Gas Natural Fenosa director Ramon Adell: “We comply with a policy we don’t agree”

Ramon Adell of Gas Natural Fenosa

The European Union is often criticised for its lack of leadership. Are our politicians the right people to tackle this crisis?

In times of uncertainty, it is quite usual that we blame politicians and look for strong characters with prestigious careers who can mobilise and convince us that our efforts aren’t in vain. But politicians in general have lost that kind of power, which doesn’t concentrate as it used to do it. Also, some politicians have lost touch with the real world and this provokes disbelief and agitation. This environment is dangerous, indeed, because it reminds us of the 1930s and the dictatorships that it brought to Europe. The Europe we have built today should be the guarantee that these mistakes stay in the past.

Nevertheless, the eurocrisis has divided EU member countries even on subjects that were thought to be unquestionable. Europe cannot become the excuse to impose narrow-minded views but a tool to generate progress and peace. Our priority must be the people, and so social divides and unfairness need to be fought.

What role is playing the euro in this change of social mood?

Look, I believe the common currency still is good for Spain and for Europe. We live in an interconnected world, and a disunited Europe would be far worse equipped to influence and expand its market. As mighty as it appears, Germany would be but a little country isolated in the world. Europe is an essential project for all of us.

Taking in account the context and its unavoidable external conditionalities, do you think Spanish president Mariano Rajoy could have implemented different policies?

The Spanish government has made a lot of right decisions–perhaps no as timely as needed, but there are many challenges ahead and it should keep going. The labour market reform, for instance, has led to price adjustments and more flexibility, which has risen our competitiveness. The reform of our financial system has strengthened our banks, although slowly. Now the time has come to reform the public administration–it’s too big–, the pension system and the energy sector, and this must be done quickly. Austerity was meant to be about cutting all the waste of public investments and deregulate the economy to give the private initiative more chances of generating growth and jobs; yet, so far there’s been too many tax increases and too few important corrections.

Do you agree that Spain has to reduce its deficit?

Does anyone refute it? It’s just common sense. A household cannot overspend, and it’s the same for a country. If instead of the Spanish state we are taking about a company, a 7 percent deficit would mean that this company would be €70 billion in red a year. That company should implement urgent measures, and do so fast. It would be cutting spending, and increasing its competitiveness, and that would probably be painful, too.

The Spanish government expects the economy to begin its recovery by the end of this year, but this scenario seems increasingly unlikely.

We economists couldn’t even see this crisis coming, so our forecasts must be read with caution. I think it has been proved in previous occasions that over-optimistic claims were more about good wishes than the reality of the situation.

So you are not optimistic at this point,

I think for Spain to exit the crisis we need to prioritise growth policies over austerity plans, and this depends on how the German government’s attitude evolves, and if deficit targets are set over longer periods of time. It’s hard to know when, in 2014 or 2015, we don’t know. We see there are hopeful signs, but our deleverage requires more time because private and public sectors were excessively in debt.

What role could Germany play in a recovery process?

Germany’s decisions are very important. Berlin influences EU’s policies more than any other country, including France, and its upcoming elections will have a wide influence. Once we have the results, action must follow. Germany must understand that a strong Europe is good for its national interests, too, and German companies will benefit the most. I’d like to believe that Chancellor Angela Merkel is able to admit change is necessary if her economic policies are  proved to be wrong. If Germany just seeks control over Europe, this will wreck the whole European project.

Has Berlin been right, so far?

Germany has imposed tough deficit targets and people in peripheral economies think the goals are too strict, and it has sparked a negative sentiment, a sense of disappointment. It looks as though the generosity, the shared understanding of our common project has vanished. There are no agreements, only orders. The Troika’s officials aren’t seen as people who come to help at all; instead, they are described as ‘the men in black’ who put the whole country under suspicion. The anger has focused on Germany, and particularly on Angela Merkel. The power balance seems broken.

We comply with the Troika’s policies because they are imposed on us, but we don’t agree with them. And this austerity has yet to prove it’s right. Personally, I doubt austerity alone can bring economic recovery. Those who defend that forget the risk of social destabilisation it may cost us.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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