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Spain’s Tragedy Was All Too Predictable

From the hospitals in Bergamo to the Pope’s prayers in Rome, Italy has become the symbol of the Covid-19 epidemic in Europe. But as the contagion in Italy slows and the daily death toll starts to fall, the eyes of the world have moved to Spain, which is suffering from an equal – if not worse – outbreak.

Spain has more than 130,000 registered cases now and 12,000 recorded deaths. The death toll is lower than Italy in absolute terms, but slightly higher if one takes into account Spain’s smaller population. What’s worse is prime minister Pedro Sanchez, much like his counterparts in France and the U.K., ignored the health crisis unfolding in Italy and dithered before imposing the kind of draconian lockdown measures that could have saved thousands of lives.

The most reckless decision was allowing a demonstration to take place in Madrid on international women’s day (March 8). More than 120,000 people took to the streets even though Spain already had over 500 confirmed cases. The government only enforced a national lockdown in mid-March, which has since been tightened to include all non-essential economic activities and extended to April 26. These measures have started to show their effects, as growth of registered cases and deaths begins to slow, but they cannot help those who have already been infected.

The Spanish government should have been especially cautious given the fragility of its healthcare system. Fernando Simon, the head of the health ministry’s Coordination Center for Health Alerts and Emergencies, said at the start of the crisis that Spain had roughly 4,400 intensive care beds, for a population of nearly 47 million. Compare that to Germany, which has a population of nearly 84 million but started the crisis with 28,000 critical care beds. The Spanish government is rushing to open up new hospitals, but doctors are already facing supply shortage problems, as they did in Italy, and are having to make devastating decisions over how to prioritize their scarce resources.

The rest of the political class has not helped. Spain is a federalist country, where autonomous regions hold power over a range of policy areas including healthcare. Prime Minister Sanchez eventually claimed emergency powers for his government, but only after a string of regional politicians had resisted. The opposing right-wing Popular Party behaved opportunistically. It attacked Sanchez after his decision to close down all non-essential activities, seemingly changing course from earlier calls for a tougher lockdown — only to change tack and support the stricter measures. Meanwhile, Pablo Iglesias, the leader of the left-wing Podemos party, which runs the country in a fragile minority coalition with the Socialists, has sought to exploit the emergency to push his agenda of sweeping nationalizations.

Much like Italy, Spain faces an enormous economic crisis on top of its healthcare emergency. The country had emerged strongly from the sovereign debt crisis, outperforming much of the rest of the euro zone for years. But Madrid failed to sufficiently shrink its public debt, which stands at more than 95% of gross domestic product. The European Central Bank has launched an emergency 750 billion euro ($812 billion) asset-purchase scheme that is helping Madrid keep a lid on its borrowing costs. However, the crisis will inevitably add to the country’s debt, which will become harder to sustain in the future.

Spain is now calling on the rest of the euro zone to show solidarity, through the issuance of joint and several liabilities (“Euro bonds”). There is a strong case for mutualizing at least some debts of the crisis, but it is very unlikely that this will happen any time soon. For now, Spain will have to rely largely on the ECB and on itself. After a tragically shaky start, Sanchez must show his resolve.

[Source: By Ferdinando Giugliano, Bloomberg Opinión, 06Apr20]

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