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A quick guide to Spain’s political crisis

As if its continuing economic problems were not enough for Spain to deal with, the country has now been enveloped in a political crisis. Here is a quick guide to the implications of the crisis in a Question/Answer format, with a few useful links for those wanting a bit more detail or background and a few extra quotes from articles by both Reuters and the Financial Times...

Background:

http://elpais.com/elpais/inenglish.html

http://www.bbc.co.uk/news/world-europe-21326937

http://www.economist.com/blogs/charlemagne/2013/02/spanish-politics?fsrc=nl

http://www.ft.com/intl/cms/s/0/7c7c599a-6fb0-11e2-956b-00144feab49a.html#axzz2K8GulIRg

The implications of the crisis:

Q: What could this latest scandal mean for general market and foreign investor confidence, bearing in mind that Spain is one of the most troubled eurozone nations?

A: The scandal will negatively affect the

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Madrid view: will the sun ever return to Spain?

Spaniards woke up this week to the release of yet more depressing unemployment figures. According to the official bureau of statistics unemployment is at 26.02% of the active population. This means that there are less than three people working for every one that is unemployed. The figures did not break the psychological barrier of 6 million, but at 5,965,400 they got very close. The last quarter of 2012 added an extra 187,300 people to the unemployment queue, and showed that unemployment has not yet touched the ceiling. At the beginning of the crisis in 2008, unemployment was at 7.95% - it has risen relentlessly and is now three times as high. 

No doubt people outside Spain are able to imagine the personal and social drama behind this figures. Spaniards are understandably circumspect these days. We miss the sun as well as a glimpse of hope. This probably explains why the video

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ECFR this week: 11th January 2013

 

As many of you have read (and tweeted about), our year kicked off with our predictions for the future in“Ten Trends for 2013.” Will the British debate about Europe become less toxic? How much is the single market being threatened by the euro crisis? Are small states the key to European foreign policy? Have a read and make your own mind up. 

Mark Leonard also wrote his latest column on issues discussed in “Ten Trends” – “In 2013, the great global unravelling.”

This last week we took a look at one of the key questions of European foreign policy – do sanctions work? We published a policy memo from Konstanty Gebert – “Shooting in the dark? EU sanctions policies” – that argues that if we don’t develop a better way of tracking the effectiveness of sanctions, then this key tool of European foreign policy is no more effective than shooting a gun in the dark. 

Elsewhere:

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    Madrid view: the new EU chessboard

     

    The euro crisis has caused an unprecedented realignment in European political geography. For decades, EU integration functioned as a chessboard in several dimensions: economic, political and strategic. In each there were various dynamics, but also balances that gave all participants some cause for satisfaction.

    On the economic board, there have always been asymmetries in size and strength, but never such hegemony as to make anyone feel threatened. EU integration has functioned as a “good globalisation,” with transparent, equitable rules of the game, and authorities and institutions to enforce them. Each country has been able to seek its market niche, experiment with various socioeconomic models, and adjust them to its own satisfaction. All the EU members have had opportunities not only to grow, but to do so cohesively: both internally, creating social inclusion, and externally,

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    Madrid view: is the worst over for Spain in 2013?

     

    How does 2013 look for Spain? Is the worst over? The answer to that question depends largely on how “worst” is defined.

    The absolute worst scenario, the collapse of the euro, can now be set aside thanks to the decisive action of European Central Bank president Mario Draghi. The wording he chose in a statement on the issue – “I will do whatever it takes to save the euro and, believe me, it will be sufficient” – was exactly what the markets had been waiting for since 2010. Markets now know that betting against the euro could be dangerous.

    But this does not mean that the crisis is fully over.

    For domestic political reasons, EU leaders are still reluctant to follow Draghi’s lead and do whatever it takes to consolidate the euro. A banking union has been born, but it is still half-baked, while the more ambitious proposals aimed at a fiscal union are still in their infancy. EU

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