To Our Readers
Spaniards leading a national surge in global business and politics, culture and the arts. As the country prepares for a pivotal election, TIME examines its striking creative burst
Posted Sunday, Feb. 29, 2004; 15.48GMT
Forget the toro, the flamenco dancer and the lean silhouette of that famously foolish knight. The most appropriate icon for today’s Spain is a building crane poised to construct another vacation home somewhere on the Costa del Sol. Driven by the twin engines of consumption and construction, the Spanish economy is racing. You can see it everywhere: last year, 58% more houses were built than in 1996, the year Prime Minister José María Aznar took office. You can see it in
the concrete along many of Spain’s gleaming new highways. Indeed, you can see it on the highways themselves: in 1996 BMW sold just over 12,000 cars in Spain; last year, it sold nearly 34,000. Spain’s adventurous banks are growing strongly: its biggest, Banco Santander, showed its best profit ever last year — €2.5 billion — and its closest competitor, BBVA, plans this month to complete its purchase of the biggest bank in Mexico, Bancomer, for €3.3 billion.
The big picture is even brighter. Spain has grown at an average rate of 4% per year since 1997, and even though that rate fell to 2.3% last year, that still far outstripped the European Union’s dismal average of 0.6%. Indeed, even though Spain’s €741 billion economy is the fifth largest in Europe, 40% of the jobs created in the E.U. over the last four years were Spanish.
Is this the healthy surge of an economy that needed to catch up to its more prosperous neighbors? Or a boom that carries with it the certainty of an eventual bust? That argument lies at the center of the current electoral campaign, and both sides make compelling cases. Spain has a vigor much of Europe can’t match, but its staying power could be tested as the E.U. enlarges and the construction boom cools.
In many ways, it’s a happy economic debate to have, the fruit of former Socialist Finance Minister (and current E.U. economic and monetary affairs Commissioner) Pedro Solbes’ labors to get Spain in shape for the euro. His successors, Aznar and Economy Minister Rodrigo Rato, were thus able to prescribe the classic cure that is proving so unreachable for France and Germany: they slashed taxes, cut government jobs and brought the state’s share of the economy down from 45% to under 40%. As a result, the average income of Spaniards rose from 78% of the E.U. average in 1995 to 84% today.
That jump has had profound implications for Spaniards’ lives. Shop shelves now groan under the weight of state-of-the-art computers. Middle-class Spaniards are traveling like never before to places like Machu Picchu and the Egyptian pyramids. For some the consumption boom amounts to a psychological sea change. “We have a sense that we’re doing well, a new feeling of self-esteem,” says Juan Pablo Fusi, an historian and academic director of the Ortega y Gasset Foundation in Madrid. “We’ve lost the sense that Spanish history will always end badly.”
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