Can Spain survive tough new austerity measures?
This week, the government of Spanish Prime Minister Mariano Rajoy unveiled a slate of tough new austerity measures that are intended to reduce the government's budget deficit by $84 billion over the next two and a half years. Rajoy's proposal is likely to pass given his party's control of parliament, but that didn't stop tens of thousands of protesters across the country from rioting and clashing with police. Another escalating factor: The leader of Catalonia, a region with a historically tense relationship with the central government, said he may allow Catalans to vote on secession. Analysts say the austerity measures are part of a strategy to secure badly needed loans from the European Central Bank (ECB), but they're guaranteed to usher in a whole new world of pain for Spain's workers, a quarter of whom are already unemployed. Can Spain survive more austerity?
No. Europe has to end its austerity fixation: The Spanish public is, "in effect, saying that it has reached its limit," says Paul Krugman at The New York Times. "With unemployment at Great Depression levels and with erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far." The maddening part is that "more austerity serves no useful purpose," merely prolonging recessions that only exacerbate yawning budget deficits. The ECB must shore up Spain's finances — "and it should do so without demanding more pointless pain."
"Europe's austerity madness"
Yes. Austerity is the only way forward: The only way the ECB can intervene is if its loans come "with many strings attached, including stern austerity measures," says James Ashton at the London Evening Standard. Otherwise you can expect "howls of protest from the Germans, who feel they are being forced to underwrite other countries' mistakes." It's true that Europe could set debt-reduction targets "at more achievable levels" to prevent unnecessary pain and ease doubts that Spain can actually come through on its promises. But overall, "such desperately needed short-term actions pave the way to a longer-term solution to this crisis."
"Spain's fate is key to the eurozone"
Rajoy can't win either way: "Spain has entered into a permanent crisis," says Alen Mattich at The Wall Street Journal. The bond market and the ECB are only too happy seeing "Spaniards protesting on the streets," because it means the government is serious about austerity. So Rajoy's government must try to "keep people protesting austerity without actually causing the country to go into meltdown." It's inevitable that Rajoy "will get the balance wrong" — and that could mean disaster not just for Spain, but for Europe.
"Europe's never-ending crisis"