Interview with President of the Government at Agencia Efe

Q.- There are four months to go until the regional and municipal elections and a year until the general elections. When you took office, the country was depressed, in a recession; it was going through a profound job crisis and lacked self-esteem. Do you believe that is all now behind us?

President of the Government.- First of all, many congratulations to Agencia Efe; let's hope it will go on for at least another 75 years.

When we came to power, the situation was very difficult. In 2012, Spain had already been suffering from several years of negative growth, unemployment was on a continuous rise, we had major economic imbalances and part of our financial system was in an extremely difficult situation.

Things have now changed. In 2014, for the first time after six years of negative growth, we saw positive growth. In 2014, for the first time after six long years shedding jobs, there were 400,000 more National Insurance contributors, consumption increased, the imbalances were corrected and international bodies and analyst study services acknowledged that the people of Spain had made a great effort. Things are now seen in another light.

We could say that the people of Spain have overcome the worst but that there is still a lot to do.

Q.- And in the last three years, what has been the most complicated thing for you: politics or the economy? Was there any moment in time when you felt it was impossible to climb out of the hole?

President of the Government.- The most difficult thing, without a shadow of a doubt, has been the economy.

I remember that back in 2012 Spain was on the verge of bankruptcy and everyone said that Spain would have to resort to a bailout. We had to take some tough decisions, some very complicated decisions; we were under a great deal of pressure from certain international bodies. But if you ask me whether I felt that there was no solution at any time, my answer would be 'no'.

Spain has gone through various serious economic crises, perhaps not as serious as this one, but in the end the Spanish people are tough and resilient. Many people understood the decisions that the government had to take.

Q.- And you, Mr President of the Government, who also went through the previous experience of the PP in power back in 1996, when there was also a serious crisis, what do you feel has been the most complicated thing? Having to confront this crisis or the previous one?

President of the Government.- Things were very different then. In 1996, the horizon was clear in Spain and in Europe - the goal was joining the Euro, and that was very positive for our economy because it generated a great deal of confidence. In 2012, there was no talk about joining the Euro, we were already a part of it. The talk was about whether the Euro would fail; about whether Spain would exit the Euro and about whether Spain had to resort to a bailout, which was lethal for confidence in our economy.

Hence, the two situations were very complex. Now, what we have just gone through… I wouldn't wish having to tackle a situation like that on any future President of the Government of our country.

Q.- And do you believe, Mr President of the Government, that the Spanish economy will grow, as you predicted, by 2%? On another note, can you confirm the upward revision of growth to 1.4% of GDP for 2014?

President of the Government.- We have always been very prudent in our forecasts, because it makes no sense to sell propaganda or deceive people, firstly, because that's not right and secondly because in the end the whole world will find out when they see the results.

In fact, for 2014, our forecast for growth was 0.7% but, in the end, it will be 1.3 or 1.4%. Either one will do. The Bank of Spain has just announced 1.4%. We will wait for the definitive figures from the INE [Spanish Institute of Statistics], which I imagine will be during the course of January.

What will happen in 2015? The forecast for growth we made is of 2%. The consensus of the analyst and the study services is for above this 2%. For the time being, we would prefer to be prudent. We will say that Spain is going to grow by 2% and, as we did last year, we will do our best to exceed our own forecasts.

Q.- Despite all your optimism, which is clear, Mr Rajoy, it would seem that possible risks are looming. The Spanish economy is quite heavily indebted, the fear exists that we are entering into a dynamic of salary hikes, Spanish exports are weakening and unemployment is still very high. How do you see these risks?

President of the Government.- The most important issue of all those you have mentioned is unemployment. The fight against unemployment has been the main political objective of this term of office because in the previous term, between 2008 and 2011, 3.4 million jobs were shed in Spain, which is a horrendous figure. This has been the main aim of these last few years and it must remain so in the future.

In 2014, for the first time, net employment was created in Spain and there were 400,000 more National Insurance contributors, and growth stood at 1.3 or 1.4%. I expect 2015 to see growth of 550,000 to 600,000 National Insurance contributors, meaning that on top of the 400,000 new contributors in 2014, plus these 550,000 to 600,000 in 2015, that is close on to one million new contributors to the Social Security system in just two years - 2014 and 2015.

However, this is still insufficient and the policies that have proved to be effective must remain in place in the next term of office, rather than changing them, thus generating stability and confidence in the Spanish economy. That is our great objective.

You asked me about Spanish debt. The figure is significant, but the amount we pay to service our debt has dropped and the forecast is that, as from 2017, the level of public debt in Spain will start to fall.

Exports are doing well. And, in terms of wage moderation, the government does not set salaries. This is the result of agreements between trade unions and business leaders. I believe that the agreements signed have been done patriotically. This has resulted in the Spanish economy becoming more competitive and prices falling, thus helping to maintain purchasing power. Last year, prices fell by 1% on December the previous year. That was the first time this has ever happened in our country and, I repeat, it has been very positive for the economy.

Hence, I can state that, if we maintain these economic policies, 2015 will be much better than 2014, and 2016 will be much better than 2015.

Q.- Various voices in your economic departments have been conveying the idea that, if the growth forecast is met, we will create some 800,000 new jobs between 2014 and 2015. But I thought I heard that we would reach one million?

President of the Government.- The figures for 2014 are final. By December 2014, there were 417,000 more National Insurance contributors than at the end of 2013, with growth of 1.3 or 1.4%. Minimum growth of 2% will be posted in 2015 and hence we calculate that there could be about 550,000 to 600,000 new National Insurance contributors. The sum total of 2014 and 2015 will be almost one million more contributors to the Social Security system.

I repeat, this is not enough because the level of unemployment is still so high in Spain, but at least we will have changed the trend. We are now talking about how many jobs we are going to create and not about how many jobs we are going to shed, which is what was talked about in Spain for so many years.

Q.- And in an election year like this, could the target of not exceeding 4% of the public deficit be achieved?

President of the Government.- We will try to achieve this. When we came to power, the deficit stood at 9%, and between 2012 and 2013 we had to reduce it whilst in a recession, in other words, with lower revenue, and we thus had to reduce both costs and the deficit at the same time. That was very complicated. The aim is to meet our commitment, which is a 4.2% deficit by the end of 2015.

Q.- Will more cuts need to be made this year?

President of the Government.- As regards the issue of cuts, I would like to tell you something I consider to be important. The major public services in our country have been maintained, which was a prime objective: pensions have not been frozen, unemployment benefits have been maintained, the public health system has been maintained and grants in the last year rose by 20%.

In other words, a major effort has been made on the part of the Spanish people, but we should have something very clear: the main pillars of the Welfare State - pensions, healthcare, education, and also to certain extent unemployment, because it helps the people, and long-term care - all remain in place.

There is obviously room for improvement and we will try to achieve this, but it is clearly difficult to find another country with the same level of pensions and healthcare as Spain.

Q.- One thing that is being said by our citizens is that the economy seems to be going better at a macro-economic level, but that hasn't yet filtered down to the micro-economy, to our citizens' pockets. When will our people start to feel that things are really going better?

President of the Government.- It is true that this is being said but let me tell you something: if you don't straighten out the macro-economic situation, there will never be economic growth or job creation, nor would we be able to maintain our public services. Hence, the first thing is to correct all the macro-economic problems that Spain had and, once these start to improve the effects will begin to be felt. The 400,000 Spaniards who have started to make National Insurance contributions in 2014 have already started to feel that something has happened in Spain.

Consumption, after years of continuous falls, is starting to pick up in Spain. If you look at the data on property sales, mortgages or car sales, you can see signs of improvement.

Hence, we are at a phase in our recovery where the majority of the macro-economic recovery has now been achieved. People are starting to see this now, and they will see it more evidently as the recovery consolidates. More Spaniards will obviously start to see this now, and with greater intensity in 2015 than in 2014.

Q.- Certain voices in your ministerial departments are pointing to the possibility of a second tax reduction. Do the margins exist for a second round of tax reductions if revenue continues to increase perceptibly?

President of the Government.- In 2015, the first round of tax reductions come into force, for both Personal Income Tax and Corporate Income Tax. And then, in 2016 there will be a second round of reductions for both Personal Income Tax and Corporate Income Tax.

To the extent that Spain grows and increases its economic activity, and hence revenues increase, we will try for a further reduction in taxes.

One of the most difficult decisions I have had to take, and I took this at the first Council of Ministers after coming to power, when we discovered a monumental public deficit which no-one knew existed, was raising taxes. Now, three years later, we have managed to reduce them and in 2016 we will reduce them again and I will obviously, as soon as I can, because I totally and utterly believe in this, drop taxes even further.

Q.- The President of the Regional Government of Catalonia, Artur Mas, has just announced that he will call early elections for 27 September.

President of the Government.- I must say that this announcement means that in less than five years, regional elections will have been called three times in Catalonia and this quite simply evidences and goes to show that certain policies have been an outright failure and have only led to instability and uncertainty in Catalonia over these last few years.

Citizens there are now going to be subject to an eight-month long electoral campaign. Three elections will be held in Catalonia this year: municipal elections, these regional elections, which weren't due, and the general elections. And this has been decided on to try to respond to the criteria of the CiU [Convergence and Unity] and Esquerra Republicana [Republican Left] political parties. And what about the general interest, attending to the problem of unemployment and the economic problems of their citizens? They have forgotten about the real problems.

Here it was said: it is necessary to resolve the mess and the problems we have, while this decision has been taken for purely party interests. It's not normal to have three elections in less than five years and it is not normal for anyone - this doesn't happen anywhere in the world - to announce early elections nine months prior to holding them.

It will fall to the citizens of Catalonia to express their opinion on this matter, which seems incredibly serious to me.

Q.- Esquerra and CiU say that these are referendum elections. Do you believe this is true?

President of the Government.- I consider that people must be told the truth. The elections, if they are finally called by Mr Mas, will be elections to be held in Spain like those held in any other part of Spain. They are elections to the Regional Parliament of Catalonia and those elected are the Members of Parliament of Catalonia, and those MPs then elect the government, as has always taken place in all Spanish parliaments.

The idea of referendum elections does not exist, and hence, the people should not be fooled by this. The only people to be elected there are the Members of Parliament of Catalonia, as always.

Q.- But if they insist that they are referendum elections and establish them as such, would there be any chance of the State responding, of bringing an action against the establishment of the elections as referendum elections?

President of the Government.- You cannot do what does not exist nor is planned to exist at law. In other words, elections are to choose MPs and that is what will be elected. There will be party lists there, a list for one party and a list for another, and each one will have the election programme it sees fit and appropriate. But these elections are to choose MPs. I repeat, anything else is an attempt to mask the truth from the people and that is not right.

Q.- Why do you believe the pro-independence movement has been so successful in Catalonia?

President of the Government.- I don't believe it has been successful, because not long ago a simulation of a referendum was held and, according to the figures announced by the organisers, which cannot be verified by anyone, less than 30% of the census voted for independence.

Hence, the main change that has taken place here is that CiU, or at least Artur Mas, has become pro-independence. But the vast majority of the citizens of Catalonia are not pro-independence and there are clearly many more Catalans than pro-independence supporters in Catalonia.

Q.- There are those who consider that the State should probably have a greater presence in Catalonia. Do you agree, for example, with transferring State institutions?

President of the Government.- I believe that we are going through one of those phases in the modern history of Spain in which the presence of the Government of Spain in Catalonia has been most noticeable.

When we came to power, the Regional Government of Catalonia and other institutions in other places in Spain were unable to pay their suppliers, and were unable to tackle debt maturities in the markets because no-one would lend them anything. What is the purpose of the State's presence? To ensure that the Regional Government of Catalonia's suppliers can get paid and, consequently, to be able to pay for basic public services. The 75 billion euros under the so-called Regional Liquidity Fund and the Supplier Payment Plan were allocated to social needs throughout Spain. A very significant part of this amount, almost 40%, was allocated to the social needs of the Regional Government of Catalonia.

That made it perfectly clear regarding what a national State is that supports all of its citizens, not its regions, because rights and support apply to people, to human beings, and not to hectares or highways.

Q.- Do you feel that this government and previous governments could have made mistakes in relation to Catalonia?

President of the Government.- Everyone makes mistakes. I don't know anyone that doesn't make mistakes when governing and indeed in any walk of life, but I believe that this government and the previous governments, regardless of their ideology, have always worked on two issues: firstly, resolving the problems of the people, and secondly, ensuring the law is upheld.

Q.- Do you believe that the so-called move towards independence could be checked in part through a fiscal compact?

President of the Government.- No. I sincerely don't believe that it could. Regional financing models in Spain have always been designed in the same way - through pacts and agreements between the regions and the government of the nation, which is the only way to do this.

Q.- Many surveys are predicting a defeat for the PP in many local councils. Are you prepared for your party to be defeated in these elections?

President of the Government.- What I am prepared for, and my party as well, is to give battle and try to convey to all the people of Spain who have placed their trust in us that they can continue to do so in the future.

We came to power faced with an extremely difficult situation and we have asked the Spanish people for many things. We have probably also made mistakes in the past, which are starting to be seen now, but this is a party with a track-record and a history, which governs in many local councils, which has many people representing our ideas that hold public office and I believe that they can feel well satisfied despite the mistakes they may have made.

Hence, what we are prepared for is to say to the Spanish people that they should place their trust in us, we will be here and we will continue working hard in the future.

Q.- Both within the PP and without, there are those who would reproach you for delaying in taking decisions and for not having already named the candidates to stand for Madrid and for the Region of Valencia. Will we soon know the names of these candidates?

President of the Government.- We will name them soon. But this matter of reproaches… Some may reproach what others think is very good. In fact, in 2011, at the last regional and municipal elections, the nominations were announced in March. I believe that each party has a legitimate entitlement to organise itself how it sees fit.

I am not in favour of opening up excessively long electoral periods. I believe that governments must engage themselves in governing and everything related to electoral problems, and electoral controversies that end up influencing everything should be limited to a short period of time.

Hence, we have plenty of time ahead of us. The elections will be called on 31 March and then there is a period for nominating candidates, but, at any event, I imagine that in the near future, probably in the month of February, we will take our decisions.

Q.- You are aware that there are many names being mooted. Esperanza Aguirre has put her name in the running, as have Cristina Cifuentes and Ana Pastor and there is even talk of the Vice-President of the Government and Jaime Mayor Oreja. Are these people among the possible candidates?

President of the Government.- The fact that there are many names is very comforting to know. What would concern me is if I didn't have any candidates or that public opinion didn't see any candidate with possibilities of generating confidence or of being elected. Hence, it is more difficult to choose, but rest assured that I would always prefer to choose from among many than not have anyone to choose.

All these names are wonderful. I imagine that the PP's Electoral Committee will shortly decide what it has to decide and I am sure it will get it right.

Q.- But do you have clear who they will be?

President of the Government.- No. That is down to the Electoral Committee. I will have this crystal clear in the future.

Q.- President of the Government, will there be any changes in the government when the names are announced for Madrid and Valencia? Could the results of the municipal elections change your plans to see out this term of office?

President of the Government.- I don't intend to make any further changes to my government and I believe that the legislature should last for four years. This government is stable, which is a worthy attribute. It can govern and this year, in my opinion, is decisive, because the economic recovery that began last year will be consolidated.

Q.- What can we expect from the PP Convention next week?

President of the Government.- It will be a convention heavily focused on the real problems of our citizens, and hence, it will be very economic and concentrated on social policies.

Q.- Now that you mention social policies, what is this issue of the Government's Social Agenda?

President of the Government.- The most important aspect is employment. Employment is the most social issue that exists. This is the social policy par excellence; but social policies also encompass pensions, healthcare, education, etc. This will have great importance during the course of the year.

And then, we will present a childhood plan, the elderly statute and we will also take certain decisions on long-term care and present a family support plan. We have already implemented certain measures to support families in the Personal Income Tax reform, but I believe that we will be in a position to announce more things within a couple of months.

Q.- There has been much talk about you having distanced yourself somewhat from Mr Aznar. Has it been hard to re-establish relations? Will the former President of the Government take part in the upcoming electoral campaigns?

President of the Government.- Many things are said and many things are written which are not exactly true, or sometimes they are simply exaggerated. My relationship with Mr Aznar has been good for many years. We have known each other since the start of the 80s; he appointed me as a minister on five occasions and as vice-president of the government, and at the present time our relationship is normal. I have spoken to him two or three times recently, to welcome the New Year in and send Christmas greetings. He will indeed attend the convention and he has already participated in electoral campaigns; more frequently in some, with greater intensity in others, and I imagine that he will continue to do more or less the same as before during the course of this year.
We are all very pleased in the party with his backing, his support and his contributions.

Q.- What is your take on the Podemos phenomenon? Do you believe it will die out?

President of the Government.- Europe suffered a very serious economic crisis. It hit some countries harder than others, particularly Greece, Ireland and Portugal; and it was also tough in Spain. Logically, this causes a certain deterioration of the large traditional political parties and results in the rise of other political forces that didn't previously exist. The phenomenon of radical parties has taken place throughout Europe.

But I would make one reflection and that is that the great countries of the world, those in which the highest levels of well-being and wealth exist are those where traditionally moderate governments always rule; for example, the United States, the United Kingdom, Germany, France, Spain and Australia.

You must understand that the crisis has disenchanted many people, both here and in other places, but you must also make a global balance of the situation and see who is who. That is the best way of tackling problems, always looking at the big picture to make a good diagnosis.

Q.- Can you see the PSOE reaching an agreement with Podemos?

President of the Government.- I don't know what the PSOE will do. What I can see is that we have reached major agreements recently on issues such as the fight against terrorism and I believe that this is very positive.

I would like to reach more agreements, and I would also like to see the PSOE not straying from moderation and balance. No positive service can be offered to your nation without moderation and balance.

One must be aware of what one is doing, not of what others are doing. You must have your own personality. That is what I would like to see of the PSOE.

Q.- And should this be the case and for the good of Spain, would you be prepared to have a coalition government with the PSOE? And if so, would you feel more comfortable with Mr Sánchez or with Ms Díaz?

President of the Government.- My counterpart with the PSOE is chosen by the PSOE, as is only right, and I have nothing else to offer on this issue. As regards what might happen in the future, let's wait and see. What the People's Party wants is to reach agreements with the people of Spain so, aside from that, let's wait and see. On the major policies of State it is always good to reach agreement with the other main party. Aside from that, on the issue of government, let's wait and see.

I believe that, during this legislature, Spain has displayed a very important attribute, which is stability, because this has allowed us to take decisions that have freed Spain from suffering from a great many problems that would have arisen if we hadn't taken them.

Q.- You mentioned the issue of corruption. Do you feel that your government and your party have done everything in their power in relation to corruption?

President of the Government.- Of course you can always do more. On the issue of countering corruption as well. But, we have done many things. One very important fact is that there is no impunity. Many of the cases that are now on trial in our courts are there because changes have been made so that they are there. There is now no impunity here.

The Public Prosecutor's Office acts, the courts act and knowing that the rule of law exists and is working should fill us all with pride as a country because this shows that our laws and our courts are working.

We have taken decisions regarding those people that have been involved and who did things that they shouldn't have, and they are no longer members of our party. And we have presented a raft of reforms to Parliament.

Can more be done? You can be totally and utterly sure that I will obviously do everything that is within my power, because some of the things we have seen in Spain in the last few years have truly saddened me.

Q.- Do you fear that some of the court rulings on issues that have been opened up, such as the "Gürtel" or "Bárcenas" affairs could spoil the home straight of this term of office?

President of the Government.- I hope not. I believe that everything that exists is now well-known. What I would like, the same as everyone else, is that, to the extent that can be done, decisions are taken more quickly and diligently.

I know this is not easy but it would be very important for everyone to know who is guilty, and also who is innocent, which is also very important.

Q.- On a political stage on which it would seem that there are increasingly more young people vying for the top spots on the lists, there are those that are saying, even in your party, that you should give way to a younger generation. Have you thought about this possibility? Have you thought about limiting your term in office to eight years as Mr Aznar did?

President of the Government.- I have thought about it and I have done one thing. I have members of my government that are 70 years old and others who are a little over 40. I believe that you can have capable people, who are intelligent and knowledgeable in any walk of life and at any age. The question is to make use of this knowledge, of the wisdom of certain people. That is where you will find balance and I believe that that is what we have achieved in our party.

Q.- And the eight years?

President of the Government.- The truth is that I haven't thought about it. I haven't even been here for four years yet. I haven't thought about this issue.

Q.- As regards the issue of fundamentalism, what will the agreement with the PSOE on this matter bring to the table? Will greater controls be implemented on immigration? In Germany, they have just announced the withdrawal of identity cards for suspects. Will we have to condition security to the continued existence of certain types of rights?

President of the Government.- That is a very important issue. In Spain, we have fought against ETA terrorism, and we will continue to do so until it is dissolved, as we have for 40 years. We fight to guarantee the security of the Spanish people, their fundamental rights, starting with the right to life, and this fight against terrorism did not affect the liberty or the fundamental rights of Basque citizens or any other Spanish citizens. Hence, security and the rights and freedoms of our citizens are absolutely compatible.

The agreement between the PP and the PSOE is pure common sense and adapted to reason. The fight against terrorism requires unity, cooperation and a continuous adaptation of our laws to the new circumstances that may arise.

Q.- You mentioned the issue of Greece, which you have visited this week. Can you see a victory by the radical left destabilising Europe again and affecting Spain?

President of the Government.- European rules, regulations and commitments are there to be met. If the rules of the game must be changed every time there is a change of government in the 28 Member States comprising the European Union, the European project would be absolutely unfeasible. Hence, it is wholly unthinkable to me that the rules, regulations and commitments taken on by Greece will not be taken on by whichever government comes out victorious from the elections.

And of course nothing good comes from deceiving people by saying that they are going to change certain rules and regulations or by not meeting their commitments.

Q.- As a member of the UN Security Council, will Spain promote a new policy in relation to the Middle East including recognising Palestine as a State?

President of the Government.- Spain's position on this issue is contained in the non-legislative motion approved by Parliament. What we want to see is two States that live in peace, guarantee security and liberty, and for an agreement to exist between the parties. That is what we will fight for.

Q.- When will the government confirm the change it announced in relation to abortion?

President of the Government.- I believe that shortly, in the month of February. What we are discussing at present is the legal procedure to follow. What we want is for this to be done quickly so that girls under the age of 18 require the knowledge and consent of their parents.

Q.- Do you believe the time has come for the Infanta Cristina to renounce her dynastic rights regardless of the outcome of the trial that has been announced?

President of the Government.- That is a decision that is not for me or the government of this nation to take.

Q.- In relation to the controversy regarding oil exploration, is the government in favour of this anywhere in Spain?

President of the Government.- No. Just imagine how important it would be for the country to have oil or gas, what it would mean in terms of wealth and well-being for the Spanish people. Very important! But explorations should only be carried out when one or more reports exist by experts with the knowledge and capabilities and using technical criteria, stating that no environmental risks exist. Should this not be the case, we will not allow this.

Q.- Your main objective of this term of office has been to improve the country's economy. What will be the main objective should you win the elections again?

President of the Government.- The objective must be the same as in this term of office: growth and employment. It is true that we started off this term of office in a dreadful position, because the first thing we had to do was avoid bankruptcy and a bailout, and remain in the Euro. I am convinced that by the end of this term of office there will be fewer unemployed than at the start and more people working than in 2012. But, even so, there will still be many people who are unable to find a job and hence this must remain our challenge.

As regards measures, we will place great emphasis on research and innovation, we will try to introduce a further round of tax reductions and we will continue undertaking structural reforms, but with our sights set on the same goal: job creation.

Q.- What would you like to have done in this term of office, which, due to circumstances, you have been unable to undertake?

President of the Government.- What I would most like to have done is to have created more jobs, but 2012 and 2013 were terrible years. And, of course, I would have liked to have lowered taxes instead of raising them.

Q.- After your term as President of the Government, how would you like the Spanish people to remember you?

President of the Government.- I don't have any great pretentions on this issue. But I would like to be remembered as a serious person, who took his job seriously and who left Spain in a better position than he found it.