Greece's economic turbulence is dominating political debate in Spain ahead of a year-end general election, with the ruling conservatives pointing to Syriza's difficulties to discredit its Spanish ally Podemos.
In the escalating tug-of-war between Athens and its international creditors, Prime Minister Mariano Rajoy's government is pushing the message that its reforms have stifled the risk of contagion from Greece and the two nations are not comparable.
"We have the instruments... to deal with market volatility," Economy Minister Luis de Guindos said July 6, a day after Greek voters defiantly rejected terms for a new EU-IMF bailout.
He said Spain's banks had been shored up, the public deficit more than halved, and "macroeconomic imbalances have been corrected", with the government forecasting growth of 3.3 percent this year.
Spain's economy is much larger than Greece's -- it is the fourth largest in the eurozone -- and its population of 47 million is over four times greater.
On the face of it, Spain’s leftwing anti-austerity Podemos party should have been crowing at the landslide victory of the no vote in Sunday’s Greek referendum. But while Podemos leader Pablo Iglesias was quick to praise Syriza and Greek prime minister Alexis Tsipras, his overriding message was a simple one – Spain is not Greece.
With a general election due in Spain by the end of the year, Iglesias, whose party made substantial gains in local elections earlier this year, was careful to mark the differences between the two countries, worried, analysts said, that any worsening of the situation in Greece could drive crucial middle-class voters away from his party.
We have a great friendship with Syriza, but luckily, Spain is not Greece,” Iglesias told radio Cadena Ser. “We’re an economy with much more weight in the eurozone, we’re a country with a stronger administration and with a better economic situation. The circumstance are different and I think it makes no sense to draw parallels.”
Instead, Iglesias framed the referendum as a step forward for democracy in that the Greek people had finally been handed the power to decide on austerity measures. “It’s good news for Europeans and Greek citizens,” said Iglesias. “The people of Greece have said they want change, they support a government who says that things can be done in a different way.”
The referendum was a clear success for Tsipras, said political scientist Fernando Vallespín from Madrid’s Autonomous University. “The automatic assumption is that what is good for Tsipras is good for Podemos,” he said, but he feels it is too early to say whether that is the case, pointing to the efforts made by Iglesias to distance Spain from Greece.
Reinforcing the differences between the countries dampens the idea of contagion, he said, and maintains the party’s appeal to moderate voters. The latest polls show Podemos is in a virtual tie with the governing People’s party and opposition Socialists.
Spain’s finance minister, Luis de Guindos, said that although the no vote made the situation more complex, Spain was “absolutely not contemplating a Greek exit from the euro”.
Greece’s creditors had not handled the crisis perfectly, he said, but the onus was now on Greece to enact reforms. “I think there were mistakes on the part of the troika, but it is inevitable that Greece implements reforms because there have been nations that have done them and they are emerging from the crisis.”
The Spanish government is open to negotiations for a third rescue package, he said. “Given the circumstances, from the point of view of the markets, it is absolutely necessary.”
His remarks were a backing down from the hardline position taken by Mariano Rajoy, Spain’s prime minister, who last week said that it would be good for Greece if Tsipras lost the referendum. “If he wins the referendum, Greece has no other alternative other than to leave the euro,” Rajoy told Cope radio station on Tuesday.