After the bailout, Spain needs to rise to the challenge

Spain struggling to stay afloat
Spain struggling to stay afloat

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Spain struggling to stay afloat 01:48

Story highlights

  • Spain's reluctance to ask for aid earlier in the crisis has complicated issues, says Vicenzino
  • Vicenzino: Spain, other distressed parts of the eurozone need a two-pronged approach to crisis
  • Leaders must explain need for austerity, says Vicenzino, while citizens must be aware of responsibilities
  • Vicenzino: Spain's positive transformation after decades of autocratic rule provides useful lessons for developing societies
Contrary to the claim from its Prime Minister Mariano Rajoy, Spain's bank bailout does not represent a euro victory; but it is desperately-needed temporary relief.
It buys indispensable time for the country, and the eurozone, to act more decisively and shore up credibility in international markets just prior to Greece's looming election and its potential fallout -- including an exit from the euro.
Unlike Greece, Spain can service its debts through a reasonable long-term arrangement but cannot do it alone. The immediate plan provides a crucial soft-landing but an expanded bailout, beyond its banks, is required in the not-too-distant future.
The broader fundamental question is not whether the euro will survive but who will survive in the euro. Spain clearly teeters on the brink: an arduous and painful road lies ahead.
Through its landslide electoral victory in November 2011, Spain's center-right and pro-business Popular Party (PP) can technically claim it governs with a popular mandate. However, its support was composed of considerable protest votes against the failures of the predecessor Socialist government and its inept leader, former Prime Minister Jose Luis Zapatero.
Throughout the campaign, the PP's broad message for reform was unambiguous, but its leader, the current prime minister, intentionally avoided a detailed economic plan to prevent Socialist fear-mongering.
Eurozone mess could cost U.S.
Eurozone mess could cost U.S.

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Spain's indebted regions
Spain's indebted regions

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    Spain's indebted regions

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Spain's indebted regions 03:05
Spain's crisis has real estate roots
Spain's crisis has real estate roots

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Spanish PM: Don't call it a bailout
Spanish PM: Don't call it a bailout

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Spanish PM: Don't call it a bailout 02:58
Since assuming office, Rajoy has embarked on necessary reforms, particularly in the labor sector, but not as aggressively as markets hoped. However, they were enough to facilitate the current bank bailout, which also excluded the burdensome restrictions on Greece, Ireland and Portugal.
Overall, Rajoy's reluctance to ask for international assistance earlier has further complicated Spain's plight.
Most Spaniards accept tough times lie ahead, but austerity has gone beyond the limits of many. The potential for increased social unrest looms.
Although a loosening of austerity is required, it must not be mistaken for the abandonment of austerity. The emergence of populist politicians increases this appeal. These false prophets and their tempting rhetoric promise an easy exit from the current crisis. Their rise to power will only delay the inevitable and further aggravate an already grave situation.
Spain and other distressed parts of the Eurozone require a two-pronged top-down and bottom-up approach which will assist in implementation of reform.
The top-down approach entails essential public outreach for transformation. Thus far, Europe's leaders have failed to effectively communicate and connect with ordinary citizens. It is essential to explain austerity within the context of global realities and as a collective struggle. After all, the people are direct stakeholders in the process. Achieving a broad national consensus is critical. Responsible leadership must emanate from the top.
The bottom-up approach involves gradual transformation of the public psyche. Citizens' economic rights, responsibilities and expectations and the state's obligations and purpose must adapt to new world realities. Curbing generous labor laws and pension schemes are just the beginning. Outdated Western illusions of endless prosperity, instant gratification and the almighty state's endless resources still prevail. The cradle-to-grave state security system is over.
Despite current economic difficulties, Spain's political system has generally demonstrated greater maturity in recent decades when compared to other Mediterranean states in the European Union.
This has been marked by longer-lasting governments and a younger and more dynamic political class.
Furthermore, Spain's dynamic private sector has gone global within a generation. Its businesses have played a critical role in setting the tone for Spain's image abroad and the pace of its involvement around the world. Today, it is a leading investor not only in emerging markets but also the developed world.
Defeatist notions of a bankrupt nation doomed to marginal status must be avoided: they benefit no one.
Spain's voice should, and must, be heard. It has much to contribute. Spain's positive transformation since the 1970s, after decades of autocratic rule, provides useful lessons for developing societies emerging from dictatorship, including the Middle East. Its solid institutions and strong rule of law serve as valuable examples of the benefits of peaceful progression.
Overall, Spain has a responsibility to remain engaged in a rapidly changing world. Despite enormous domestic hardships, Spain must rise to the challenges at home, and increasingly abroad.