing out the banks to the tune of tens of thousands of millions of euro … all under the pretext that “we are all in this together” and “we must all make sacrifices” and “tighten our belts”.

An employee of Bankia holds a placard reading "Consultants and politicians only guilty" as he protests against layoffs in the centre of Madrid. - Photo: ndtv.comWhile the rich and powerful are never caught, hardly ever charged and if so, almost never end up having to serve jail sentences, another case has also made the headlines in the last few days. An unemployed mother of two, who spent 193 euros buying food and nappies for her daughters with a credit card she found on the street will now have to serve a jail sentence after having already paid a fine of 900 euro. The contrast is stark and reveals clearly that under capitalism there is one law for the rich and another for the poor.

Corruption: Inherent in Capitalism

That capitalists paid a capitalist party to make sure it would rule in their interest should not come as a surprise to anyone. After all, this is always the case, even when illegal payments are not involved. Marx and Engels already explained in the Communist Manifesto how “the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.” Corruption is also inherent to the capitalist system, a system based in the commodification of all human relations. The purchase of law makers and politicians, the powerful lobbying companies created for the stated purpose of getting laws passed, regulations overturned and in general favouring certain businesses over others is widespread in so-called capitalist “democracy”.

In the case of Spain, the spiral of speculation and gambling involved in the huge boom which preceded the current recession, particularly in the construction sector, massively exacerbated these features. In order to build houses a company might need to buy a number of local councillors or mayors so that certain plots of land are given building permission. In order to be awarded contracts for the building of hospitals, roads, airports, it might be useful to bribe certain officials. If a company wants to get the concession for a toll road, or for the MOT inspection service, it might help to have friends in high places. Or, perhaps the process can be simplified if bourgeois politicians get a few business friends to set up a company for which a particular concession will then be created.

If you add to this mix huge amounts of money coming from mafia operations in the former Soviet Union and Eastern Europe which find in construction a lucrative avenue for money laundering, then you can see how corruption was the necessary side effect and lubricant to the enormous housing bubble which took place in Spain for nearly 15 years.

The combination of these constant stream of corruption scandals being revealed (and this has been going on for years) with the economic crisis (which has now destroyed 3.5 million jobs, bringing the total number of unemployed to 6 million, a record level of 26% and over 56% for the youth) and the massive attacks on acquired rights and public services has created a widespread discrediting of the whole edifice of bourgeois democracy and the capitalist system.

Changes in consciousness

An opinion poll carried out by Metroscopia for El Pais at the beginning of January, gave some very telling figures in this respect. An overwhelming 97% agreed with the statement “the current crisis is leading many people to increasingly mistrust our political institutions”, while 96% agreed that “the consequences of the crisis are not being shared equally amongst all social sectors, but being paid much more by the middle class and those with fewer resources.” The same opinion poll revealed that 73% of those asked though that Spain “is on the brink of a social explosion caused by the level of poverty and unemployment.”

Another opinion poll, published in July 2012 also by Metroscopia / El País, measures the level of approval of different institutions. The findings revealed a deep mistrust for the main institutions of capitalist democracy: 88% disapproved of the way banks and political parties work, 81% disapproved of Parliament as a whole, while 68% and 65% disapproved of the Supreme Court and the Constitutional Tribunal.

The ruling class is seriously worried about this situation. They can see how the implementation of the economic policies, that are needed in order to make the workers pay for the crisis of capitalism, is straining the legitimacy of the institutions which ensure the normal functioning of bourgeois democracy. There has been a deep-reaching process of politicisation of millions of people. Not only has there been a shift in consciousness, but also a massive increase in the participation of people in direct mobilisations. An official study released at the end of 2012 put the number of demonstrations in the first ten months of that year at 36,000 (not including the Basque country and with only partial figures for Catalonia). This figure is almost double that of the total figures for 2011. Millions of people have taken direct action, not only in the main general strikes and national demonstrations called by the trade unions and social movements, but also in thousands of local demonstrations against cuts and privatisations, against the closure of hospitals and libraries, in direct action to prevent home repossessions, in the occupation of bank offices and in other in strikes and protests.

Some sections of the ruling class are starting to wonder whether the PP government in its present form, discredited and worn out by the cuts and austerity packages which have been met with massive opposition, is still their best option.

When the scandal of illegal payments in the ruling PP party was revealed by the right wing paper El Mundo, the also right wing ABC, known for its loyal defence of the PP government against all odds, carried a front page with the pictures of politicians involved in corruption scandals and a screaming headline which read “Spaniards say enough!”. The editorial warned:

 “We run the risk therefore, of breaking the essential links of a democratic regime, above all that of the legitimacy of the system. If the Spanish people do not trust their politicians, they feel that their vote is wasted or misused, and sooner or later this break will take place, in which ideological extremisms and anti-system opportunists will thrive.”

The ABC called for a campaign of “regeneration of the political life,” that is, to wash the facade of the edifice of bourgeois democracy, so that its structures can be preserved.

The latest opinion poll by El País in January, gives the ruling PP only 29.8% of the vote (losing over 15 percentage points since the general elections in November 2011), but support for the social democratic PSOE is even lower at 23.3 (losing 5.4 points since the elections). The main beneficiary of the discrediting of the two main parties is United Left, which is now polling 15,6% (8.7 points above its result in November 2011). Not only has the PP experienced a collapse of voters support (from a peak of 46% immediately after the elections), but the PSOE is also seeing its voter support steadily decline.

The PSOE has been tainted one the one side by the counter-reforms it carried out during the Zapatero government period, which preceded the victory of the PP, and on the other hand by not having distinguished itself from the Rajoy government. The ruling class is worried that if this situation is allowed to continue, the United Left will grow even further, channelling the build-up of discontent which is accumulating. The same oppinion poll by El Pais showed that 84% do not trust the president Rajoy, but an even greater 91% mistrust the main leader of the “opposition” PSOE, Rubalcaba.

A government of national unity?

It is in this context that El País (and El Mundo a few days before) have published revelations which point the finger directly to the tops of the PP and the president himself. A week ago, before publishing the latest allegations, an editorial in El País exhorted the PP leaders to deal with the corruption allegations in a swift and sharp manner. What were they worried about? The explanation was clear:

“The situation of the ruling party puts the breaks on and weakens the position of the Executive when it comes to dealing with the economic crisis, to decide how sovereign debt is paid, how to fight unemployment or how to answer the Catalan independence movement.”

In other words, El Pais, representing some of the more far sighted sections of the Spanish ruling class, was warning the PP leadership to clean its act as they need a strong government with enough legitimacy to carry out the necessary attacks on the working class (“dealing with the economic crisis”).

In the same week as El Pais published this editorial, PSOE leader Rubalcaba appealed to all “social factors” for a “grand agreement to fight unemployment”, involving all political parties, the trade unions and the capitalists. What was being proposed basically was a slight slowdown in the deficit reduction targets, in order to cajole the unions into accepting the “necessary structural reforms” (read attacks on the acquired rights of the working class).

Yesterday, January 31, after El País published Barcenas' bookkeeping documents, the US ambassador to Spain, Alan Solomont, made a statement recommending a “national pact against corruption” in order to face up to the “discrediting of the political class and the government” in a moment of such a serious crisis.

In a few days, Mario Draghi will have a meeting with the Spanish parliament political groups. This will be behind closed doors. No minutes will be taken and no recordings will be made.  Here he will most certainly express the anxiety of the European ruling class with the continued crisis of Spanish capitalism and the danger of a social explosion in such a key European country.

The position of Rubalcaba in responding to the documents published by El País was also that of a responsible statesman. While he appealed to Rajoy to respond personally and publicly to the crisis, he insisted in the  reasons why he did so: “This is a critical situation and we have to be aware that with the economic crisis this cannot be taken anymore. In order to be able to ask the country for sacrifices, one must be transparent.” Of course, what worries him is not so much corruption per se, but the impact corruption scandals might have on the government's ability to implement cuts (“ask for sacrifices”).

Faced with this situation, the ruling class is already calculating what their best option is. The PP government is seriously eroded and faces overwhelming popular opposition, but the PSOE is not in a position to take over on its own. At some point a sort of crisis-, or national unity- or technocratic government might be necessary. Such a government could be justified, by the bourgeois, on the basis of fighting against corruption and taking the “necessary bold measures” needed to deal with the crisis.

This should be resisted by the workers' movement. The recent experience of Greece and Italy shows that there cannot be any sort of national unity in the face of capitalist crisis. In reality what this would mean is to remove a discredited government and replace it with another which might temporarily gain more support … so that the implementation of the same anti-working class policies can be continued.  The ruling class is seriously considering its options to try to solve what is clearly a very explosive situation.

The whole edifice of bourgeois democracy which was built in Spain in the aftermath of the revolutionary wave of the 1970s is in crisis. At that time the leaders of the Socialist and Communist parties betrayed the revolutionary aspirations of the masses by reaching a deal with the shaky remains of the Franco regime. They accepted the Franco imposed Monarchy and the Franco flag, abandoned the right of self-determination for the nationalities and agreed to a limited form of bourgeois democracy. That set up lasted for several decades on the basis of the enormous disillusionment with the betrayal of the revolutionary upsurge, the election of the PSOE government in 1982, and later on the prolonged but unsound boom of the 1990s / 2000s. The economic crisis has destroyed any basis for that relative stability and has thrown the whole system into disarray.

On the evening of 31 January there were already spontaneous demonstrations outside the PP headquarters in several cities across the country. The leaders of United Left correctly advanced the demands for the resignation of the government, punishment for those involved in corruption and early elections. This should be combined with the organisation, in unity with the trade unions, the different anti-cuts campaigns (the mareas or tides), the anti-eviction campaigns etc. of mobilisations linking up the struggle against corruption with the struggle against cuts, austerity and the attempt to make the workers pay for the capitalist crisis.

From a more general point of view, there is a danger of falling into the idea of the need to “regenerate politics” or to “reclaim democracy.” What should be explained clearly is that capitalist democracy is always the rule of an unelected minority (by legal or illegal means): the owners of the means of production. From that point of view, any struggle for genuine democracy must start by the expropriation of the IBEX35 companies, so that the key levers of the economy can be part of a democratic plan, decided by the majority in the benefit of the majority. In this way, the struggle against corruption and the opposition to the existing institutions can be linked to the struggle for socialism, the only genuine form of democracy there can be.