Beatrice Rangel: Can Spain Save Itself?
By Beatrice E. Rangel
Latin American Herald Tribune
June 4, 2018

Former Venezuela Presidential Chief of Staff Beatrice Rangel on whether Saturday's swearing in of Spain's new Prime Minister Pedro Sanchez by King Felipe VI will herald a change in the corruption and competency of the country

In a sudden and successful political maneuver, Mariano Rajoy, leader of PP, was ousted from the Spanish presidency.

In now is Pedro Sanchez, a socialist leader who is backed by what Italian film makers would dub "an Armata Brancaleone".

This term is used to describe a group of badly assembled and poorly equipped people.

The rebelling team's cohesive band seems to be the desire to do away with what remains from the traditional Spanish leadership that launched the country into democracy but has failed to improve the quality of democratic rule.

But it remains to be seen whether these Spanish "Young Turks" will be capable of stepping up to the plate of executing reforms demanded by economic change and the third technology wave. Indeed, despite its much-heralded support for economic freedom, Spain's economy functions as a huge corporative entity where competition is consistently avoided, back room deals are common practice and rent extraction continues to be the ultimate goal for successful business operations.

With respect to digitalization -- which is key to economic advancement -- the process faces severe roadblocks springing from the regulatory corner that continues to be the the protective shield to economic interests that refuse to compete.

To be sure, the aim of 100% internet coverage at 30 Mbps, with 50% of households subscribing to internet connections above 100 Mbps by 2020 are in line with targets laid out in the Digital Agenda for Europe.

But until regulatory and administrative barriers are removed, small and medium sized and service enterprises will be unable to benefit from a dynamic and flexible use of spectrum through the deployment of ultra-fast broadband networks and Spain will lag the leading economies of Europe.

In education little is being done to develop human resources capable of matching employment needs of businesses.

In sum, Spain seems to be hijacked by the economic interests of the past. This prevents the country from embracing the development promise of the future which is key to bringing down its unemployment rate which is stubbornly fixed at about 15%.

While this situation persists, there will be little incentive for young an entrepreneurial Spaniards to stay in their country and create wealth.

The ousting of Mariano Rajoy does not seem to be enough to trigger a wealth creation trend in Spain, especially should his ouster fall short in the ousting team's promise to efface corruption at its roots.

Because corruption is the reason behind Spain's relative underdevelopment.

Corruption is behind the rock-solid wall of administrative rules and regulations that serve two purposes.

First they keep foreign competition from entering the Spanish market.

Second, they promote cartelization, price rigging and bribe paying.

Corruption is also behind the financing of political parties which -- contrary to their Scandinavian, British and German peers -- are not financed by the quotas paid by affiliates but by generous grants from corporations that in exchange get to choose the regulatory framework that best suits their rent extraction aims.

The system acts as a strait jacket for growth and as an exclusionary barrier against entry by entrepreneurial leaders into the economic commanding heights.

Should Mr Sanchez and his Armata Brancaleone preserve this system, they will most probably condemn their fellow citizens to yet another era of slow growth and social discontent.

Should they dare to bring down the regulatory and administrative walls, Spain could become a European tiger riding on economic complementarities with Germany and the UK and the very rich exchanges with Latin America.