With Spain suffering the highest unemployment in the European Union and its economy expected to remain in recession for a least another year, things are looking bleak for Prime Minister Jose Luis Rodriguez Zapatero. Now it seems the government in Madrid has found a convenient scapegoat for its travails: the Anglo-Saxon media allied with nefarious speculators looking to undermine the euro.
On Sunday the center-left El Pais newspaper reported that the Spanish intelligence agency was looking into "speculative attacks" on Spain following the Greek debt crisis. Citing unnamed sources, El Pais said the National Intelligence Center (CNI) was investigating "whether investors' attacks and the aggressiveness of some Anglo-Saxon media are driven by market forces and challenges facing the Spanish economy, or whether there is something more behind this campaign."
Europe's fifth largest economy may have avoided the huge public debt incurred by Greece, and its banks are fairly solid, but Spain's over-reliance on the construction industry during the boom has left its economy floundering in the recession, with a near 19 percent unemployment rate, and its difficulties in slashing public spending are causing concerns in Europe.
Investors have voiced growing anxiety over rising debt levels in the single currency area, the euro zone, and over the ability of some governments to manage public finances, giving a quintet of shaky economies, Portugal, Ireland, Italy, Greece and Spain, the unflattering moniker PIIGS.
Stressing Spain's 'Solidity'
Economists have questioned assertions by the government in Madrid that the economy will grow by some 3 percent by 2012. Spain's deficit has soared to 11.4 percent of its gross domestic product, well ahead of the euro zone 3 percent limit. There are doubts that the country will manage to stick to its pledge of slashing €50 million ($70 million) off public spending, particularly because in a heavily decentralized Spain, powerful regional governments control a big slice of the budgets.
Zapatero's Socialist government has bristled at comparisons with Greece, which saw its pubic debt burden rise to 113 percent of GDP. Last Tuesday the Spanish prime minister urged calm and stressed his country's "solvency and solidity." He told a meeting of Socialist lawmakers in Madrid that "there are movements that have brought a great deal of concern on the stock market. It seems there are speculative movements."
Infrastructure Minister Jose Blanco raised eyebrows last week when he alluded to shadowy forces ganging up on the country. "Spain is the victim of an international conspiracy to destroy the country's economic status, and then, the euro," he said. "Nothing that is happening, including the apocalyptical editorials in foreign media, is just chance."
British business daily The Financial Times and the market-friendly weekly The Economist, have been particularly critical of Zapatero's handling of the economy. On Friday The Economist rejected the accusations of an Anglo-Saxon plot as "piffle," writing "the best retort is: grow up."
Yet, if the El Pais report is correct, it would seem the Spanish government is taking the matter very seriously indeed. Officials at the Spanish Defense Ministry and the CNI have, however, neither confirmed not denied the report so far.