Interview by President of the Government on Telecinco News

Madrid

Pedro Piqueras.- Mr Rajoy, a very good evening to you.

President of the Government.- Good evening.

P. Piqueras.- Thank you for coming here on an occasion such as this, with the confusion that is affecting the whole of Europe, of course you are aware and you are having continuous talks with other political leaders, isn't that so?

President of the Government.- That is my obligation and I obviously comply with that. Today I have spoken with the German Chancellor; I have also spoken with the Italian Prime Minister, with my Portuguese counterpart and I will have to talk with many other people over the coming days.

P. Piqueras.- We will move on to these talks shortly but first I wanted to ask you something. Greece has said "no" in the referendum to the conditions imposed by the European Union, a "no" that I think is fairly forthright. What does this mean? Are we at the end of one negotiation and at the beginning of another?

President of the Government.- I believe that the European Union is an ongoing process of negotiations. We are neither at the end nor at the beginning. We have now spent four months - too much time - negotiating with the Greek Government and what I would like to do now is to see things developing quickly, because the problems still persist, economic growth in Greece is going to be negative when just a few months ago the forecast was for it to be positive; the banks have closed and the people cannot get their money out. Hence, I believe that we need to speed things up and set out clear ground rules for negotiations. We cannot go on like this.

So, negotiations have been held, but we must continue to negotiate and bring them to an end as soon as possible.

P. Piqueras.- But you said last week, I have it written down here and moreover we had heard this before that a "no" decision would be tantamount to bringing relations to an end.

President of the Government.- Yes. A "yes" decision would have been much better, and it wasn't just me saying that, it was the 18 countries in the Eurozone, all except the Greek Government. I believe that the "no" decision was not good for the Greek people, for Greece itself or for Europe; but that doesn't matter now; we, as politicians, are here to try to resolve complex situations, difficult situations. There are countries that have gone through very hard times. Of course, we are prepared to support Greece, but Greece and its government must follow the rules and procedures established by the European Union because, if they don't, it is impossible for the Euro to work.

P. Piqueras.- Will the departure of Varoufakis help resolve things somewhat? Will it be possible to reach an agreement?

President of the Government.- There are those who say that Varoufakis does not have the best manner about him. I do not know Mr Varoufakis but, at any event, that does not seem to be the most important issue to me. What is important is that Greece must be aware that we are willing to help. In fact, we have already helped Greece: we have lent more than 200 billion euros already with a grace period of 30 years and a very low interest rate. But the key now is for Greece, in exchange for this help, because now no-one in the world is lending Greece money, to undertake reforms and encourage growth and job creation. That is the most important thing and the Greek Government must be aware that things must be this way.

P. Piqueras.- A meeting is still taking place in Paris, the most important meeting of today. The political leaders of Germany and France, Merkel and Hollande, met at a dinner, initially with two very different points of view. Responsibility is as important as solidarity; this was a call for solidarity from Angela Merkel. Can you confirm you spoke with her before the meeting as you mentioned at the start?

President of the Government.- Yes, I have spoken with her. I used those two words at a press conference I gave here in Madrid yesterday. I spoke with Ms Merkel and, in the end, as always happens in the European Union, our positions are similar and all decisions are approved unanimously. On this issue unanimity is also necessary.

What Hollande and Merkel have said is what common sense dictates. There was a referendum; it now falls to the Greek Government to make their move and for us to listen to it. The Greek Government has to make a new proposal, we must then look at this. But the key is for the Greek Government, which knows that there will be support available, must also meet its obligations. In other words, we cannot build a Europe in which only rights abound but not obligations. Indeed, there is solidarity, but solidarity must be accompanied by responsibility. I believe that this is well said, this is common sense and responds to what the vast majority of people in Europe feel.

P. Piqueras.- Yes, but this might give the feeling that Tsipras has won the referendum. In other words, Greece hasn't broken away from the Euro or from Europe, the doors are open to some extent and there is even a call for solidarity.

President of the Government.- But the call for solidarity… And there has always been solidarity. Just look, Spain has lent Greece 26 billion euros and back in 2010 we lent 7 billion euros. We will start to be repaid in thirty years' time. So, if Spain lent that, then Germany lent more, because it is the country that lends the most; followed by France and then Italy. There is solidarity. I don't know whether… Tsipras has won in the sense that he proposed that his people should vote "no", but the problems persist there, and moreover, they have increased. Greece still has no liquidity, Greece still receives no financing, in Greece there is no growth and no job creation, and on top of that, the Greeks cannot withdraw their own money from the bank.

Hence, this is not a question of whether he won the referendum, because the decision is not taken in Greece; the decision is taken by the European Union as a whole. What Tsipras must do, in my opinion, is negotiate quickly because this situation of an impasse is very negative for everyone, and then it must meet its commitments, as Portugal did, which has now come out of its bailout situation, or as Ireland did. That is what is being asked of Greece, and I believe that this is reasonable, and what we all feel.

P. Piqueras.- On which issues do you feel the European Union should give ground and on which issues shouldn't it?

President of the Government.- The details obviously fall to the European Commission, the European Central Bank, the International Monetary Fund and the Greek Government. But I believe that what is fundamental, what Greece must do, is undertake reforms to help grow and create jobs because, without economic growth, jobs don't appear, nor do you have tax revenues, and hence, it is impossible for Greece to do well.

Let me tell you something: back in 2012 we were in the situation we were in, but now we are the country that will grow the most in Europe and which will create the most jobs in 2015. It was very difficult, very tough and I had to take some complicated decisions, many people were angry with me, and some are still angry, but a governor must take decisions to resolve problems, you are not there to hold referendums, and sometimes you must take tough decisions and be misunderstood. Tsipras must undertake reforms, as Portugal did, as Ireland did, and as we also did in our country, which moreover, did not need to resort to a bailout.

P. Piqueras.- Do you believe that the possibility of a 30% reduction is a viable prospect, as the Greeks want?

President of the Government.- Greece has already had a 50% reduction with its private creditors. Of course, now no-one is lending to them. In other words, at this time, only the European Union will lend to Greece, that is, Spain, Germany, Italy and the rest of the countries in the European Union; and moreover, we have lent money under wonderful repayment conditions, because the interest rate is minimal and they will only start paying back in 10 years' time. In other words, Greece is surviving through European solidarity. And the only thing Europe is asking for at this time, well, it is that reforms are undertaken to grow, to create jobs and to be free and thus implement its own policies.

There is talk of austerity, which is one of the things talked about on a daily basis, but, of course, the issue of austerity is one of having money. If you don't have money, you are forced to be austere; if you have money, you are not forced to be austere. But in order to have money you need to undertake reforms, grow and create jobs, and Greece needs to realise that this is what it must do.

P. Piqueras.- Very briefly, do you believe that Greece will make its repayments at some point in time?

President of the Government.- I hope so. It won't be me who says that Greece isn't going to pay. It owes a lot of money, something above 90% of its GDP. That is like Spain owing 900 billion euros, which is an astronomical figure. But it is clear that if Greece does not pay, it cannot live in a world such as this. In other words, this idea of not paying is simply unimaginable. It has a good term established, everything is open to debate and can be renegotiated, but Greece must aspire to be a serious country and a free country.

P. Piqueras.- Mr President of the Government, what will be the direct consequence for Spain of this showdown between Greece and the European Union?

President of the Government.- It is not good for Spain, or for any other country in the European Union. But it is worse for Greece. However, having said that, and that we will be affected by this, I should add that it will affect us a lot less than if we had not implemented the structural reforms that we have carried out in the Spanish economy over the last three years.

Hence, I can say to the people of Spain, with all the facts to hand, and well aware of what I am saying, that the Euro is here to stay and that Spain, despite what may happen in Greece, will remain a fundamental part of the Euro. That is the most important issue.

P. Piqueras.- Mr President of the Government, what many of our citizens are wondering, when you have a crisis such as this and when alarm bells go off all round Europe is whether it is possible for our country to fall back into recession. What is the possibility of us finding ourselves in a situation like that of Greece, with capital controls, etc? It is normal that the Spanish people are worried.

President of the Government.- Yes, it is normal. But look, let me tell you something: in Spain we have gone through some tough years, because they have indeed been tough; but now we are growing and we will be the country in the European Union to enjoy the most growth, above 3% this year. In 2015, some 600,000 jobs will be created. That is very important, together with the fact that sound bases have been laid for the future, which are what will help avoid events like this from taking place. If we continued to be adrift, as happened in 2011 and 2012, and hadn't done some of the things we did back then, among others, budgetary control and structural reforms, we would now be in a much weaker position.

P. Piqueras.- But these measures had a major social impact.

President of the Government.- Let me tell you something with total frankness: these measures have undoubtedly had a social cost, but if we had not taken these measures, the social cost would have been much greater. Furthermore, we can now rectify these things. I remember than when we came to power, after only 10 days we had to raise Personal Income Tax, because, if not, we would have had a monumental problem. We have now been able to reduce Personal Income Tax, and by the end of this term of office, by the end of 2015, the Spanish people will be paying less Personal Income Tax than they were paying at the end of 2011.

So, in life, as in so many other areas, not only in politics, you sometimes need to make an effort, you must work and take difficult decisions, because, if not, you won't get anywhere. The situation in Greece is going from bad to worse, the country is growing increasingly less while unemployment is rising, and then you have this problem with the banks… That is why I would truly like Greece to make an effort, to employ a little bit of common sense. That is what the 18 countries in the Eurozone are asking for and I believe that this would be very good for everyone.

P. Piqueras.- Now that you have dealt with the issue of Personal Income Tax, we will leave the issue of Greece and focus on issues in Spain.

Would you have dropped Personal Income Tax if the general elections were not just around the corner? I mean, bringing forward the tax reduction?

President of the Government.- Let me tell you something; I will explain something for you. We increased Personal Income Tax on 30 December, 2011. I took office on 21 December and at practically the very first Council of Ministers I had to raise this tax because that was when I became aware of the Spanish public deficit, which was 9% instead of 6%; in other words, 30 billion euros more. At that point in time we said that we would lower Personal Income Tax in 2014, but in 2014 we saw that we were still unable to lower it and so we said to the Spanish people that we would lower it in two phases: half in 2015 and half in 2016, unless tax collection was so good that we could lower it earlier. At present, tax revenues are rising, because there is more economic activity, there are more people working, consumption has risen, more VAT is being paid and that is why we have been able to lower it. But the initial idea was to lower it in 2014.

P. Piqueras.- Not because there was a necessary call for elections, because it had to be so.

President of the Government.- No, not at all. Simply for the reason that I have just explained; I wanted to reduce Personal Income Tax as quickly as possible, but I was unable to, and hence I believe that the best service I can offer people is to say that I couldn't and to see if we would continue growing and find a time in which we could.

I am really satisfied that we have been able to do this.

P. Piqueras.- By the way, when are the elections going to be? Do you dare give us a date here, at this time, on this news programme?

President of the Government.- Quite frankly, I don't know, but they will be towards the end of the year.

P. Piqueras.- Towards the end of the year, do you mean December?

President of the Government.- No, I mean towards the end of the year.

P. Piqueras.- Will August be put to use in order to present the Budget on time, so that they can fall in November? I ask this to help establish a date.

President of the Government.- Yes, I believe that presenting the General State Budget is good, because it gives certainty to the future. The regional governments and local authorities find out the resources they will have available and can draw up their own budgets. And we give a sense of normality to things.

Spain, which has gone through a very complicated period and must now offer certainty, security, it must offer absolutes, because that helps things abroad considerably. This helps foreign investment to increase and this can help create jobs. It is very important to offer certainty and security, which is the opposite to what Greece is doing, as we have seen.

P. Piqueras.- I think we can then say November for the elections.

President of the Government.- I didn't say that.

P. Piqueras.- That is what I understood.

Mr President of the Government, will you try to recover something important for you, which is the loss of support in the local and regional elections? And how will you try to do this? It was such a significant loss of support.

President of the Government.- Significant, yes. Although we were the leading political party, we lost a lot more power than we did votes, because the Socialist Party gave their votes to Podemos and thanks to that they are governing in Madrid, Valencia, Zaragoza and other cities where the People's Party won, but that's another story. Indeed, we lost votes for many reasons. I believe that, in the first place, because the crisis has been very tough, and we had to take many difficult decisions and hence there are still many people who have not felt the recovery. That is why we must persevere. I know that there are many Spaniards that still cannot find work, and others that have had their salaries dropped. That is why we must persevere with the same policies. There are some people who are starting to see things going well, but there are still many other Spaniards who are not in that position.

That has harmed us significantly; we have also been harmed by some of the corruption cases we have seen, and then there are many other things and different reasons. I believe that these are the two main factors that have given rise to people abandoning us, but I will try to explain to the Spanish people that on economic issues we did what we needed to do.

Quite sincerely, I believe that I have fulfilled my duties through the decisions I have taken on economic matters. I appreciate that there are many people who do not share this or who believe I have taken the wrong decisions, but in all sincerity I believe I have fulfilled my duty, although it has not been easy to do so.

As regards corruption, I believe that we must be more forceful. I think that everything we have been through can protect us for a while, but everything that involves being more demanding, more forceful, through more legislation and more resources for the Tax Agency, or the Public Prosecutor's Office, or the Judiciary, must be a priority in the near future.

P. Piqueras.- I am listening to you and I seem to be feeling a change, an important change, in some respect, Mr President of the Government, because to date it seemed that you had suffered, above all, from a problem of communication; in other words, of not communicating the things you were doing. I really believe, as do many other people, that there has been a problem of another type; for example, of not directly tackling corruption. That is why I say that I have noted a change. What are you really going to do to tackle corruption? What decisions are you going to take within your party to tackle corruption?

President of the Government.- We have presented a raft of very important laws that have been approved, which are going to make it much more difficult to commit acts of corruption in the future. But I am prepared to present all those that may be useful to this end, all of them.

We have increased the resources for the Public Prosecutor's Office, for the Judiciary, and we will continue to do this in the future. And, of course, they have acted with absolute independence, because the cases being heard now are well-known, they are seen, they are broadcast on TV, and they are judged, whichever party the defendant may belong to. And, of course, within our own party we will act as rigorously and forcefully as possible.

Quite frankly, I have things very clear. I will try to explain to the people of Spain what we have done. I believe that Spain is on the right course; I believe that we must persevere and that the worst thing would be to stop and turn back now, and obviously the People's Party, which has a track record of service to Spain - which contains errors that we have committed, of which there were many- will try to win back the confidence of the majority of the Spanish people. And I, of course, will work as hard as I can, and I will do this with determination, with reason, with arguments and by speaking to as many Spaniards as I can. I cannot speak with 46 million people because that is impossible, but I will speak with as many as I can.

P. Piqueras.- There is one question that you have also mentioned that has caused you to lose many votes and that is the measures you have taken, which have badly affected many people in this country economically, people whom this recovery you are speaking about has not filtered down to, which, while being real, has not reached many people who lost their jobs and their homes as well. Should you have prevented growing social inequality with more forceful measures back at that time?

President of the Government.- The issue of inequality is a problem being widely debated throughout Europe at this time, because it is a problem that is indeed emerging throughout Europe.

I will tell you what I think about inequality. I believe that the main factor that leads to inequality is unemployment and that is one of the reasons why creating jobs has been one of the main priorities for this term of office. I can say to you with satisfaction, because this does give me great satisfaction, after seeing the latest figures the other day, that we now have fewer people unemployed than when we came to power, more people in work and more people contributing to the social security system. That is very comforting for a government that has not had things easy.

Now, having said that, firstly employment, then education. The key is equal opportunities. There are many people who cannot work because they don't have the qualifications and we have to make a great effort, not only, for example, in Vocational Training, where there are now 180,000 more students - this is key, because it leads to a great future for employment - but also in training the long-term unemployed. We have modified all the regulations that existed but, of course, these things don't take place overnight; these things might take as long as two or three years.

Hence, we must resolve inequality first and foremost, to which end jobs are key, to which end education is key. Aside from that, decisions must be taken and support given to those people in the worst situations; and we have done many things: you have unemployment benefits, the PREPARA Plan, the agreements reached with the trade unions for those long-term unemployed, etc. This, as you have just said, is one the major challenges of the future.

P. Piqueras.- Mr President of the Government, in relation to the upcoming elections, surveys point to there being three parties that are almost neck-to-neck at the head of the polls in terms of the number of votes. Who will your main rival be: Pedro Sánchez, who you have been permanently harassing over the last few months; Pablo Iglesias, who seems to be drawing a lot closer, I would say, to you; or Albert Rivera, who is stealing away a great deal of the voters in the centre?

President of the Government.- I must say, Pedro, that I do not harass. Here, sometimes…

P. Piqueras.- You openly criticise him.

President of the Government.- I openly criticised him yesterday for the pacts agreed with Podemos. Of course, the People's Party won the elections in some of the major cities in Spain and yet the Socialist Party seeks, and has done this, to place Podemos in power, and then it states that it will make agreements with anyone except the People's Party and Bildu; that does not really seem to me like a democratic exercise of the first order. But anyway, that's how it is.

In terms of surveys, there are all manner of them. Some have been published, as you pointed out. I am not going to concern myself with that. I would simply say to the Spanish people that we have gone through some tough times, that some problems still linger, but that changing course now is the worst possible thing that could happen. Just look back, returning to a socialist period, which left us with a monumental crisis, makes no sense. We are going to persevere and look to the future and continue to do things reasonably, because jobs are now being created in our country, and a lot of them.

P. Piqueras.- Mr President of the Government, we are going to draw this interview to a close now, but I am going to ask you to stay with us for just another minute. We are going to move on to an issue; the war of the flags, which has hit the start of the San Fermin fiestas. This is a very controversial gesture, the City Council of Pamplona has decided to raise the ikurriña [the official flag of the Basque Country] on its balcony. With some whistles of protest, the official flag of the Basque Country was raised; an act that was reported by the Government Representative there for violating the law. The Mayor of Pamplona (from the party Bildu) tried to cover himself by arguing it was a question of protocol due to the presence of the three Basque parliamentarians there. Mr President of the Government, what do you have to say to this? What is your assessment of the events and of the words of the Bildu mayor?

President of the Government.- I am not surprised precisely because the mayor is a Bildu mayor. We have done what we needed to do which is to lodge an appeal. I believe that Navarre has its own flag, but we all know what the aims of some people in the Basque Country are: to take away Navarre and, if they can, part of France. Hence, I categorically reject this, this does not fall within the realms of legality in any way whatsoever and I understand why many people in Navarre take it for what it is: an attack on their feelings.

P. Piqueras.- Mr President of the Government, thank you very much for being here with us once again, on Telecinco News, as well as on such a special day as this following the "no" vote by Greece to the conditions imposed by Europe.

President of the Government.- Thank you. It has been a pleasure.