Spain’s deputy PM calls for EU to step up or risk extinction

Spain’s radical left deputy prime minister has called for the EU to guarantee a minimum income for all of its 450m citizens as he warned that the bloc would not survive if it did not show solidarity with the countries worst hit by coronavirus.

Speaking to the Financial Times, Pablo Iglesias, the leader of the insurgent Podemos party, declared the ideologies of Tony Blair and Margaret Thatcher dead and buried as he outlined Spain’s own plans for a minimum income guarantee.

“The EU of cuts, of austerity plans, of a lack of solidarity of the north with respect to the south — that’s not going to survive,” Mr Iglesias said.

Spain, which has suffered heavily from coronavirus in both human and economic terms, is waging a campaign for an EU summit next month to agree on a post-pandemic recovery fund of some €1.5tn, to be disbursed through grants, not loans. But Spain and its allies, including France and Italy, will have to overcome the deep reservations about such a scheme among northern states, notably the Netherlands and Germany.

Mr Iglesias argued that a “certain [level of] debt mutualisation is a [necessary] condition of the [continued] existence of the EU”. But he also said he was joining with ministers from Portugal and Italy to call for a pan-EU minimum income guarantee to “establish European standards of dignity and to protect consumption”. 

A minimum income guarantee is a scheme intended to provide top-up payments so that everyone receives a certain level of income, ensuring that the poorest in society can be sure of receiving a set amount every month. 

Under the joint proposal, the European Commission would determine what minimum income would apply to each of the bloc’s member states, depending on factors such as gross domestic product and average salaries.

The proposal does not specify whether top-ups would come from EU funds, national budgets or a mixture of the two. Since Spain, which expects unemployment of 19 per cent this year, would stand out as a potential beneficiary, any suggestion of transfers between EU countries could further agitate the European debate.

Mr Iglesias’s arrival in government is one of the great dividing lines of Spanish politics. Last year, Pedro Sánchez, the country’s Socialist prime minister, said admitting Podemos into the administration would give him sleepless nights. But a second inconclusive general election in less than a year left him with little option but to form a coalition with the group, which has long been a rival on the left.

Spain’s centre-right opposition has accused Mr Iglesias of wanting to rip up the 40-year-old pacts underpinning the country’s transition from fascist dictatorship and highlighted that two of Podemos’ five ministers are professed communists. This week, Santiago Abascal, leader of the hard right Vox party, said Mr Iglesias, whose government brief covers social policy, bore responsibility for the high toll of coronavirus deaths in Spain’s care homes.

But in his interview with the FT, in an office decorated both by a photo of King Felipe VI and a civil war poster of socialist militias, Mr Iglesias depicted himself as part of a new international consensus.

“Everyone now understands you need an activist state; the market economy is protected much better and it guarantees certain minimum levels of demand and welfare,” he said, as he argued that Spain’s health system and care homes had been undermined by privatisation and its vital industries weakened by offshoring.

“People think catastrophes turn atheists into believers; in fact they turn neoliberals into neo-Keynesians . . . The ideas of Thatcher, of [former German chancellor Gerhard] Schröder and Tony Blair have been buried by history; no one can defend them now.”

While some countries such as the US are responding to the crisis by triggering blanket payments as an emergency measure, Spain’s leftwing coalition — in which Podemos is a junior partner — wants a minimum income guarantee to be a lasting part of its legacy.

Spanish caretaker prime minister Pedro Sánchez is congratulated by Pablo Iglesias in January © Pierre-Philippe Marcou/AFP/Getty

Mr Iglesias has agreed with Mr Sánchez that Spain will present its national plans for the measure this month. He would not be drawn on its level or on its cost, although he said that if it involved extra expenditure of up to €6bn a year, it would be a much smaller outlay than the country’s temporary lay-off schemes, which are currently paying out to more than 3m people.

“The key thing about the minimum income guarantee now, in the context of the Covid-19 crisis, is its urgency,” he said. “Families have suffered an atrocious collapse in their income . . . and with a lockdown and social distancing they can’t count on the informal mechanisms they relied on in past crises, such as doing an odd job for a friend for €40.” 

Critics of minimum income guarantees emphasise that, in contrast with universal basic income proposals, payments can be withdrawn if people earn more than a certain amount, potentially trapping them at a modest income. 

But Mr Iglesias said the Spanish plan would avoid setting claimants “an obstacle course” and was needed not just to deliver social justice but to maintain a minimum level of demand in the economy.

The Podemos leader sounded a contrite note about the government’s handling of the pandemic; Spain’s official death toll of more than 26,000 is the third-highest in Europe, after the UK and Italy. “If we could go back, we would be stricter,” he said when asked about government policy in the run-up to the lockdown in mid-March.

Mr Iglesias hit back at criticism about the government’s encouragement of International Women’s Day marches on March 8. “If someone emphasises the women’s march but not [a Vox meeting the same day] or football games that attracted tens of thousands of people, it gives me the sensation they want to attack the feminist movement,” he said.

A pedestrian wearing a protective face mask walks along Calle Mayor past shuttered stores and cafes in Madrid © Paul Hanna/Bloomberg

In emollient words about his one-time rival, whose Socialists Podemos once threatened to overtake in terms of votes, Mr Iglesias said he “was very proud” of Mr Sánchez’s record as prime minister and suggested the coalition between the two parties would last beyond the current parliament’s four-year term.

He is also clearly enjoying government. The building in which he gave the interview was inaugurated by Francisco Franco, the late dictator, in 1955. That was one of the reasons why the bearded and ponytailed Mr Iglesias chose it for his office on becoming deputy prime minister this year. “I like it because of the symbolism,” he said.