A country cannot attract foreign investors without a good image. We are talking about industrial, sustainable investment, not speculation. This idea of an image goes together with legal security and political stability. Spain offers the latter without any doubt.
The two main parties PSOE and PP are interchanging power about every 8 years. No other important political forces disturb their power system established after the Franco regime and it’s impossible to consider a “Big coalition” or even a coalition like we have after nearly all elections in Germany. Coalition would imply a lot of cohesion and compromises, a lot of sitting together and talking like we see now in Germany. This seems to be challenging in Spain. The ruling parties have a quite easy job, but is that really good for the country as a whole?
This image problem has to do as well with Spanish society and culture. Although the Spanish Government is under suspicion of corruption and nepotism, the ruling party PP is still more popular in polls than the opposition, PSOE; which also says a lot about how corruption is perceived in Spain. To foreign correspondents it seems weird that citizens are not punishing Mariano Rajoy for the various scandals going on in his party.
Although I know by travelling around in the country for work and talking to many people that Spain has so much to offer in terms of economy, much more than it’s given credit for, it seems that corruption is widely tolerated by the Spaniards. Avoiding taxes seems like playing smart. However, no one seems to worry that with less income the State can offer less services. And up to now no one worried about the image that the country gives abroad.
When I arrived in Spain in the year 2000 the opinion of a German journalist was not required, now the media consults foreign journalists for everything. Research is done and campaigns have started to improve that image, but it is not so easy to change stereotypes. That was also the experience of a Spanish girl from the Swiss School in Madrid who did her final paper on the Spanish image in Germany and found out that their perception was full of clichés. She made a video to show them that Spain is really different, but she had to admit that the opinion of the requested people did not change that much. That they probably somehow did not believe what they saw in the video.
Fact is also that many Spaniards tell me: “I prefer to do business with a German than with a Spaniard.” That means they do not have a very high opinion of their own people, they trust more a German which is also about image, the good image that German businessmen have. But nevertheless it seems that there is apart from a change in the tax offices and banks to punish the shadow economy on a small scale, there is no great will to change the whole system. A common statement of Spaniards who break the rules is, “why should I pay taxes if the money just goes in the pocket of the politicians?”
Also the cases involving important figure heads such as the ex-head of treasury of the PP or princess Cristina and her husband Iñaki Urdangarin do not lead to a major protest of people. Nearly every day I get a phone call or an email coming from entrepreneurs who feel cheated by the Spanish justice and political system and try to get me to publish their story. They do not even trust anymore their own media and contact the foreign press.
These people complaining about corruption come from all over Spain: Galicia, Andalucia, Madrid, Barcelona or Murcia, something that shows corruption is not a regional problem, it has become a national problem. But there is no national movement against it. For many foreign correspondents it became very clear, that nepotism, corruption and shadow economy are spread all over the country, when Catalonia and its politicians became involved in a lot of scandals, even though they always pretend to be different from Spain. But also in Catalonia the Government in power has not yet suffered from real protest actions from its people, although members of the ruling parties are under suspicion.
However, somehow there is no organized movement to break these bad habits within the political system, these conflicts of interest between the political and economic world that many believe have become totally insane. Combined with a not independent justice system it makes Spain not really attractive for entrepreneurs. Every now and then people storm the streets to get higher salaries, to fight for their jobs, but up to now there has been no big movement against the ruling party or the high level of corruption in the country as a whole.
Most foreign correspondents see a clear link between the current crisis in Spain and the constant breaching of legal and economic laws and regulations, in both the business and public sector. But it seems that many Spaniards are not willing to break the status quo, to start all over again and leave their comfort zones. This includes to stop employing people without a contract, to stop charging rents without declaring it to the tax office and stop abusing not qualified employers with very low salaries.
But to talk about corruption in Europe openly among member states seems to be taboo anyhow. Although German correspondents write about it or want to write about it, in Germany it seems that the media is not interested. Many editors say: “Tell us something new, we knew already that Spaniards were corrupt.” Just if corruption has to do with the monarchy it stirs some interest among the German yellow press.
This image problem makes the recovery for Spain a bit complicated. The confidence of European institutions in Spain has been enormously reduced. Within the European Comission, László Ándor, the commissionary for Employment, was said that Spain abused the enormous amounts of aids received from Structural and Cohesion Funds in Europe. He criticizes the useless infrastructure and inefficient railways that were built and does not understand why the governments of Aznar and Zapatero did not invest more money in education and innovation.
Anyhow it is interesting that Germany does pressure and criticize the countries in southern Europe for being inefficient but never mentions in public that the current Spanish government is involved in corruption scandals. The same happened when Berlusconi was in power, no one of his colleagues dared to criticize him and his abusive control of the media.
“It is a very sensitive subject. No one wants to be linked to it. In Germany there is also corruption, but it is done in different way, more intelligent. There are also a lot of conflicts of interest among companies and State. People know that they get caught if they do illegal things, but that does not mean, that they do not want to do it or are better persons than in the South of Europe where it is more accepted to break the rules”, says Georg Abegg, German firm Rödl & Partners representative in Madrid.
Germany’s image actually benefits from Spain’s damaged one, and is profiting economically speaking. People trust German courts and, although trade unions are strong, there is a high rate of conflict resolution at all levels. It’s also true that Chancellor Merkel is doing a great job to promote all the good virtues that we relate to Germany such as being fair and disciplined, straight and serious. Apart from that a Great Coalition appeals to many countries as a sign of democratic maturity.
If one analyzes the German economy and public spending in detail one can find as many risks and problems, also different, than in Spain.
Germany is not living an “economic wonder”, it is just suffering less from the crisis compared to everyone else due to its strong export economy. It is even profiting from the fact of low interest rates and very low refinance costs in the Eurozone. Germany will soon face serious problems that have to do with an overage society and social welfare states that will not be financed unless people pay more taxes.
Therefore Spaniards should not refer to Germany as a model for everything, but they can definitely learn how to market the country in a better way. But therefore they have to sit and talk all together. Still a big challenge for the somehow divided country.
* Stefanie Müller is German magazine Wirtschaftswoche correspondent in Madrid.
**Image by Andres Kudacki/Associated Press.