The Zen Of Zapatero

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Still, Spain's business community is waiting to see Zapatero's first budget, to be presented later this week. In a speech to high-carat investors in Madrid last Friday, he said the 2005 budget would yield a slight surplus. He vowed to spend 34% more on housing, 7.4% more on education, 6.9% more on health and 6.2% more on police and justice. Some of that will further his ambitious social reforms, many aimed at turning Spain away from its machismo traditions. According to Amnesty International, more than 2 million Spanish women suffer abuse from their partners every year, and putting a stop to it is a human and political priority for Zapatero.

The rest of the new spending, he has suggested, would go to correct Spain's low labor productivity. Part of the problem, he believes, is that 30% of all workers are on temporary contracts. So Zapatero has started discussions with employers and unions to encourage a shift to permanent part-time jobs, which he says would mean more security for workers and efficiency for employers. He also wants to encourage a shift to renting, which, he says, can stabilize the boom in housing prices and promote labor mobility. The goal is to "get over the false choice between efficiency and equality, between social policies and productive policies."

Easier said than done. The government's numbers will be closely scrutinized in the Spanish Cortes in coming weeks and then in the Senate, where Zapatero needs the support of all smaller parties to push it through. While growth remains strong, there are warning signs. According to Eurostat, the country's annual inflation rate in August was 3.3%, a full percentage point above the euro-zone average. That gap has widened since the Socialists took over, a trend they attribute to the country's dependence on imported oil. By the end of the year, Solbes says, he intends to get inflation down to 3%. He has acknowledged it will be "a very difficult task."

Tougher still is unemployment, which is the highest in Western Europe at more than 11%. On that front Zapatero may have already promised more than he can deliver. Earlier this month, he told shipyard workers in Bilbao that he would save the bankrupt state-owned Izar shipyards, even as their holding company was discussing a privatization rescue plan that would mean closures and layoffs. Now striking workers in five cities are calling Zapatero a liar and dozens have been injured in clashes with police. In other words, Zapatero is just beginning to address the questions that cost real money. And already looming is another passionate issue he had hoped to put off: the reform of Spain's pasted-together 1978 constitution. Increasing demands for far-reaching power in some of Spain's 17 autonomous regions, particularly the Basque Country and Catalonia, were tamped down by the Aznar government, which feared that opening a constitutional debate could only bode ill for Spain's unity. Zapatero cannot afford to ignore the problem: his minority government not only has to keep Catalonian Socialist leader Pasqual Maragall happy, but also depends on the votes of the radical pro-independence Left Republicans of Catalonia.

Zapatero took a smart first step in July, when he invited Juan José Ibarretxe, the President of the Basque region — whom Aznar refused to meet for three years — to a formal meeting at Moncloa, with the red, green and white Basque flag fluttering at the door's entrance. But the good feeling didn't deflect Ibarretxe's pursuit of a referendum — considered unconstitutional by the Madrid government — to create a Basque state merely "associated" with Spain. Catalonia's wishes aren't any easier for Madrid to swallow, but already Zapatero has given Maragall a transfer to Barcelona of Spain's telecommunications competition authority — as well as a promise that a Catalonian representative can attend the government's foreign-policy planning sessions. "Imagine the California governor sitting in on [U.S.] National Security Council meetings," says the PP's Arístegui. "Every day Maragall shows his muscle and says, 'You owe me.'"

The constitutional question could reveal Zapatero's already vaunted talante, an aptitude for consensus, as a great strength — or a fatal weakness. Zapatero says he has a "contingency view of history," citing the famous line from Spanish poet Antonio Machado: "Traveler, there is no path, the path is made by walking." If he can finesse the constitutional debate and meet Spain's other domestic and foreign challenges, he will have set the country on a bold new course. But that will be a path the traveler will have to blaze himself, not just follow.