SPAIN

Legal procedures for registering candidates and parties remain essentially flexible and inclusive (under Organic Law 5/1985). Parties must simply present a series of documents to the Register of Political Parties at the Ministry of Interior. Virtually every Spanish adult is eligible to run for public office, including EU citizens in local and European Parliament elections. The only restrictions on candidacies contained in the electoral law apply to specific public figures (the royal family, some public officials, judges, police officers and members of the military) and to those who have been convicted of a crime. Fair registration is protected by a number of guarantees, which are overseen both by the electoral administration and the courts, including the Constitutional Court through a fast-track procedure. Legislation on gender parity (Organic Law 3/ 2007) requires party election lists to have a balanced gender representation, with each sex accounting for at least 40% of the total number of candidates.
That said, the legal regulation on political parties (Organic Law 6/2002, supported by both major parties, PP and PSOE) allows the banning of those parties that are “irrefutably” associated with “conduct…incompatible with democracy, prejudicial to constitutional values, democracy and human rights,” a provision linked to the fight against separatist terrorism in the Basque Country. This legal innovation, combined with judicial decisions, has led to the dissolution of the Basque extreme nationalist political organization Batasuna, and the recent dissolution or suspension of other minor parties directly or indirectly connected to ETA terrorism. The possibility of declaring a party illegal as a consequence of its members’ “repeated and serious” public defense or tacit support of terrorism in speeches and statements has raised questions as to how far political discrimination can go in excluding candidates with a radical ideology. However, during the period under consideration, two separate judgments established that the system is not discriminatory (under a unanimous ruling by the European Court of Human Rights on June 30, 2009), but that any disproportional restriction that violates the freedom of association or the right to participate will be overturned (under a ruling by the Spanish Constitutional Court on May 21, 2009, in which the barring of the Iniciativa Internacionalista party from participation in the European Parliament elections was overturned as an interference with fundamental rights and freedoms). However, as these judgments suggest, some risk exists that the pressing social need that has led to this regulation may be used in the future for unreasonably preventing some candidatures.

The electoral law (Organic Law 5/1985) recognizes and regulates (articles 59 to 67) the access of candidates and parties to public television and public radio networks during electoral campaigns. This access is not exactly equal, but is plural and proportional (based on past electoral performance), and is strictly regulated through an allocation in minutes of free advertisement slots (paid advertising is not allowed) and news coverage. Thus, parties fielding candidates in at least 75% of the districts receive a free slot of 10, 15, 30 or 45 minutes every day, depending on their share of the vote in the previous elections. A similar system operates with regard to news coverage, where the time devoted to each party is also proportionally allocated according to the previous electoral results. Therefore, while new candidates or parties may find it difficult to win media access, the two major parties (PSOE and PP) enjoy some advantage, since they are the only ones that regularly draw more than 20% of the vote (i.e., the threshold established in law to obtain the maximum allocation of time). Whether fair or not, the allocation of these advertising slots and minutes of news coverage is guaranteed by strict Central Electoral Board (Junta Electoral Central) oversight. In fact, many journalists working in the public media are very critical of this rigid system, which subordinates the journalistic interest of the information to the firm allocation of time in order to guarantee proportional access according to the law.
Despite the existence of a similar regulation regarding private television networks (Organic Law 2/1988), access of the candidates to private television stations, radio networks and newspapers is not guaranteed. On the one hand, electoral ads are not free in these media, and on the other, access by candidates is much more unbalanced depending on the political ideology of the few communication giants that openly promote their favorite candidates. It could be said that, while the major private media companies exhibit a partisan political bias, the media system as a whole provides fair, or at least plural, coverage of different political positions, as in every other Western European country. Notwithstanding this fact, during the 2008 – 2010 period, the creation of several new small channels following the introduction of digital terrestrial television (DTTV) has exacerbated the politicization of the private television sector at the national, regional and local level. As a reaction to this development, the Spanish parliament began in spring 2010 to discuss an electoral law reform that would extend to the private media the system of proportional news coverage, under the oversight of the Central Electoral Board, which is currently applied in the public media.

According to Article 23 of the Spanish constitution, all adult citizens of 18 years and older have the right to participate in public affairs, directly or through representatives freely elected in periodic elections by universal suffrage. The extent to which this right to vote can be exercised is absolute, and apart from minor errors, no discrimination or any other significant exclusion has existed in recent elections. Only those suffering specific mental disabilities or who have been judged guilty in certain criminal cases (always by a court) may lose their political rights. All citizens are automatically included in the electoral register (Censo Electoral), which is as a rule updated correctly. There is ongoing debate over the possibility of extending suffrage rights to all legal immigrants. This development does not seem feasible in the near future, although EU citizens can already vote in local and European Parliament elections, and even foreign citizens are entitled to cast ballots in local elections if their home countries reciprocally allow Spaniards to vote in local elections. Finally, during 2010, the major Spanish parties started to discuss curtailing the local-election voting rights of Spanish migrants living abroad.

Party financing regulation has been changed in recent years (Organic Law 8/2007) but this legal innovation has not eliminated the traditional enforcement and oversight problems associated with loans and donations to political parties. The Audit Office (Tribunal de Cuentas) is the body charged with auditing the political parties’ accounts, but its members are appointed by the parties and are not sufficiently independent, as explained below. This body’s reports, particularly the most recent publications, show that parties and their associated foundations in many cases do not follow proper accounting rules, do not respect spending thresholds in campaigns, do not publish accounts regularly, and do not specify the nature and value of private donations received. The Audit Office’s sanction powers are inadequate, and the modest fines for infringements can be easily paid by the parties over several years through deductions from future contributions, thus serving little or no dissuasive role. Recent corruption scandals (e.g., the so-called Gürtel or Pretoria affairs) show that the financing of parties, particularly at the local level, attracted scarce supervision during the years of Spain’s real estate bubble (particularly in the late 1900s and early 2000s), and was often linked with arbitrary changes in urban planning by local authorities. Various reports recently issued by international organizations such as the Council of Europe or NGOs such as Transparency International have criticized the opacity and impunity of party financing in Spain.

After a long tradition of subordination to the government of the day, legislation (Law 17/2006) on the state public radio and television service has transformed Radiotelevisión Española into an autonomous corporation that guarantees neutrality and objectivity vis-à-vis the central government, with a reinforced oversight role for the Spanish parliament and the introduction of an independent audiovisual authority. From 2008 to 2010, despite the rapid political weakening of the Zapatero cabinet as a consequence of the economic crisis, the incumbent government respected this institutionally protected independence; an attitude which contrasts with the direct influence exerted by some regional and local governments over subnational public radio and television networks.
Notwithstanding this, and with regard to political intervention in private broadcasting operations, it should be noted that the central government passed a decree law in August 2009 to license paid DTT services (oriented basically to the broadcast of pay-per-view Liga and Champions League football matches). This regulation was implemented against the legal advice of the consultative Council of State, and was aligned closely to the interests of a newly created communication group (Mediapro) which is ideologically close to the socialist party. Ironically, as the company most deeply harmed by the measure was the much more powerful and also ideologically center-left private communication giant Prisa, several conservative media organizations wound up praising this new licensing regime. Finally, a complete regulatory reform of the audiovisual sector was made in Law 7/2010, which was passed without the support of the main opposition party (PP). Throughout the period under review, this party has maintained a concerted alliance with the most conservative private newspapers, radio and television stations in what has been labeled as the “strategy of confrontation” against the government.

A moderate level of diversification in media ownership has continued, a trend that has grown somewhat stronger over the last couple of years. Apart from a quite healthy regional and local media sector (certainly newspapers, which are a traditional feature of the Spanish journalistic landscape, but today also including television and the Internet), diversified ownership structures prevail at the national level. To be sure, there are several giant media companies, each with an ideological bias, but the media market as a whole allows for a certain level of pluralism. If electoral behavior was compared with the spectrum of opinions actually published, very conservative positions would perhaps be shown to be overrepresented, and leftist positions somewhat marginalized. However, the most important media groups generally tend to cover a wide range of opinions, including post-materialist, social-democrat, liberal, Catholic and nationalist. There is no effective anti-monopoly policy in this field, but national public TV and radio networks (note that no public newspapers exist) have been relatively independent since 2006 (see Media Freedom) and help to compensate for some deficiencies.
The print media market is dominated by the Prisa Group (the publisher of the center-left El País, which is the most sold and most influential newspaper, but averages only 2 million readers), Unidad Editorial (which is owned by the Italian group RCS, and publishes the right-leaning El Mundo, with 1.3 million readers, as well as the most popular sports and economic newspapers) and Vocento (publisher of the conservative ABC, which is read by 750,000 people, as well as several other moderate or centrist regional newspapers such as El Correo in the Basque Country). Other groups include Prensa Ibérica (owner of several regional newspapers), Zeta (publisher of El Periódico de Catalunya, read by 800,000 people in Catalonia and Aragon) and Godó (publisher of La Vanguardia, based in Barcelona, with 750,000 readers). The electronic media market is quite similar to the print sector, since the two most-read political information websites are those belonging to El País and El Mundo, the two most popular newspapers.
The proliferation of TV channels at the national, regional and more recently local level has generated fierce competition for available advertising revenue. Public TVE, and the private groups Antena 3 (Grupo Planeta) and Tele 5 often swap positions with respect to audience ratings, with each generally drawing between 12% and 18% of television viewers. Tele 5 and the minor channel Cuatro (with a 5% to 9% audience share) are now owned by the Italian Mediaset (Silvio Berlusconi’s group). Regional public television stations, the private group La Sexta (owned by Mediapro, which is ideologically close to the socialist government) and a wide range of channels that appeared following the implementation of DTT complete the spectrum. Some of these focus solely on news, including Canal 24 horas (public TVE), CNN+ (affiliated with Prisa, leaning towards the center-left) and several tiny conservative channels.
Finally, the radio market is dominated by two of the groups mentioned above: Prisa (with the popular and influential station SER, which draws 5 million listeners) and Grupo Planeta (with Onda Cero, with 2.5 million daily listeners). Radio Nacional de España (RNE), the private Cadena Cope (belonging to the Catholic Church) and Punto Radio (Vocento) are also important radio networks. In 2010, these generalist stations shared around 50% of the total audience, with the other half divided between thematic, mostly music-focused radio stations.

Spain does not yet have a specific law to guarantee free and easy access to government information. The socialist party, which has held office since 2004, included the passage of such a law as one objective in its 2008 electoral manifesto, but the bill on transparency and access to information had not yet been approved by the Council of Ministers as of spring 2010. Citizen access to public information is partially regulated by specific legislation on administrative procedure (Law 30/1992), environmental issues (Law 38/1995, following a 1990 European directive), and is outlined in the constitution (Article 105 states: “The law shall regulate access by the citizens to the administrative archives and registers, except where it affects the security and defense of the state, the investigation of crimes and the privacy of persons”).
However, access to government information is extremely difficult as a consequence of bureaucratic red tape and the rigid interpretation of exceptions and restrictions (“(D)ocuments can be withheld if the public interest or a third party’s interest would be better served by nondisclosure or if the request would affect the effectiveness of the operations of the public service. Access can also be denied if the documents refer to government actions related to constitutional responsibilities, national defense or national security, investigations, business or industrial secrecy, or monetary policy. Access to documents that contain personal information are limited to the persons named in the documents. There are also restrictions for information protected by other laws including classified information, health information, statistics, the civil and central registry, and the law on the historical archives”). In addition, the legally allowable period for state response is too long (two months) to be practical. Moreover, enforcement and appeal mechanisms (either to the administration itself, to the Ombudsman or to the courts) are ineffective.
An extensive report published in October 2005 by Sustentia and The Open Society Justice Initiative Foundation (reported by Freedominfo.org) concluded that nearly 60% of requests filed under the auspices of Law 30/1992 went unanswered, and replies were discriminatory since the response depended on the identity of the applicant. Of requests filed under Law 38/1995 on the right of access to information relating to the environment, only 30% were answered correctly, while 20% were answered late and the remaining 50% were never answered.

No substantial changes in the civil rights domain were evident during the 2008 – 2010 period. Spanish state institutions respect and protect civil rights, and rights guaranteed by the constitution and ordinary legislation are enforced, although some infringements may occur in practice. Considering that cases of mistreatment of illegal immigrants were reported during the 2000s, positive developments during the period under review here include the passage of new legislation on the civil rights and integration of foreigners (Organic Law 2/2009), and on the issue of asylum (Law 12/2009), improving legal protection for asylum seekers and immigrants.
On the other hand, during 2008 and 2009 it became clearer than ever that the systematic delays and the lack of adequate resources (both human and technological) in the Spanish courts are undermining the effective protection of fundamental rights. Prime Minister Zapatero has recognized the urgent need to modernize the functioning of the court system. Thus, the parliament passed new legislation aimed at improving civil and criminal proceedings (Organic Law 1/2009), while the Ministry of Justice has started to implement a modernization plan, the only government department allowed to increase public spending and personnel recruitment during 2010.

As noted above (see Candidacy Procedures and Voting and Registration Rights) in the electoral context, the 1978 Spanish constitution specifies political liberties that are respected by all state institutions. So-called fundamental rights and public freedoms (included in Section 1, Chapter 2, Part I of the constitution) receive special protection against infringements. These political liberties particularly protected against government (or even private) interference or violation include: (1) the freedoms of ideology, religion and worship on the part of individuals and communities, along with the guarantee that no one may be compelled to make statements regarding his or her ideology, religion or beliefs (Article 16); (2) the right to freely express and spread thoughts, ideas and opinions through words, in writing or by any other means of reproduction, without any form of prior censorship (Article 20); (3) the right to peaceful unarmed assembly, with no need to notify local authorities in advance unless demonstrations are being held in public places, and no need of prior authorization (Article 21); the right of association (Article 22); the right to freely join a trade union (Article 28); and the right to individual and collective petition (Article 29).
There are some restrictions to the freedom of association and the right of petition in the case of members of the armed forces and the Guardia Civil police force, which is subject to military discipline (a recent piece of legislation, Organic Law 11/2007, sought to clarify the rights of Guardia Civil members, but they have not proved particularly happy with this new regulation).

In general terms, Spanish institutions continue to offer effective protection against discrimination on the basis of gender, ethnic or religious minority status, and sexual orientation. Nevertheless, there have been cases of discrimination against these groups reported, as well as more frequent cases of discrimination against immigrants, the disabled and the elderly. The Office of the Ombudsman annually reports several specific cases and denounces the governmental inability to prevent them.
Since 2007, the European Social Fund anti-discrimination program of has been implemented, and in early 2010 the government announced a bill aimed at improving the legislation on religious freedom. This bill is designed to avoid any discrimination against minority non-Catholics, although some technical problems, as well as resistance from the Spanish Catholic Church, have arisen during its preparation.
During the period under review, two very important legal measures originally passed in the previous legislative term (Law 13/2005 legalizing same-sex marriage, and Organic Law 3/2007, on effective equal rights for men and women) have come into force without major problems. The first of these represents a path-breaking regulation in the southern European context, while the second one includes positive discrimination measures for women in political and business settings. However, according to a recent opinion poll conducted by the human resources company Adecco, 42% of Spanish businesswomen said that such legislation was ineffective in ensuring women equal payment and professional opportunities in the labor market.

No important changes occurred regarding legal certainty in the period under review. The Spanish executive rarely makes unpredictable decisions, and normally acts on the basis of and in accordance with legal provisions. Spanish administrative law and practice is grounded in the principle of legal certainty (and, to a much lesser extent, the principle of transparency, as discussed under Access to Government Information). Strict legal interpretations may in fact produce some inefficiency in certain aspects of the administration, such as the rigid system of personnel recruitment, working methods that depend rigidly on clear departmental command rather than flexible cross-organization work teams, a preference for formal hierarchy rather than skills when making decisions, the reliance on procedure regardless of output effectiveness, and other such effects. In addition, the legalistic approach is also a source of abuse in some cases, since citizens are generally reluctant to appeal administrative acts to the courts as a consequence of the high costs and long delays associated with this process. Nevertheless, basic administrative law is consistent and uniform, assuring regularity in the functioning of all administrative levels.
It is true that subnational levels of administration engage in a higher level of discretion or even arbitrary action, for example concerning licenses for housing construction and in urban planning decisions. However, the recent collapse of the real estate bubble and changes to the land use planning regulations (Legislative Decree 2/2008) have helped inaugurate a trend of increasing legal certainty in this domain as well.

The Spanish judicial system is independent and has the capacity to make governmental and administrative activity take place according to the law. The administrative jurisdiction (jurisdicción contencioso-administrativa) regulated by the constitution and Law 29/1998) allows specialized courts to review actions taken by the government and administration, effectively ensuring legal compliance.
The administrative jurisdiction is made up of a complex network, including local courts (in the 52 provinces), regional courts (the administrative chamber of the highest courts of justice in the 17 autonomous communities), and national courts (the administrative chamber of the National High Court for special cases, and the administrative chamber of the Supreme Court, which is the last level of appeal). In addition, the Constitutional Court may review governmental legislation (i.e., decrees) and is the last resort in appeals to ensure that the government and administration respect citizens’ fundamental rights.
Nevertheless, courts have arguably shown some bias vis-à-vis the incumbent government. Because of the confrontational style of Spanish policy-making and the fact that judges may be independent but are not ideologically neutral, the judiciary’s mandate to serve as a legal check on government actions can at some points be deemed politically obstructive. That is to say, conservative judges who side with the opposition PP party may be eager to frustrate the actions of a socialist government. For its part, the government has reacted against this judicialization of politics with a growing politicization of justice.

The appointment process for Constitutional Court justices is regulated by the Spanish constitution and by specific legislation on the Constitutional Court (Organic Law 2/1979, as amended several times; Organic Law 6/2007 was the last important amendment). The Constitutional Court consists of 12 members. Of these, four members are appointed by the Congress of Deputies, requiring a supermajority of three-fifths of its members, and four members by the Senate, requiring the same supermajority vote (following a selection process in which each of the 17 regional parliaments nominate two candidates). Additionally, two members are appointed by the government, and two by the General Council of the Judiciary (Consejo General del Poder Judicial, CGPJ). All 12 Constitutional Court members have a tenure period of nine years, with one-third of the court membership renewed every three years. Membership on the Constitutional Court is incompatible with any other office or business activity whatsoever.
The appointment process for Supreme Court justices is regulated in the legislation on the judiciary (Organic Law 6/1985, as amended several times; Organic Law 2/2004 was the last important amendment). The Supreme Court consists of five different specialized chambers, and all its members (around 90 in total) are appointed, requiring a majority of three-fifths, by the General Council of the Judiciary. The CGPJ is the governing authority of the judiciary, whose 20 members (judges, lawyers and other experienced jurists) are appointed by the Congress of Deputies and the Senate by a three-fifths supermajority vote, and have a tenure period of five years.
These processes include special majority requirements and are formally quite cooperative. Thus, in the case of the Supreme Court it involves: (1) the judicial associations (which nominate 36 candidates to fill 12 CGPJ positions), (2) the National Congress and the Senate, which appoint (again requiring a three-fifths vote) the members of the CGPJ, and finally (3) the CGPJ, which appoints the justices themselves (with a three-fifths majority vote, since the passage of legal reform in 2004). In the case of the Constitutional Court, regional parliaments nominate 34 candidates for a total of four positions, with the final appointees being selected by the Senate through a three-fifths majority vote. The other eight justices are appointed by three different institutions: the Congress of Deputies, the government and the CGPJ.
However, the truth is that this does not guarantee the independence of the judiciary. The various three-fifths majorities can be reached only through extra-parliamentary agreements between the two major parties (PSOE and PP), and this has led to a strong and growing politicization both among the members of the Constitutional Court and the CGPJ (the organ which appoints Supreme Court justices). All Constitutional Court justices and most members of the Supreme Court are quickly labeled as “conservative” or “progressive” justices by the media and politicians depending on the party that pushed for their appointment. Even if there is some formal guarantee of independence, neutrality is not expected and justices do not tend to be considered to be divorced from the ideology – or even the tactics – of the parties that suggested their appointment.

No major scandal connected to the central government surfaced in Spain during the 2008 – 2010 period. However, the perception of corruption increased as a result of several local scandals (particularly, the so-called Gürtel, Millet, Matas and Pretoria cases) that arose in the Mediterranean regions (Valencia, Catalonia and the Balearic islands) and to some extent in Madrid. Although there is some evidence of links between these scandals and illegal party financing, most have represented cases of personal enrichment linked to the Spanish property boom. Though these cases have only recently come under investigation, they actually occurred before 2008.
It is true that Spain’s rankings in international indexes measuring corruption have shown some deterioration, but again, this is primarily the effect of the recent emergence of old cases in the media and the courts, rather than a sign that the situation has actually worsened. In fact, the bursting of the real estate bubble, coinciding with the eruption of the 2008 economic and financial crisis, make it quite conceivable that corruption levels may even have declined. The 2008 reform of land use regulation, which limited local public authorities discretion in reforming urban plans and granting building licenses, may also have helped; but to be sure, this probable improvement is much more the effect of the economic cycle than the result of effective enforcement of legal, political or public integrity mechanisms.
The fact that Spanish parties and citizens have demonstrated an incapacity to exclude effectively corrupt politicians from politics (e.g., 70% of mayors shown to be involved in corruption were reelected in 2007, and opinion polls do not show evidence of changes in electoral behavior after a scandal) means that the Spanish society and state cannot completely guarantee that officials will not exploit their offices for private gain. However, political corruption does not affect the daily lives of people (as might, for example, the practice of paying bribes to public employees), and most civil servants and politicians follow regulations to preserve the public interest, including legislation on conflicts of interest and asset declarations.

In the 2009/2010 rankings of the World Economic Forum on Global Competitiveness, Spain fell to 33rd place in the world with respect to economic competitiveness, from a rank of 29th the previous year. The government has taken a threefold approach in tackling the economic crisis: Firstly, short-term relief for families and companies was implemented through the so-called Plan E (the Spanish Economy and Employment Stimulation Plan). In addition to support for families, companies and the banking system and some employment measures, Plan E also features specific reforms aimed at modernizing the economy in key sectors such as transport, energy and telecommunications. Second, this modernization supplements a more ambitious approach toward structural reform of the Spanish growth model, in the form of the draft law for a sustainable economy (introduced in March 2010). This proposal focuses on three key dimensions: economic (through an improvement of productivity and competitiveness), investment in social capital and environmental sustainability. Finally, sharp spending cuts have recently been announced, aimed at reducing public expenditure by about €50,000 million in the course of three years (the so-called austerity program).
It is widely believed that the housing bust was only the tip of the iceberg in terms of problems with the national economy, since Spain has long suffered from excessive private consumption as well as high levels of personal debt. The government has been criticized for making a belated, insufficient, patchwork and even incoherent response to the economy’s underlying lack of competitiveness. However, if stopping the public deficit from growing seems now unavoidable, the resulting lack of resources might prove a serious hindrance to those structural reforms that require money (although it may also open a window of opportunity for unpopular structural reforms needed in the labor market, pension system and banking sector).

According to official data, unemployment has doubled in the last two years, strongly hitting workers in low-skill occupations, particularly immigrants, women and young people. Unemployment rose to more than 4 million people in February 2010, with a rate of 19.4%, nearly twice the euro zone average. On the other hand, a severe mismatch exists between workers’ qualifications and job availability, with many highly skilled employees not making adequate use of their expertise and capabilities. The debate on labor market reform has focused on two primary issues: the inflexibility of employment regulations (particularly concerning layoffs), and the existence of a dual labor market in which some 35% of the workforce serves under temporary contracts and has no job protection, in contrast to the other highly protected 65%. This arrangement has held down both wages and permanent employment.
In 2009, the government put considerable effort into negotiating a social pact with trade unions and employers. Thus, the Agreement for Employment and Collective Bargaining 2010 – 2012 was signed in February 2010, featuring moderation in salary increases and limits to the use of temporary employment (although by spring 2010, this agreement could be viewed as having been superseded, since the government unilaterally decided to launch a much more radical labor market reform). Over the same time period, the Spanish government adopted a package of measures aimed at encouraging transition to employment, increasing geographical mobility and shortening periods of unemployment. These include the Extraordinary Plan for Orientation, Vocational Training and Labor Insertion; the Local Investment Fund; and Plan E’s Special Fund for Employment and Economic Reactivation, which was budgeted at €11 billion and was expected to result in the creation of 300,000 new jobs across the country. Most direct job-creation measures have taken place in the public and private construction sector; however, this risks reinforcing the roots of the crisis, while offsetting the moderate level of funding directed to alternative economic sectors that might better contribute to reform of the Spanish growth model. Initiatives aimed at reorganizing active employment policies have also been put in place, as well as incentives designed to smooth the transition from unemployment to part-time or self-employment. All in all, there are problems of intergovernmental coordination in this crucial field, with the central government retaining responsibility for financing unemployment benefits, while the autonomous regions run job placement services.

The Spanish business sector is relatively weak in terms of entrepreneurship and competitiveness, and companies tend to be disproportionately small (in 2008, only 14 Spanish firms were among the world’s 500 biggest companies), low-tech, and locally focused. Substantial red tape, high business set-up costs and high tax rates complicate things even further. Recent government initiatives such as the 2006 Business Promotion Plan have done little to rectify this situation, but the economic crisis has put more pressure on the government to tackle the flaws in Spain’s business conditions more radically.
As part of the Plan E program, the government committed to reduce administrative charges paid by self-employed workers and companies to the Treasury by 30%. The government has also announced that it will streamline its procedures so as to make it possible to create a company in 24 hours, compared to today’s average of 14 to 19 days (the so-called Plan Empresa 24 horas). An omnibus law was passed in late 2009 adapting existing national regulations to the European directive on services. A plan was also introduced to promote freight transport by train. On the financial side, a new service was opened by the Official Credit Institute (ICO) aimed at making it easier for small and medium-sized enterprises to access credit. As part of the draft law for a sustainable economy (which had not yet passed in spring 2010), two new funds will be introduced in the near future designed to support public and private investment projects with the potential to improve competitiveness in new technologies, the information-based economy, environment and energy. In addition, a reduction in social security contributions has been proposed. As a whole, the burgeoning array of new measures and initiatives produced on almost a daily basis is very difficult to summarize. Most fundamentally, doubts can be cast on the feasibility and impact of these measures, and on the presence of a clear underlying purpose. Meanwhile, only limited attention is being paid to longer-term issues such as competition in the telecommunications sector.

In the last two years, decisions concerning tax policy have been strongly influenced by the economic crisis, with continuous changes overlapping or replacing one other. Arguably, the reform process has not been driven by a consistent underlying logic, but has rather followed an erratic and pendulum-like path.

Emergency stimulus measures were adopted shortly after the elections in May 2008, featuring several tax deductions and benefits, including an income tax rebate of €400 for every taxpayer, rapid refunds associated with investment in a permanent residence, and the elimination of the Property Increment Tax. However, if the priority at the time was to fuel short-term liquidity for families and businesses, curbing the public deficit became the government’s sacrosanct goal just a year later. To that aim, more fundamental changes in the structure of the tax system will be set into motion over 2010 and 2011, designed to raise an extra €11 billion per year. Small and medium-sized companies will profit from a tax cut of 5%, intended to help stimulate the economy. Moreover, the abolition of the €400 tax rebate can in some senses be welcomed: Given its universal application, critics argued from the beginning that it would not ultimately benefit people in actual need. The increases approved for the VAT (from 6% to 8% for the reduced rate, and from 16% to 18% for the general rate) and for taxes on saving accounts (19% for savings up to €6,000, and 21% for sums over that amount) seem much more controversial: The VAT will negatively affect the already diminished rate of private consumption, and consequently might not result in substantial additional revenues. It we take into consideration that 61% of bank account holders have savings under €21,000, small savers are expected to become the big losers in this increased tax on savings.
Although fiscal pressure in Spain remains significantly lower than in Scandinavian welfare economies, Spanish taxation policies do not appropriately discriminate between groups with different economic capacity. And the fiscal reform summarized above seems to reinforce the deficiencies of the system in terms of inequity: It will not be the wealthier sector of the population, but medium- and low-income workers who will be penalized with comparatively higher tax wedges. Finally, measures to tackle tax evasion have to be strengthened.

After a decade of steady improvement in Spain’s public finances (with budget surpluses seen from 2004 to 2007), the economic crisis has pushed the budget into severe imbalance. Pump-priming in the last two years has led to a drastic increase in public spending, with public debt growing slightly in 2008 and more considerably in 2009. By the close of the review period, the overall budget deficit stood at 11.4% of GDP (more than twice the government’s gloomiest estimates).
Taking this into account, the announcement of the austerity plan only a month after closing the general budget for 2010 did not seem to take anyone by surprise. However, many economists are skeptical and have raised doubts as to its feasibility. According to the plan, an annual cut in spending of 4% will take the deficit down back to 3% of GDP by 2013. This level of spending cuts mostly corresponds to the plans of the central government, which has already announced that new hiring in the public service will be reduced by 70% in 2010. However, 20% of the cuts will have to be made by autonomous regional governments, a task that seems more difficult to achieve, given their spending records and their perpetual need for funds.
In addition, the plan depends on quick and significant economic growth, an estimate that is far too optimistic. All in all, the government has lost credibility with respect to its capability to produce accurate estimates. Whereas faulty calculations have led to inadequate macroeconomic policies, the government remains focused on expanding social expenditure and subsidizing unemployment rather than creating structures supportive of long-term employment. In addition, spending pressures related to the aging of the population will keep rising, affecting the long-term sustainability of public finances.

Spain’s public health care system is faced with two pressing problems: restraining spending and improving quality. Health-care spending absorbed a third of state revenues in 2009, representing approximately 6% of GDP. Moreover, 32% of these expenses were associated with pharmaceuticals (compared to an EU average of 25%). Whereas the current economic crisis makes the situation difficult in the short run, population aging trends (in 10 years time, one out of five Spaniards will be over 65 years old), chronic disease proliferation, new and highly expensive treatments, and a general abuse of free medical appointments puts the sustainability of the system at high risk in the medium and long term.
This critical situation led to an unprecedented agreement between the central government and the autonomous regions in March 2010, aimed at saving an estimated €1.5 billion per year. Among other provisions, this plan will implement the so-called bill-in-the-shade system (that is, informing citizens about the costs of the assistance they receive, so to encourage reasonable use). A head purchasing office will be created, which regions will be able to join voluntarily in hopes of getting better prices from suppliers. Reference pricing for drugs will be recalculated downwards, and the use of generic drugs will be encouraged.
Beyond these issues, the quality of health care in Spain has deteriorated somewhat in recent years. According to the Euro Health Consumer Index, which compares health care systems in Europe, Spain has fallen from the 14th position to the 21st since 2005. The most recent report emphasizes deficiencies in patient rights and prevention. There is also significant interregional inequality. Waiting lists continue to grow, and the use of alternative private services has increased accordingly. In 2006, a Quality Plan for the National Health System was adopted. After three years, a report on this plan was issued for the period 2009 – 2010. It included additional measures, but no detailed analysis of the results achieved during the previous phase was provided.

Social exclusion remains a perennial problem for Spain: 20% of Spaniards already lived under the poverty threshold in the 2005 – 2008 period. In terms of social inequality, young and elderly people are at higher risk of poverty, while immigrants and some groups of women have been particularly affected by unemployment and/or precarious employment. If anything, the current recession has led to further impoverishment of vulnerable households, broadening the gap between these and the wealthiest sectors of the population. Spain’s Gini coefficient is the highest within the European Union, and there is a 10-year difference in life expectancies between the top and bottom income percentiles.
The Spanish government’s chief instrument in the fight against social exclusion is the National Action Plan for Social Inclusion. In the 2008 – 2010 period, this plan pursued a two-fold strategy: on the one hand, a broad-ranging policy of active social inclusion (through labor-market initiatives, income guarantee measures and improvement in the quality of public services); on the other hand, measures targeted specifically at immigrants and elderly. With respect to immigrants, the budget committed to implementing the Strategic Plan for Citizenship and Integration amounted to €1.5 billion for the 2008 – 2010 period. As for the elderly, the basic regulatory and institutional aspects of the National System of Dependency are now in place (including two new occupational certificates – Socio-Health Care for People At Home and Socio-Healthcare for Dependent People in Social Institutions – and the creation of the Territorial Council of the System of Autonomy and Care for Dependency). However, funding restraints have brought this program to a standstill in some autonomous regions. Most importantly, the Spanish central government lacks appropriate oversight mechanisms. Assessments are oriented toward examining progress in terms of budgetary execution or legality rather than in terms of the effectiveness of measures to reduce inequality.

Although the government’s Plan E includes a set of measures intended to support families and alleviate economic difficulties, few of these target women in particular. On the other hand, the “cheque bebe” (a €2,500 benefit payable to families for every newborn or adopted child) remains in place, although it may be eliminated in the near future). Some autonomous regions (such as Madrid and Asturias) have already suppressed or decreased their additional contribution to the cheque.
The Ministry of Employment is pursuing a campaign to ensure employers’ compliance with legislation on wage equality, and discourages any form of discrimination in the workplace. Subsidies for maternity leave have been extended. Nevertheless, the paternity leave program receives minimal use, and further measures are needed to instill a culture of shared responsibility for child care. The moratorium in implementing the National System of Dependency (care of dependent people) does not make it easy for women to free themselves from the burden of family care. In general, timid governmental action and traditional gender roles deeply rooted in Spanish society keep women in an unequal position. The wage gap between men and women is 17% and the pension gap comes close to 20%. Women’s employment rate is 51%, as compared to 68% for men.

The pension system represents the largest single piece of social spending. It accounts for more than 30% of the state’s budget and over 8% of Spanish GDP. The Socialist government has committed to an increase in pensions of between 3.4% and 7.2%. This increase should affect the minimum pension level, as the measures contained in the government’s Plan E (see Economic Policy) include a rise in this amount larger than seen at other income levels. As a result, the task of poverty prevention has been addressed and partly accomplished. Nevertheless, the elderly remain among the most economically vulnerable people within the system.
On the other hand, the economic crisis has led to a steep decrease in contributions to the social security program. This, combined with the process of population aging –which is stronger in Spain than in any other European country – has reopened a much-needed debate on the long-term fiscal sustainability of the pension system (for example, the social security surplus declined by 41% in 2009 as compared to the previous year). Early in 2010, the Socialist government proposed what amounts to a radical reform project. In line with discussions in other developed countries such as the United Kingdom, the proposal features a delay in the official retirement age to 67 years, a provision that would come into force in 2013. The minimum age to enter early retirement will be also increased, so as to limit use of this mechanism. At the same time, the contribution period taken into consideration in calculating the pension amount will be longer; and some changes are also planned to widow and orphan pensions.

In the past decade, some 5 million immigrants have arrived in Spain. In all, 12% of the population is now foreign-born. Apart from some western Europeans looking for a second home “in the sun,” the bulk of immigration comes from poorer countries, typically consisting of young Eastern Europeans, Latin Americans and Africans in search of jobs and better living conditions. Spain has so far lived in harmony with these newcomers. It helps that the Treasury has for the most of the time benefited from their contribution to the social security system. In the case of Latin American immigrants, language and cultural links have been beneficial too. As for the Muslim population, although most of them are moderate and well-integrated into Spanish society, some radical groups involved in recruiting and fundraising for al-Qaeda have also been uncovered. The public perception of immigration has deteriorated somewhat recently as a consequence of the economic crisis; it is increasingly common to hear the argument that immigrants are no longer a source of revenues, but they are instead putting further pressure on the country’s social services and public spending. However, taking account of the high unemployment rate, racial conflicts are in fact scarce in Spain, and the tendency toward integration on the part of immigrants seems positive.

In 2005, an amnesty was granted to more than one million then-illegal immigrants. Today, official government policy combines measures supporting integration (see Social Inclusion Policy) with more energetic steps to prevent illegal immigration. The Spanish government backed the European Pact on Immigration and Asylum, sponsored by French President Nicolás Sarkozy, and the Return Directive on illegal immigration (known in Spain as the “Shame” Directive). It has also offered bilateral aid to several northern African countries if they agree to receive illegal immigrants deported from Spain. A program has been unveiled allowing migrants to draw their unemployment insurance benefits as a lump sum if they return to their home country and renounce their residence rights in Spain.

Reversing the trend of recent years, defense expenditure has declined, with investment in military research and innovation being the area most significantly diminished. In spite of this fact, Spain scores close to the OECD average in terms of military capability and equipment sophistication. Experts and the general population have raised some criticism of military deployment in a large number of international missions with no clear relationship to Spain’s national interests (almost 3,000 soldiers are currently deployed in Bosnia-Herzegovina, Kosovo, Lebanon and Afghanistan, although the government decided unilaterally to withdraw troops from the NATO mission in Kosovo in 2009, due to its disagreement with the declaration of independence made by the young Balkan state).

The Spanish government is strongly committed to multilateralism, as exhibited by its role advocating for the recently adopted Internal Security Strategy for the European Union (aimed at establishing more effective tools for combating conventional and new threats) and its participation in Operation Atalanta (an EU military operation tasked with deterring, preventing and repressing acts of piracy and armed robbery off the coast of Somalia). Spain has also signed numerous multilateral agreements to strengthen counterterrorism cooperation on a political level. In May 2010, interior ministers from Spain, France, Portugal, Italy, Malta, Algeria, Libya, Morocco, Mauritania and Tunisia agreed to strengthen their exchange of information in order to prevent anyone accused of a terrorist crime from finding shelter in those countries.

Whereas the Zapatero government continues to promote its initiative Alliance of Civilizations abroad, a long-needed initiative has also been implemented at the internal level to coordinate efforts in national security matters. Previously, the ministries of Foreign Affairs, Home Affairs and Defense worked separately, developing their own strategies and plans. However, a proposal was announced in late 2009 to develop a general national security strategy, to be coordinated by former EU High Representative for the Common Foreign Affairs and Security Policy Javier Solana.

In general, Spain performs satisfactorily in the field of internal security as compared to other European countries. Indeed, it scores comparatively low on general delinquency and homicide. According to official data, the crime rate decreased in 2009 (as compared to 2008), whereas there have been improvements in clearing outstanding cases. Nevertheless, the expenditure on public order and internal security has significantly decreased, and acute problems remain concerning domestic violence against women. Despite the introduction of GPS bracelets for domestic violence offenders in 2009, the technology is not yet broadly used, and more than half of abuses are never reported to the police in the first place.

In the last two years, the fight against the Basque terrorist and separatist group ETA has been successful, with the detention of its suspected ideological and operational leaders. Franco-Spanish field-level cooperation has intensified. Apart from ETA terrorism, the government of Spain and its citizens are concerned that the country remains a principal target of Islamic extremism. In order to face this new security threat, substantive police and intelligence efforts are now devoted to targeting terrorist recruiters and facilitators. Thus, for example, 65 suspected Islamist terrorists were detained in 2008.

In spite of these positive steps, the impact of the current economic crisis has contributed to an increase in the subjective feeling of insecurity, and public opinion continues to press for additional preventive measures.

Spain’s environmental policy outcomes are at best mixed. Despite a positive trend in the use of renewable energy, Spanish and European targets have not yet been achieved. Indeed, clean energy use remained under 8% of total energy supply in 2008, while the 2020 target of 22.7%, as proposed by the National Renewable Energy Action Plan 2011 – 2020 currently under discussion, seems far too ambitious. The decrease in CO2 emissions in 2008 and 2009 not only reflects a change in the national energy model, but also the effects of the economic crisis.

The government’s concerns over a high level of energy dependency (Spain currently imports 100% of its oil, and approximately 81% of its total primary energy consumption) have led to the Energy Efficiency and Saving Action Plan 2008 – 2012. Among other provisions, this encourages the replacement of incandescent light bulbs with florescent ones, and holds financial incentives such as the Plan VIVE to promote innovative and environmentally friendly vehicles. The Spanish government is pioneering support for electric vehicles at the European level, as the Comprehensive National Strategy to Promote Electric Vehicles suggests. Moreover, it has shown itself to be seriously committed to adapting national policy to European directives in this field. As a result, the National River Restoration Strategy and the National Integrated Plan for Solid Waste Management 2008 – 2015 were recently approved, and a draft law to transpose the 2009 European Commission directive to enable environmentally safe capture and geological storage of carbon dioxide (CO2) is currently under discussion.

On the negative side, it is not clear how effective the country’s 2007 air quality strategy has been to date, and the interbasin water transfers between the Tajo and Segura rivers can be seen as a step backward in terms of water treatment policy, desalination and the “AGUA” program. All in all, important problems concerning water scarcity, deforestation and air pollution remain unresolved. Moreover, a pricing policy aimed at encouraging energy saving has not been sufficiently exploited. Environmental organizations have raised concerns that economic stimulus measures launched in 2008 and 2009 did not always take environmental impact into consideration.

Spain has traditionally lagged behind its European neighbors in terms of research and innovation, and scores far below OECD averages on all R&D indicators. After some years of increasing investment in innovation policy, the financial and economic crisis has led the government to make regrettable cuts in public expenditure in this sector: The 2010 R&D budget was reduced by 15% as compared to the previous year’s already diminished level. Nor has the crisis encouraged private investment. Thus, for example, Nokia – the top European company from an R&D spending perspective – spends four times more than the top 21 Spanish companies put together. As a consequence, the Spanish research sector has experienced a brain drain of growing severity.

The alleged commitment of the government to supporting research and development resulted in the creation of the Ministry of Science and Innovation in 2008. This ministry quickly proposed a draft law on research, development and innovation (intended to improve researchers’ professional career prospects, as well as the overall stability and efficiency of the system); a medium-term national scientific research, development and technological innovation plan (National RDI plan 2008 – 2011) and the Integral System of Monitoring and Assessment (SISE), aimed at overseeing public grant programs. At the regional level, it is worth noting the Catalonia government’s 2010 – 2013 research and innovation plan (PRI), aimed at planning and promoting Catalonia’s research and innovation, and at encouraging cooperation between research centers.

Overall, budgetary constraints are conflicting with the government’s pledge to sponsor a new model of economic growth based on brainpower rather than on construction. Moreover, resources could be used more efficiently by enhancing mechanisms of intergovernmental coordination between the central government and the autonomous regions.

Although Spain remains below the EU average, expenditure on education grew in 2009 to reach 4.95% of GDP. Further increases have also been approved in the general state budget for 2010. Yet, additional spending will be irrelevant if it is not accompanied by improved spending efficiency and does not translate into better educational performance. In that regard, the last Program for International Student Assessment (PISA) report does not indicate successful results; quite the opposite, Spanish schoolchildren occupy the 35th place in reading comprehension, 32nd in mathematics and 31st in sciences in a comparison of 56 countries.

Moreover, school attainment has worsened dramatically, as shown by a compulsory secondary education dropout rate that is now twice the EU average (31% versus 15%). This poses a fundamental challenge for equality, since low attainment strongly correlates to socioeconomic background, and is more frequent among children of immigrant families. Interregional inequalities have also risen both with respect to academic performance and per capita expenditure. In November 2008, the central and regional governments agreed on a plan aimed at reducing early school dropout (the Plan para la Reducción del Abandono Escolar Prematuro), which was also intended to strengthen links between compulsory education, vocational training and work. It is worrying that vocational training remains very unsuccessful, despite the comparatively high wages in many jobs requiring skills acquired through such training. In March 2010, the School 2.0 program was approved, with the goal of making new technologies a fundamental aspect of education, by developing computing infrastructure in conventional classrooms and providing all schoolchildren with a laptop.
The outlook for higher education is little better. Some privately run business schools are considered to be world class, but no Spanish university, either public or private, is ranked among the world’s top 150. In general, universities are still academically driven and fail to respond effectively to emerging labor market demands. This combines with the large number of universities and campuses distributed throughout the country, which offer almost identical degrees. A process of specialization is urgently needed to make the university system sustainable and to enhance its quality. In this context it is worth noting the University Strategy 2015, an initiative shared by the state and regional governments and universities aimed at modernizing the country’s higher education system, promoting excellence in research and training, and improving the system’s international reputation. One of the main elements of the strategy is the Campus of International Excellence program.