Is Spain on the brink of national bankruptcy?
The latter means that the the state can access the savings people have in their bank accounts. In such “crisis situations”, the citizen would only be entitled to withdraw smaller sums. The rest of the money could be “temporarily” confiscated. The maximum amount would be determined by the authority of the respective country, the portal Information explained in March 2021.
At that time, the portal still claimed that this would only affect sums over 100,000 euros. But this is water under the bridge: on May 26, 2022, the left-wing socialist government of Pedro Sánchez announced that the tax authorities could now confiscate any savings above the minimum wage.
A “corralito” could be ordered overnight, just as it has already been made in Argentina, Cyprus, Greece or recently in Sri Lankawarned Spanish lawyer Aitor Guisasola last week.
Is the lawyer exaggerating in his assessment? Not necessarily, since Spanish public spending is extremely high and inflation is rising as fast as the national debt. From May 2021, the financial newspaper El Economist reported that Spain’s public debt had reached 125.3% of GDP and had reached a peak not seen since 1881.
Unsurprisingly, the situation deteriorated further. On May 17, 2022, the Spanish mainstream made it known that the the national debt had reached its highest level ever in March: 1.45 trillion euros.
“Spain is over,” Guisasola said. He believes that the possibility of preventing national bankruptcy is now almost impossible. The American Janus Capital Group and the British Henderson Global Investor concluded that Spain was one of the countries whose public debt had increased the most in recent years.
In fact, Spain’s public debt has grown 347% since 1995, three times faster than its gross domestic product (GDP). Henderson actually pointed out that Spain was the fourth most indebted country in the world and that 2020 alone was comparable to eight years of indebtedness.
“Compared to the size of the global economy, debt levels have peaked… It’s incredible that more than half of new government securities in 2020 were financed by newly created liquidity from central banks.” If foreign investors jump ship in Spain and exchange rates fall, the country can quickly slide into a debt crisis and go bankrupt.
In the event of bankruptcy, a government in such a precarious situation should initiate refinancing with new public debt. However, the The European Central Bank already announced in March this year that it would no longer buy debt. Moreover, interest rates have already been raised.
It means that refinancing will become even more expensive and taxes will have to be increased further, explained Guisasola. But no matter what the government does, the country cannot manage the public debt it has accumulated.
Moving forward with an expropriation law
For this reason, Guisasola assumes that the government will eventually declare national bankruptcy. And in order to gain access to private property and assets of citizens, the government is currently advancing a reform of the National Security Law (Ley 36/2015).
It has not yet been finally adopted, but the lawyer is adamant that it will happen soon because the preliminary draft has already been approved by Congress with the votes of the PSOE and those of opposition parties such as the PP or the right. Populist VOX.
The fact that state failure is a stated goal of policy makers is currently also demonstrated by the fact that Sánchez and his supporters push public spending even more to be able to justify expropriations and the “corralito”. On May 24, 2022, El País reported that the government had announced a “record offer” for public jobswith 44,788 vacancies in ministries, justice, police and army.
“The more civil servants they hire, the more support they will have in implementing their plans,” Guisasola stressed.
And how do the masses take this development? Because most are unable to see through the staged “pandemic” background, they have no idea what is brewing in the halls of power. People think national security law reform is only about changes that affect a ‘health crisis’Guisasola said.
But article 28 of the preliminary draft specifies that expropriation and confiscation of private property can be applied to any issue of “national interest”. In addition to health security, this includes economic and financial security, cybersecurity, maritime security, aerospace security and environmental security.