SPAIN-OUTLOOK: ETA Still a Thorn, But Overall Picture not Bad

By Tito Drago Reprint | | Print |

Tito Drago

MADRID, Dec 27 1996 (IPS) - Spain’s economic situation is expected to be healthy and calm in 1997. Not so its politics: the new year begins with the Basque Separatist group ETA still a thorn in the side of the authorities.

ETA outdid itself in 1996. On the day after Christmas, the separatist group’s most recent victim became their longest held hostage. Prisons officer Jose Antonio Ortega Lara completed 344 days in captivity, one more than Jose Maria Aldaya, a businessman freed early this year.

In 1996, ETA also kidnapped young Basque entrepreneur Cosme Declaux, planted bombs and attempted shootings, leaving wounded and dead in their trail.

In recent years it has staged regular violent pro-independence demonstrations involving hundreds of young people in the cities of the Basque country.

Meanwhile, regional peace movements have sprung up and are gaining support. The strongest of these — “Gesture for peace” — held demonstrations in all the Basque cities urging an end to violence and peacefully opposing the ETA sympathisers.

On the economic front, the trends seem positive. Predictions are that inflation will be kept under 3.5 percent by the end of the year. Gross Domestic Product (GDP) is expected to grow 2.2 percent in 1996 just marginally down on the level achieved in 1995. However, the economy is showing an expansive tendency following the fall registered in the fourth quarter of last year and the first quarter of this one.

The increase in GDP was mostly based on foreign trade. Domestic demand is still cramped. Persistently high levels of unemployment, above 20 percent of the economically active population, is the root of the reduced demand.

Lack of investment in the construction industry has prompted the government to modify land-use laws and reduce the amount charged by municipal authorities for building permits.

The government wants all land made available for construction as long as there are no historical or environmental reasons to prevent it. Government sources have expressed satisfaction with the economic situation as growth has recovered while inflation has fallen.

Two leading Spanish unions, the General Union of Workers (the pro-socialist UGT) and Workers Commissions (the communist CCOO), will be asking for a 7.1 percent minimum salary increase in 1997.

Their claims are based on the need to restoring purchasing power to the levels of recent years. The government has only accepted a 2.6 percent increase, saying this is the figure in line with the previous year’s inflation.

The large difference between the two points of view means there will be tough negotiations ahead. Union officials fear they will be forced to strike and hold public protests in order to get their demands accepted.

Meantime, the Centre-right government of Jose Maria Aznar continues to be kept in power by deputies of his own party and by the moderate nationalists of the Basque country, Catalonia, Valencia and the Canary Islands.

The majority opposition, from the Spanish Socialist Workers Party (PSOE) and the United Left coalition (IU), fulfill their opposition role in Parliament with their eyes on the electoral calendar, but without affecting government stability.

Against this backdrop, all eyes are on the Basque situation and the impact that developments there could have on the economy.

If predictions by the Organisation for Economic Co-operation and Development (OECD) – which includes the most industrialised nations — are fulfilled, Spain will outdo its 1996 growth in GDP and will further lower inflation.

Unemployment is also expected to fall by at least one percent in a year’s time.

Spain will continue to lead the list of countries with high levels of unemployment but, if the OECD forecasts are fulfilled, the numbers will have started to fall.