For a man who permanently wears a beard to hide the scars on his face (not a shark attack, a traffic accident) then Mariano Rajoy, the Prime Minister of Spain, is a reassuringly dull and dour. Perfect for times of austerity one might say; Sarkozy-esque Presidentialism does not go down well in Europe where people have been reduced to (unknowingly!) eating horse meat.

Image courtesy of L y J, ©2013, some rights reserved.
Image courtesy of L y J, ©2013, some rights reserved.

When Spain’s centre-right Partido Popular was elected with an absolute majority in the ‘Congreso de los Diputados’ in December 2011, with Señor Rajoy at its head, he had a reputation for personal honesty. As an enormously experienced politician who served as Deputy Prime Minister under the Aznar administration and was Aznar’s anointed successor, he was heavily tipped to win the 2004 elections. However, proving the notoriously unpredictable nature of politics, the 2004 Madrid bombings took place three days before voters were due to go to the polls. In a fug of national mourning, a rabid media wanting to apportion blame and confused intelligence reports Rajoy issued a press release stating that ETA (the Basque separatist group) had perpetrated the terrorist attacks. As it later transpired that Al-Qaeda had claimed responsibility then his overly hasty judgment was portrayed by the Spanish socialists (PSOE) as a deliberate ploy to bolster the national security credentials, an issue in which the PP are generally stronger than the PSOE.

He may have at least found solace in ex-British Prime Minister Harold MacMillan’s muse on the what is most likely to disrupt even the best laid plans for political careers and governments ‘events, my dear boy, events’.

The political and economic situation in Europe has transformed out of all recognition since his 2004 election defeat, meaning his 2011 electoral platform of cutting the public deficit was similar to that of the Conservatives in the UK 2010 election.

Top of his agenda was the taming of Spain’s profligate semi-autonomous regional governments as well as a dose of central austerity. This has led to unemployment spiking at 26% and debt to GDP ratio reaching a vertiginous 91%. Luckily for him, Mario Draghi of the European Central Bank has flooded the market with money to recapitalise the Spanish banks, with the result that that Spain’s 10 year bond yield is currently teetering just over 5%, instead of the 7.5% that it reached in late July 2012. By way of comparison, the UK’s hovers around the 2% mark, despite losing its AAA credit rating last week.

Rajoy’s reputation for sober decision making amidst the slow motion car crash that is the Eurozone crisis, is precisely why the Bárcenas scandal is enveloping the political class in Madrid is so damaging. The allegation is as follows: the ex-treasurer of the Partido Popular, Luis Bárcenas, ran an off-the-books fund (all the accounts were handwritten records) into which party donors could pay varying amounts would then be distributed among the party’s top brass: including the supposedly incorruptible Señor Rajoy. These payments averaged out at around 25,000 euros annually.

As ever with cases of tax evasion, the tentacles of corruption go deep and transcend national boundaries. Indeed, national interest in the case had largely dissipated until the national newspaper ‘El País’ launched an <Yo acuso!> in mid-January 2013 by splashing the news on its front page that Bárcenas had over 22 million euros squirrelled away in secret accounts in Switzerland. It should be stressed that Bárcenas has denied all the accusations, stating that the money in the account in Switzerland is from legitimate business activities. For his part, Rajoy has ordered an external party audit of all the accounts of the Partido Popular and described the handwritten accounts as ‘apocryphal’. Rajoy has also stated his innocence and, in a bid to draw a line under the scandal, has published all his tax receipts online for the past decade. (They can be found here:http://www.lamoncloa.gob.es/Presidente/biografia_new/070213rentaypatrimonio)

Allegations of personal corruption on this scale are sometimes enough to kill ailing governments, unless one has the zombie-like redemption powers of Silvio Berlusconi (or just own all of the media channels?!). The pressure from Berlin and Brussels to duck and weave through this scandal will be immense and one senses that Rajoy has been stunned, but is yet to take a knockout punch. The Bárcenas case has certainly hurt the Partido Popular’s popularity and moral authority; but perhaps the most worrying thing for Spanish democracy in the long term is that, ironically, the opposition PSOE has not seen in a massive uptick in support.

This is a conundrum. How can the opposition not take advantage of a government that is imposing a ravaging austerity programme on its public sector (in concordance with the edicts from Brussels)? Here is a country where a burst housing bubble means thousands of people are in negative equity, or are simply defaulting on their mortgages, a country in which real wages are spiralling downwards with no prospect of growth in the near future, and it is now allegedly led by a bunch of heinously corrupt individuals who are siphoning off funds to ‘top up’ their own salaries.

The answer is that this scandal is simply symptomatic of a much broader and deeper crisis of authority among Spain’s political and social elite. The electorate are starting to categorise politicians as a hegemonic, homogenous group who all implicit in a system that is rotting from the inside. Hence, whilst the Bárcenas scandal is personally damaging to Rajoy in the short term, the reaction to it from the electorate is perhaps the most damaging of all. The feeling of stoicism is palpable in the Spanish electorate. Rajoy’s Partido Popular will most likely defer their electoral punishment until 2015 due to the lack of a credible alternative; but if not, this scandal could yet have Europe-wide implications.

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