Friday, April 13, 2018

Thoughts from Galicia, Spain: 13.4.18

Spanish life is not always likeable but it is compellingly loveable. 
- Christopher Howse: A Pilgrim in Spain. 

If you've arrived here because of an interest in Galicia or Pontevedra, see my web page here.

Spain v Cataluña
  • Yesterday I cited a John Carlin interview – but an article, not a video – and I believe this is so apt that I've posted it below this post today. It reflects the views which I'd hope any knowledgable and objective observer of the Spanish scene would have. Sadly, this appears not to be the case among Spaniards. One's forced to agree with Carlin that this is a generational thing, and a reflection of Spain's recent history. All very chastening. These are very bad times for Spain. The only good news is that this atrocious PP government seems to be on its way out. Though there's a way to go before the next general election.
  • Carlin specifically echoes something I've noted and reader María has commented upon: The outrage and passion with which people insist that Spain is a modern, democratic country reveals a certain inferiority complex which I never thought they had. It is depressing, this inferiority complex of many Spaniards against other countries.
  • Half Spanish himself, Carlin expresses his disappointment at the dark, revengeful, cruel, crass, absolutist side of Spain’s political establishment in general —and, in particular, of the PP government.
  • But he also expresses hope in Spain's youth, whom he sees as more confident; more travelled; more linguistically adept; and more cosmopolitan. Their elders are dismissed as absolutist and dictatorial, and burdened with a Francoist mentality and pathetically stupid complexes and insecurity. He'll be even less popular here than he is now . . .
Life in Spain
  • Two events of note today:-
  1. Getting dressed after an examination in the hospital on Wednesday morning, I realised there was still a needle stuck in my arm, with a plastic plug attached to it. I went and asked a nurse if they were going to take it out or if I could do that. She plumped for the latter but a rather older nurse insisted on taking me into a room and pulling it out. This was a private hospital, by the way.
  2. I picked up my car last evening, after its more than 3 weeks in the repair shop. Or, rather, I went to do so. After my lovely neighbour, Ester, had dropped me off and departed, they couldn't find a bill for me. A sort of bill was eventually found but the amount on it was more than €1,500, against the insurance franquicia(UK 'excess') ) of c. €250 I knew I was in for. Then came the fatal Spanish question: Are you in a hurry? I was just calling Ester to ask her to come and get me when, happily, the boss arrived and agreed that the amount I had to pay was in line with my expectation. He called the company for the exact number and then accepted my cash of €240, against the total bill of more than €5,000 which I'd seen on another desk. This was bad for me, as his memory had suggested it was only €200.
As I've asked a few times before . . . Does this sort of thing only happen to me? 

Anyway, moving on to a 3rd event . . .
  • Yesterday I had a doctor's appointment in a private hospital. The place was busier than an airport departure lounge, and – what with all the big screens – rather similar. There were literally dozens of people milling around, most of them having to stand. Far more than I recall from previous visits. It got me wondering just what percentage of the Spanish population has medical insurance. Quite a lot it seems, at around 30%. This compares with estimates for the UK of 1-6%. One reason for this huge difference is that insurance is much cheaper here. Another, larger and connected reason, is that all sorts of 'leftish' folk who would be atavistically opposed to private medical care in Britain have their own insurance schemes here. Teachers; university professors; Spain's innumerable national, regional and municipal politicians; and even union officials, for example. This would be unthinkable in the UK. Don't know about Germany, France, Scandinavia and The Netherlands, etc. Actually, that's not quite true; I know that in the last-cited everyone is compelled to take out insurance. So, 100%. In the USA the percentage, must also be extremely high, albeit for very different reasons. Strange, then, that no other country wants to emulate the US system. Presumably because they're all 'communist'. Or at least 'socialist'. Especially The Netherlands . . . 
The EU
  • This is what happens when a committee of 27/28 attempts to tackle a serious problem: The EU is mooting a new copyright regime for the largest market in the world, and the Commissioners who are drafting the new rules are completely captured by the entertainment industry, to the extent that they have ignored their own experts and produced a farcical Big Content wish-list that includes the most extensive internet censorship regime the world has ever seen, perpetual monopolies for the biggest players, and a ban on European creators using Creative Commons licenses to share their works. More here. Note that one of the measures being considered has already been proven a failure here in Spain.
  • No words to add to this.
  • Nice article on Putin below, providing a degree of hope that we won't soon all be obliterated in the Third World War.
Nutters Corner
  • No words to add to this either.
  • Giving an English class to Ester's 10 year old son last night and hearing that more than 50% of the class had failed the last exam, I concluded it's still not the view here that this is the fault of the teacher, not the badly-taught pupils. Which might help to explain the poor results of Spanish students in international assessments.
  • A cosmetic company's TV ad: The UK's first body-shaving range. God help us.

© David Colin Davies, Pontevedra: 13.4.18  Friday . . . .


1. Opposing Catalan separatism is not enough in Madrid: you must scorn it, too: John Carlin:

The English journalist slams Spain’s crackdown, as well as the 'naivety and infantilism' of Catalonia’s secessionist leaders

John Carlin (London, 1956) has travelled the world as a reporter. He saw the end of apartheid first-hand as a foreign correspondent writing for The Independent. He then sought a new destination, but his knowledge of South Africa, the conflict and Nelson Mandela led him to pen his most stunning title to date: Playing the Enemy: Nelson Mandela and the Game That Made a Nation, a book where he describes Mandela’s powers of seduction on his political opponents.

Carlin finds that most international political leaders lack Mandela’s political finesse, respect for one’s opponent, talent and strategic vision. Spain and Catalonia are no exception. He has never hidden the fact that he opposes Scottish and Catalan independence, but he finds Spain’s crackdown on Catalonia particularly shocking. He is disappointed in Spain, a country which he expected to be more democratic.

Following some articles criticising the Spanish government’s stance on Catalan separatism, in October last year Carlin was sacked by El País , the Madrid daily where he had been a contributor for years. He discusses that in this interview with VilaWeb, and asks himself how come Spain’s territorial issues can elicit such a visceral response in so many Spaniards, to the point that any deviation from the official party line is penalised.

—How do you see the current state of affairs in Catalonia?

—I suspect that there will have to be a referendum sooner or later, but we are in limbo at the moment. It looks as if the pro-independence movement has lost momentum and there is some in-fighting going on, but it doesn’t mean that the desire to be independent, which a significant percentage of Catalans feel, will just go away. The events of the last few months, the baton charges in October, the arrests, the people who remain in prison, combined with the perception by many Catalans that Madrid has not shown them respect over the last six or seven years have all bred a feeling of resentment that many have kept bottled up inside. This might not be so obvious today, but it won’t be forgotten. There is resentment and it is here to stay and that —among other things— will keep the separatist sentiment going.

—Spain’s repression could leave its mark on many people for generations to come.

—You must never underestimate resentment. Never. It is an incredibly powerful emotion. You can feel resentment against your father for something he did when you were fifteen. That leaves a mark, a bitterness which you will likely carry with you for the rest of your life. And not just against your dad, but against the world. It is powerful on a personal level, but also on a group scale. Resentment is a very powerful driver of human actions, on a personal, family, group and national level.

—Could you have ever imagined the extent of Spain’s repression?

—I lived in Spain for several years. My mother is Spanish and I have many relatives in Madrid. For years I lived in some sort of golden dream where Spain was a modern democracy and everything was great. But the last six months have been a huge disappointment in terms of what I can see in Spanish politics in general. And I am including Catalonia’s pro-independence camp here. But I feel more disappointed by the response of the Spanish state and its establishment against Catalonia, which strikes me as more sinister.

—The Spanish newspapers claim it is exemplary.

—People have written to Spanish papers to voice their outrage and decry that writers such as myself and some foreign media have argued that Spain is not a modern democracy. They claim that it is. Well, sorry mate, but it is not. And the outrage and passion with which people insist that Spain is a modern, democratic country reveals a certain inferiority complex which I never thought they had. It is depressing, the inferiority complex of many Spaniards against other countries such as the UK. Uncovering the dark, revengeful, cruel, crass, absolutist side of Spain’s political establishment in general —and, in particular, of the PP government— has been a disappointment.

—Do you find the PSOE’s position disappointing, too?

—In the last few years the PSOE could have insisted more in order to find a negotiated solution, some dialogue …

—What about the Catalan independence movement?

—Look, I think the pro-independence camp has been incredibly irresponsible and infantile, too. They declared independence unilaterally following a referendum that never was. Instead, it was a political mobilisation for which they ought to have found greater social and parliamentary support. When I look at some of these secessionist leaders, they remind me of college-age politicians playing a game on campus, far removed from the real world by their idealism. They haven’t got both feet on the ground and that will hurt people and, eventually, it will hurt them, too. But the Spanish government’s duty was to take on the grownup’s role and, in a way, theirs has also been an infantile position, albeit with weapons. And behaving like bullies.

—You have criticised the establishment, but the general public in Spain have accepted the crackdown on Catalonia.

—They have, indeed. My disappointment is over Spain as a whole. Perhaps this was more obvious to me than to Catalans. I travel a lot across Spain and, as I’m not Catalan, people are frank and tell me how they feel about Catalans. If you, as a Catalan, travel to Cadiz, they might be more polite to you. But, particularly in the last four or five years, I’ve been shocked —and it’s been really hard— by how it is perfectly normal for people to badmouth Catalans, even people who are friendly, nice and progressive. There is something, here. There is a widespread anti-Catalan sentiment in Spain. I don’t know the percentage, but the PP and other political parties have worked out that some voters will shun them unless they jump on the bandwagon. It’s rather depressing. But it is also a powerful argument for the pro-independence bloc. I have always opposed them and I still do, in a rational way. But in the last few years I have come to understand the separatist drive much better. Deep down, it think it’s all about emotions and separatism is also based on emotional factors.

—Independence supporters in Catalonia used to be in a minority, but they have multiplied in the last few years due to many factors.

—Yes, and I’ve written about that. The big question for me is, how come they have grown from 14 to 50 per cent in such a short time. It is a question which people refuse to answer in the rest of Spain. And every time I broach the subject with friends and acquaintances in Madrid who oppose Catalan independence viscerally, I tell them that all my Catalan friends say the same: lack of respect, abuse. And they look at me as if I was a child who understands nothing. “How do you mean, abuse? What are you on about?” And they tell me that it’s all down to Catalans not wanting to share their wealth. Their inability to comprehend the emotional factor behind the growth of the separatist sentiment in Catalonia is extraordinary. The rest of Spain is completely unable to grasp the political mentality and emotion that you have in Catalonia. It is as if you told them about Syria: they don’t get it. Still, not everyone is like that in Madrid, especially among young people. I see a glimmer of hope there. Many times I think that Spain could do with a generational change.

—Is that the other Spain?

—Yes. I generally see that in the young. I won’t say it’s infallible, but there might be a difference between the people who were born and raised under Franco and those who weren’t. Those over the age of fifty, the ruling age group that makes up the establishment, were brought up during that period and they are beyond repair: their insecurities about being Spanish in this world, about Spain breaking up, about the unity of their country … Young people seem more confident; they’ve travelled more, have better English … In contrast, I see the previous generation has hang-ups and an absolutist, dictatorial, Francoist mentality, the remnants of the regime. Me, I need to believe that the younger generations —those in their twenties, thirties and forties— will change all that. It is depressing to see that dark side, the absolutist heavy-handedness, coupled with their pathetically stupid complexes and their insecurity. It is deplorable.

—In Madrid it’s difficult to maintain a public discourse that differs from the official line on the subject of Catalonia. Is that why El País let you go?

—It’s like there is no individual thought. Either you stand with us one hundred per cent or you are against us. In my case, I’ve always made it clear in my writings and interviews that I do not support separatism, neither in Scotland nor in Catalonia. But that is not enough. You must absolutely scorn secessionists, almost hate them and systematically disrespect them in a visible manner. Opposing the idea is not enough. You are expected to combat those who support independence, endorse the Spanish government’s position, uphold the law and the constitution. And you must do so one hundred per cent. I find it interesting how Podemos have kept a low profile. I get the impression that, given the prevailing anti-Catalan sentiment, they’ve had to tone down their message because they reckon they’d lose votes.

—Is it really such a widespread feeling?

—Look, round about Christmas last year I was discussing Catalonia with a very intelligent, very bright person from Madrid. I was saying that both sides are to blame for the mess. And I was having a perfectly rational, intelligent conversation with this man when, all of a sudden, he said that independence supporters were Nazis. And I told him that I could not continue our conversation because it was impossible to have a rational discussion. It is an eye-opener when someone like him, such an intelligent individual, claims that those people are Nazis: you catch a glimpse of the irrational, nearly mad streak behind the whole thing. If someone who is brilliant talks like that, I don’t even want to think about the views of other kinds of people, including Rajoy and his lot. You talk to people and you can see their rage coming through. There was an element of irrational rage in El País’ decision to sack me.

—Catalan separatism has always argued for independence through peaceful means, but Madrid deals with it as they did with the Basque Country.

—You can only assume that many people in politics and the justice system feel the same way as my intelligent friend in Madrid and they believe that Catalan separatists are Nazis. When your initial premise is that Junqueras, the two Jordis and Puigdemont are Nazis, their imprisonment comes across as an admirable show of responsibility. Yes, they draw a parallel with ETA and Tejero [the Guardia Civil officer who attempted a coup in 1981], as if they had staged a coup d’état. They won’t even allow the Catalan prisoners to be moved to a Barcelona facility, like the ETA convicts which they keep in Extremadura prisons [very far from the Basque Country]. It is totally grotesque. That is all it takes to realise that Spain is not a true modern democracy. It is deplorable and an embarrassment.

—Has Spain’s international image taken a blow?

—Obviously, as with any country in the world, the general public couldn’t care less. Like Spanish people don’t care about what goes on in Poland. But people who think about it do feel the way I said earlier. I wonder if you read the editorial in The Times some weeks ago. It was a damning editorial urging Rajoy to allow Puigdemont to return and engage in talks, written by a man who is not exactly a specialist in Spain, but it captured the views of many people on the subject. Had he written that in El Mundo or El País, he would have been sacked. And I know the man who wrote it: he is very conservative, hardly a progressive or a Marxist dreamer.

—You speak about your disappointment with Spain. But you know the Basque conflict very well and you could already see some very dark goings-on there.

—Having kept Arnaldo Otegi in jail for six or seven years was grotesque, too. Otegi was the Basque Country’s own Gerry Adams. And Adams’ hands were stained with blood: it is a fact that he was an IRA member. But not Otegi. Adams played a critically important role in achieving a peace deal for Ireland and Otegi was one of the three or four people who were instrumental to bringing peace to the Basque Country. However, Spain’s cruel, revengeful streak showed itself again. It is the kind of absolutist, legalistic thinking which is indicative of an utter inability for political action, an aversion to risk, and a lack of courage and imagination. I am very critical of Tony Blair, but I have to admit that what he did for Northern Ireland was admirable: he engaged in talks with terrorists who had killed many more people than ETA ever did. Blair was a pragmatist.

—You are very familiar with Mandela’s style, which was based on respect and recognition. Are you taken aback by Spain’s scornful attitude?

—If Mandela had been in Rajoy’s shoes back in 2012, after the massive rally on September 11 which gave momentum to the separatist movement, he would have resolved the whole thing within a week so that Spain could remain united. With gestures, by showing respect, courtesy and using dialogue. And with a sense of humour, which is absent here. This unyielding inflexibility … it must be the invisible expression of an insecurity, of a lack of political talent, of courage and vision … Everything which Mandela possessed.

2. Putin's futureless economy can't match his power posturing

Russia’s economy was smaller than that of Texas even before the latest and most lethal sanctions imposed by Washington.

It has diminished further to Benelux proportions after the ruble’s 10pc crash this week, the steepest fall since the late Nineties.

Upon this slender economic base, Vladimir Putin’s Russia is posing as a world-class superpower, the new master of the Middle East, insisting on its ‘droit de regard’ over the old Tsarist realms as if by natural right.  What is extraordinary is than anybody should believe in such geostrategic posturing.

The harsher truth is that Mr Putin squandered the windfall wealth of the commodity supercycle and hollowed out what remained of the Soviet industrial and engineering base, leaving Russia’s Potemkin economy in a futureless cul de sac.

He has succeeded (so far) in propping up his ally in Syria but this tells us little about the global balance of power. It is easy enough to lend air support to a regime with ground forces already in place, if you are willing to carpet bomb civilians without pity.

The West’s tortured hesitation reflects entirely valid doubts over Syria’s three-way struggle, and the Salafist alternative. It too simple to confuse this with weakness.

The Kremlin likes to dismiss Western sanctions as a flea bite. Not any longer. “The measures are turning into a tool of real economic war,” said Russian premier Dmitry Medvedev.

The US Treasury document announcing sanctions – to punish “worldwide malign activity” – is a comic read but at the same time a mortal threat to the Putin oligarchy, almost intended to provoke an internal palace coup by the Siloviki in the Kremlin.

It openly alleges that Oleg Deripaska, aluminium king and head of Rusal, “ordered the murder of a businessman”. It cites claims that Suleiman Kerimov from Polyus Gold laundered hundreds of millions of euro buying villas in France, “transporting as much as 20 million euros at a time in suitcases".

Deripaska has described the sanctions as "groundless, ridiculous and absurd".

What is new about these sanctions is that they target pre-existing securities. The previous measures in 2014 had a perverse effect since they targeted only fresh issuance, which raised the scarcity value of pre-existing bonds and gave comfort to foreign investors. Tim Ash from Bluebay Asset Management said there was feeling that you could navigate around it.

The latest twist turns the named companies into international pariah, as Rusal is discovering. It has been blackballed from the London Metal Exchange. Its listed share price on the Hong Kong exchange has fallen 58pc this week.

This is a foretaste of what lies in store for Russia’s corporate elite as the Mueller investigation uncovers the whole ghastly truth about Kremlin cyber-aggression against the US political system. Whatever the White House may or may not want to do, the policy is being pushed by a wrathful Congress intent on avenging what some senators call a Russian Pearl Harbour.

No Americans can deal with sanctioned entities, and no Europeans can do so lightly without provoking the US Treasury under "secondary sanctions" clauses, if they have any commercial dealings with the US.  Belgium-based Euroclear said immediately that it would comply.

The US Treasury has a very deep reach into the international dollarised payment system, and is armed with an elite commando unit skilled at what it calls "boa constrictor" methods. Chinese banks might step into the breach and lend to Russia (at a price) but even they will hesitate.

Investors must now contend with the prospect that almost any oligarch could be targeted and that any Russian asset – including sovereign bonds – could be tainted and plunge in value overnight. This risks a collective rush for the exits. Nobody wants to be trapped in a firesale. Sberbank shares are down 17pc over the last two days even though it is not on the list.

Russia has been the darling of emerging market funds over recent months as its economy stabilised and Brent crude prices recovered to $70 a barrel. Investors badly misread the political risk, but they were not alone.

Standard & Poor’s raised the country’s credit rating to a BBB investment grade in February, deeming the national finances strong enough to “absorb shocks that could come from tighter sanctions”. This judgment will be put to a severe test.

Russian vice-premier Arkady Dvorkovich has promised to rescue sanctioned companies, implying that the state will cover the debts of private firms and state-owned companies if need be.

Mr Putin wasted Russia’s oil bonanza from 2005 to 2014 on hubristic rearmament

Yet the Reserve Fund is exhausted and was shut down in December. Much of the residual $67bn Welfare Fund is committed. The Kremlin will have to tap the central bank’s $453bn portfolio of foreign reserves. “If the sanctions go on long enough and the circle expands, the cushion may not be enough” warned an editorial in Vedomosti.

To be clear, the country is not facing an imminent financial crisis. The floating ruble acted as a shock absorber through the oil crash. It took crude prices of $115 to balance the budget in the giddy days of 2013. This was cut to $70 in 2017.

The fiscal deficit is a modest 2pc of GDP, though it is arguable that Russia will struggle to finance any deficit at all if sovereign bonds are added to the sanctions list since it lacks a functioning domestic bond market. But all in all, Russia survived the trauma.

What it faces instead is ‘neo-stagnation’, to borrow from former British ambassador Sir Andrew Wood. It is caught in a self-feeding cycle of decline as infrastructure crumbles and young brains leave.

The deep recession of 2015 and 2016 may be over but per capita income is stuck at $8,800 and industrial wages are now lower than in eastern China – let alone Poland. The post-Soviet convergence with the West has stalled. There is no new growth model for the 21st century.

The drastic plan of autarky and import substitution launched three years ago by president Putin to break dependence on commodities – 80pc of exports during the boom – has come to little. Reliance on foreign farm machinery was to be cut 56pc by 2020, and engineering equipment by 34pc. None of this happening. Machinery imports are rising.

Russia is still hostage to oil and gas. Energy provides a tolerable living for now but US shale has entirely changed of global oil industry, capping each rise in prices with a surge of new drilling. It has become a structural headwind. Russia’s own production costs are rising as the old fields decline by 3-5pc a year in Western Siberia.  The energy ministry warns that output could halve by 2035 unless there is a wave of investment.

The coming surge of US liquefied natural gas (LNG) has deprived Mr Putin of his pricing power in Europe. He was able to charge $12 (MMBtu) in 2012. Today his gas fetches around $5 even if his volumes remain high. This is the long shadow of global LNG.  

By the mid-2020s, other powerful forces will be at work. Electric vehicles will probably have reached take-off; battery costs will have come down far enough to give wind and solar an edge over gas; carbon prices will be rising to meaningful levels as the Paris climate accord bites. By then the fossil industry will be looking tired.  

Mr Putin wasted Russia’s oil bonanza from 2005 to 2014 on hubristic rearmament. The Stockholm International Peace Research Institute said the military budget rose 8.1pc in real terms in 2014 and another 15pc in the final mad year of 2015 when the economy was already contracting. Finance minister Alexei Kudrin resigned with a warning that it would ruin the country, and that is exactly what it did. 

The Russian military added a fleet of new Su-34 long-range combat aircraft, and batteries S-400 surface-to-air missile systems, even as pauperisation spread through the Russian provinces. It coincided with the negligent disarmament of the West, made worse by Europe’s austerity overkill.
This misalignment created a window that Mr Putin has exploited. The window is about to close again. Russia can no longer afford the military rent, and the West is rearming fast.

A nuclear-armed Sparta under a despotic leader with totalitarian propaganda tools can of course be very dangerous. But please don’t call Putinism a success.


Sierra said...

In Wednesday's rant against the EU you referred to a Don Quijones article starting "...that pumping £435 billion into the economy via QE is really only the thin end of a monetary wedge which has defined the past decade...". Assume you appreciated that this was about the UK?

Eamon said...

The payment the boss quoted at 200 was probably correct and he pocketed the extra 40. The phone call to confirm the price is really impressive.

Colin Davies said...

Well, as the currency quoted was pouds sterling, I'd have to have been rather stupid not to do so. But DQ's comments on QE are of much wider application, though covering the EU rather more than the US.

I assume you disagree with him. Which you have every right to do, of course. Reasons would be good.

Colin Davies said...

Bit too sceptical, Eamon. 240 is quoted on my policy . . . I checked

Mind you . . . I didn't get a VAT receipt, as I recall.