The Greecification of Spanish Politics

By:  Mike Shedlock




There’s an excellent post on Keep Talking Greece this evening on the simmering feud between Greek prime minister Alexis Tsipras and Spanish prime minister Minister Mariano Rajoy.

Tsipras made a claim that Rajoy’s plan is to “wear down, topple or bring our government to unconditional surrender before our work begins to bear fruit and before the Greek example affects other countries… And mainly before the elections in Spain. … for obvious political reasons“.

Spanish foreign minister García Margallo, returned fire with a statement (a lie actually), that “Had Spain not given €32.744 billion to Greece, it could have increased the unemployment benefits by 50 percent or increase pensions by 38 percent.

The heart of the bickering is the rise of the Spanish political party Podemos to the top of the Spanish polls. Elections are later this year. Pablo Iglesias, the leader of Podemos, and Tsipras are good friends.

Greecification of Spanish Politics

With that backdrop, let’s pick up the discussion with a look at the Keep Talking Greece article“Hellenization” of Spanish politics or How PM Rajoy lies about the Greek loan.

Adding Up the NumbersFirst let’s take a look at the numbers as discussed in Revised Greek Default Scenario: Liabilities Shifted to German and French Taxpayers; Bluff of the Day Revisited.

Dr. Eric Dor, director of IESEG School of Management in Lille has the following numbers.

  • Bilateral loans: €6.65 billion
  • EFSF: €18.113 billion
  • Target2: €5.394 billion
  • SMP Bond Holdings: €2.587 billion
  • Total: €32.744 billion

Foreign Minister, García Margallo has the total on the nose, but only €6.65 billion was a loan. The rest was a guarantee that could not be spent. Without a doubt Margallo knows the rest were not loans and is thus purposely telling a lie.

The €26 billion mentioned by economy minister Luis de Guindos appears to be roughly bilateral loans plus EFSF plus SMP.

Conspiracy Charges

I commented on the conspiracy charges in Greece Accuses Spain and Portugal of Conspiracy; 3rd Greece Bailout Discussion Under Way for €30-50 Billion.

Spanish Prime Minisiter Mariano Rajoy is making a big mistake. Spain can use debt relief. And the citizens of Spain want debt relief.

By taking a hard stance in favor of Berlin, Rajoy adds fuel to the rise of Podemos. Siding with Germany is the wrong thing to do if Rajoy wants to win reelection.

Playing with Fire

Tsipras is a close friend and political ally of Pablo Iglesias, the former political science lecturer who founded Spain’s anti-establishment Podemos movement.

Podemos is currently in the lead in Spanish polls. Elections are later this year.

Recall that the Podemos “Economic Manifesto” Calls for Debt Restructuring, Spain to Abandon the “Euro Trap”.

Spaniards should be aware that it is physically impossible that they can pursue policies that meet the national interest, within the euro as it is designed. The euro was conceived as a real trap, but nowhere is it written that people have to accept it .” said Iglesias.

Also consider Incredible Populist Positions in Podemos’ “Economic Manifesto”.

An anti-austerity, anti-euro party is leading in the polls. Podemos has an excellent chance of winning the election and putting together a coalition.

The next set of Spanish polls will be very interesting. It’s possible the charges by Tsipras unite a rally behind Rajoy. But if not, it’s all over for the current prime minister.


Reuters reports Juncker says no talks in the euro zone for a third Greek bailout. Why Reuters would even bother posting a denial like that is the question on my mind.

Recall that Jean-Claude Juncker, former Luxembourg PM and former Head Euro-Zone Finance Minister is famous for saying When it becomes serious, you have to lie.

Third Bailout Discussions or Not?

Economy Minister Luis de Guindos said third bailout talks are underway.

Juncker said they are not underway. Jeroen Dijsselbloem, who chairs the euro zone finance ministers’ group said the same thing. Spokeswoman Simone Boitelle joined the deniers with this statement “Euro zone finance ministers are not discussing a third bailout.”

It’s possible that Juncker, backed up by two others, is actually telling the truth. Known liars don’t always lie.

If so, the only possible conclusion is that Spain’s, Economy Minister Luis de Guindos lied when he stated such discussions were underway.

Given that a key campaign pledge of Syriza was no more bailouts, and given the other lies by Spanish officials for political purposes, I think we know who’s lying and why, even if such discussion will become necessary in the next four months.
Mike “Mish” Shedlock



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