Melchor Miralles: A very good morning to you, Mr President of the Government.
President of the Government: Good morning.
M. Miralles: I would like to thank you in the name of the listeners to ABC-Punto Radio, the ABC.es website and the readers of ABC for this interview.
President of the Government: It was a promise I had to meet. I also have to confess that your insistence has made it unavoidable.
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M. Miralles: According to the Popular Party [Partido Popular] you acted weakly at the Brussels summit when trying to ensure that Spain could veto the financial funds. They say that you only did so when the Popular Party cautioned you. Although they don't criticise you publicly, that is what they are saying in private.
President of the Government: We should explain what we are talking about here. No doubt it's a technical question, but I have already talked about it with Mariano Rajoy on a couple of occasions. I believe that we are fully in agreement and there is no problem. This fund aims to give assistance to countries that may be having problems; and among other things, to help buy debt on the secondary markets. We are fighting for this fund. As a country, it is in Spain's interest that there should be a European fund to which all the countries contribute so that it should help countries in difficulties if necessary.
When the fund was approved in October, it could only act; it could only be applied, in specific cases, with unanimous approval. Now, and let's be clear about this, Germany has become more flexible in its attitude so that unanimity is no longer necessary. A majority of 85 per cent is enough. This figure of 85 per cent is the rule that is in place in the IMF. Now, it is in our interests as a country that the rule should be as flexible as possible because if this fund should have to be applied or to buy debt on the secondary markets tomorrow, or if we should have to ask it for help, it is in our interest that small countries with their combined representative total should not block it.
In other words, basically the 85 per cent is more in our interest. And what would introducing a 90 per cent rule have meant? It would have meant that we could have had a veto: but the fact is that as things stand, as circumstances are, we do not have a veto as Italy has, which has more than 10 per cent, and so with the 85 per it can do so; or Germany, or the biggest countries.
So there is no problem. I believe that the Popular Party focused on this to some extent, but at this stage of the debate Mr Rajoy knows perfectly well what interests us is that this fund should be applied flexibly and that the rules should be for a majority, in this case of 85 per cent, which represents some progress. I remember very well the discussion in October. In October I asked that it should not be by unanimity, because otherwise it would be more difficult to apply the fund. Thus what we have now is a step forward, and we hope that it is useful and operational.
M. Miralles: In May 2010 you were forced to take some measures that were radically opposed to those that you had defended initially, such as freezing pensions or lowering the wages of public-sector workers. Why did you not resign at the time and dissolve parliament?
President of the Government: For a very simple reason: a sense of responsibility. In other words, when one faces a situation that demands decisions are taken, even if they are difficult and whatever their cost, as I said at the time, one has to take them. Why? Because to involve our country at that time in an election process and not to take the decisions would have been an obvious risk.
I should remind you, although this whole process moves very quickly and is quickly forgotten, that it was not until April that we had a problem of market pressure on the interest rate at which we were financing ourselves. It is true that we had hit a very high deficit, but it was the Greek crisis, the debt crisis that showed that Greece could not tackle its debt, which generated a lack of confidence that began to extend across various European countries and that is now affecting practically all of them. Except for Germany, and to some extent Finland and Austria... very few - all have been affected.
M. Miralles: But we have been hit more than other countries, to say nothing of unemployment.
President of the Government: We are talking about measures I had to take to make adjustments and reduce the deficit. They were tough, difficult measures, but I believe that it can be said that without those measures in May, Spain would undoubtedly not have been able to continue to finance herself as we have been able to continue to finance ourselves, for all this time until now. I believe that we will continue to do so, because the sustainability of our trust and of our credibility is on the right tracks, although we still have a difficult task ahead of us.
M. Miralles: Do you have the feeling, Mr President, that when you talked about full employment in the first campaign - and I don't mean that you committed yourself, but you did mention full employment - and today the OECD says that we could reach an unemployment rate of 23 per cent… Do you have the feeling that you paid dearly for being so close to the trade union positions, particularly to the UGT and Cándido Méndez?
President of the Government: There are two points I'd like to make in this respect. First, during our first term of office we achieved the lowest unemployment rate in our democratic history, at 7.9 per cent. That was under my government. That is the basis on which we constructed the election manifesto, a manifesto that was issued, as everyone can recall, a long time before the collapse of Lehman Brothers and the most serious financial and economic crisis for the last eighty years.
I have been accused of not being capable of anticipating it, of seeing it, of recognising it. And of course I admit that, and I don't want to add as an excuse that the Popular Party's manifesto also talked about full employment, and that many international analysts, and all the official bodies, did not see this serious crisis we have suffered and that we are still suffering now. That's the first point. But of course I admit that with the difference between talking about full employment in the election campaign and what we have suffered on the job front, the voters have reasonably extracted their price from us; and I understand that, because we have lost a lot of jobs, which is our great problem.
And now for the second point I want to make: What makes us different from other countries in a negative way - and there are other countries that are different in other negative ways - is without any doubt the unemployment rate. This is a structural problem of the economy and Spanish society.
Since the transition to democracy, whenever there has been an economic crisis the unemployment rate has risen above 20 per cent. This is a very serious deficiency of our economy, a very serious problem. It has become structural, and for me the main challenge and predicament we are facing at the present time.
Why does this occur? Why is it that while in other countries where, when there is an economic crisis, even a serious and profound one, there is a rise in unemployment, but a more acceptable rise, while in Spain we lose this huge volume of jobs?
It's worth looking at a very significant figure that I like to share with my colleagues; I press them as much as I can to try to discover what the answer is and what the reason for it is. Compared with Germany, we have practically the same number of working hours. Spain and Germany have the same total of hours worked, but we have a completely different distribution of working time. In other words, there are many people who have no work, and that is why we have unemployment, but the global volume of work in comparative terms between Spain and Germany is similar.
Thus we have a problem that in my opinion goes beyond labour legislation. We have tried to make labour-market changes. I'm sure that the Popular Party will try to do so, and I hope they are successful, but in my opinion it is a question of something more than our labour regulations. There is a whole model that has become consolidated, a conventional system in which the labour market operates and in which many factors have an impact: sociological, those of our business structure, and how collective bargaining has been tackled historically. These factors mean that when we have a very serious crisis, we are incapable of maintaining employment, and the adjustment made by the economy is through employment.
This is the great pending problem since the transition to democracy in our economy; because our infrastructures have been modernised. It's true that we are behind in innovation and R&D, but we have made progress and we are on the right track there. We have good, big companies that compete globally. In short, and it's worth stressing this, the other structural fundamentals are in reasonable shape. What we lack is a labour market structure, relations in place to maintain employment and, of course, this has a big influence on economic competitiveness and on the competitiveness of our products which, in the final analysis, is the key to the future of the Spanish economy.
M. Miralles: Are you aware that many people - including myself to be honest - think that you are abandoning the Presidency of Government and leaving Spain on the verge of disaster?
President of the Government: Well, that statement is not correct. The statement is not correct because we must remember that our public debt is twenty points below the European average. So I don't know how countries such as France or Germany are rated, as they are ten or fifteen points beyond disaster. And our public deficit is going to be 6 per cent; it will be one or two points above the European average. We therefore have significant positive assets with which to tackle our fundamental problem at this time - which is, without any doubt, to guarantee financial stability and address job creation.
But I would like to add something else: If you try to analyse what has happened these last two or three years in the economy in our country without taking into account the European context, what the euro means and the deficiencies in the Economic and Monetary Union, which we are now trying to put right, your analysis will not be objective. And if you allow me another question: What lies behind this very serious economic and financial crisis that many people, many families, and many companies are suffering to such an extent, particularly those who have lost their jobs and can't find new ones? What lies behind it is that we are facing a redistribution of wealth and growth in the world. That is the big issue.
For the last fifteen or twenty years, per capita income, economic growth, is shifting to emerging countries, and in particular to Asia, to the Pacific coast in general. The West is losing its position and Europe is losing its position. Why? Because these countries that are emerging are very competitive in a global economy. Their products sell more because they have lower costs and because, unlike what happened until fifteen or twenty years ago, they have already incorporated technology and quality. So Europe, and in general developed countries, are faced with a huge challenge, which consists of gaining the competitiveness that is being eaten away in a globalised world by all the emerging countries.
Consider this point: over the next ten years it is estimated that 60 per cent of global economic growth will be in or will come from Asia, and only 9 per cent from Europe. That is the basic problem. We mustn't forget it. If we are in debt, it is because we do not produce enough in competitive terms and we have to ask for these funds. And who is it who has these funds at the present time? China has three trillion euros of reserves. That is where the savings are and where we know we must compete with them, and do so quickly.
M. Miralles: I would like to ask you many questions on economic subjects and I want to ask a couple more, but I'd like us to start on other subjects.
Have you felt cheated by the Governor of the Bank of Spain? Do you have the feeling that he did not tell the truth about the reality of the sector, when you said that it was actually the healthiest in the world? There are people I trust who tell me that you are really angry with Miguel Ángel Fernández Ordóñez.
President of the Government: The Bank of Spain is an institution that operates with a high level of independence, because that is what we have given it through the regulatory bodies. In fact, the Governor, to be specific, is the only person that the President of the Government can appoint, but not dismiss. It has a charter of independence.
Let's look at this in more detail. First, I should insist, and I know that this is not well known although we have repeated it many times and there are many people who think it is not the case, that the restructuring of the Spanish financial system, the banks and savings banks, will not cost the people any public funds through taxes. Everything is being done using the so-called Deposit Guarantee Fund, which is contributing to the restructuring, to ensure that the banks we have had to back or that we have had to buy or purchase the assets of...
M. Miralles: So what has that been done with? With whose money?
President of the Government: First, with the banks' own money; and second, with the public money that has been used to guarantee, for example, when we have underwritten issues, in other words the debt requests from banks...
M. Miralles: Public money is money that belongs to individuals. When people talk about public money, it appears to be nobody's.
President of the Government: Yes, but the fact is that the public money is used for underwriting, which is a backing, a guarantee, which will not cost us anything. Quite the reverse, we charge the banks for underwriting them, for putting up a guarantee. But we do not put up any money as such. So I insist and repeat very clearly: we are not putting up any money for the restructuring of the financial system, and it will not cost the public purse anything. That is very important.
With respect to the Governor, if you compare the number of big banks and medium-sized banks in Europe that have had to be intervened in large countries - and leaving aside Great Britain - in Germany or France, our banking model has resisted better than that of the major countries. Second: Where has the biggest restructuring taken place? In the savings banks. Third: The savings banks, or most of them, have been weakened notably as the crisis has prolonged, because their balance sheets have lost capacity, and because of the deterioration of the economic situation.
I have respected the Bank of Spain and its Governor as an independent institution. It is true that the relationship works basically through the Ministry of Economy and I am fully convinced that the Ministry of Economy has been able to respond in the most delicate situations that may have had to be adopted so that the essential and necessary restructuring process of our financial system has been adequate. And I have a normal relationship with the Governor of the Bank of Spain.
M. Miralles: Normal?
President of the Government: Yes, normal. Normal, good.
Allow me to mention one thing…
M. Miralles: Could you try to be brief, so that we can deal with some other subjects?
President of the Government: Brief… A very personal reflection about something that happens to many prime ministers, and that we have experienced in the European Council. There is a struggle, a tension about the nature of bank independence - consider the European Central Bank - and about the accountability of the prime minister, of the President of the Government. Of course, we all know, to give you an example, that it is now very necessary for the European Central Bank to use the secondary debt markets to ease the tension many countries have with our spreads, and at the same time the European Central Bank has a powerful charter of independence. Often one is faced by a contradiction, but how do I explain this to one of our ordinary voters - it's something prime ministers talk to each other about - that the European Central Bank is independent, because obviously this man is not going to be voted for?
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M. Miralles: Mr President of the Government, one of your major commitments in international policy has been the Alliance of Civilisations, a project to which you have allocated some millions of euros of public funds. This was your great priority, and yet you end up not going to the Doha Summit. Not even the Minister for Foreign Affairs is going, and instead you are sending Mr Chaves. What has happened to this great project?
President of the Government: I should point out that it is one of a number of projects.
M. Miralles: You have to admit that when you took office your first decision was the withdrawal of troops to meet an election pledge; then on the international arena there was the great project of the Alliance.
President of the Government: I would just like to make one comment. The main task and direction of Spanish foreign policy where I have placed most emphasis, the hardest work that we have done - and I believe that it is our biggest achievement - is that Spain forms part of the G-20; because if there is a body, a forum, that will decide and that is deciding the future of the global economy, of a globalised economy that needs to be coordinated, it is the G-20. And we have achieved a seat at the G-20, a presence at the G-20.
In recent days, in my dialogue with Mariano Rajoy, I have told him what this represented, I have suggested that this is a priority issue, and I can assure you that I have dedicated a great deal of time to it, and that it is very important for Spain.
As for the Alliance of Civilisations; it is easy to understand that a country like Spain that has a potential for intercultural dialogue, that is important in the Arab world and that has a capacity for relating to different cultures, should lead and promote a project that we co-sponsor with Turkey called the Alliance of Civilisations. Why? Because it establishes us and puts us actively in a position of understanding with a part of the world that in fact is now undergoing a process of historic change, and one that is so important to us.
To a large extent it is to the south of our borders, and to a large extent it is a question of our traditional ability to influence the Middle East. Ensuring that a country like Spain should maintain its leadership, strength and capacity for dialogue with the Arab world, the Islamic world, and promote understanding - particularly, I stress, now with the "Arab spring" - is, in my opinion, of benefit to Spain; as is the other great priority, which is Latin America. Now we are going to need a period in which we double our efforts for political action in Latin America. These efforts we have already seen. They have been taking place in recent summits which have been held on that continent.
Why have I not been there now? Simply because I thought that we had the European Council, which, it's true, ended on Friday at midday, but on Thursday we were there until six in the morning and so I had to be prepared for what could happen. We are at a key moment in the transfer of powers and in this situation I believed that my primary responsibility was to be here.
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M. Miralles: Mr President of the Government, thank you very much for answering our questions - and without any strings attached, I should add. Thank you very much from me and from all our listeners.
President of the Government: Thank you very much and good luck with the programme.