Ignacio Molina for N1: Pandemic's effect on tourism is Spain's key concern

Ignacio Molina for N1: Pandemic's effect on tourism is Spain's key concern

Ignacio Molina for N1: Pandemic's effect on tourism is Spain's key concern Izvor: N1

In N1’s ongoing series of conversations "World in Times of Corona" we continue our series of talks with international experts on how the world we are living is changing because of the pandemic. N1 Television’s foreign affairs editor Ivana Dragicevic spoke to Ignacio Molina, analyst at the Elcano Royal Institute for International and Strategic Studies, a Madrid-based think tank, on state state of affairs in Spain and in Europe.

Spanish authorities say there is cause for optimism. After difficult weeks in which Spain has seen its Covid-19 death toll rise to become second only to Italy, Spanish authorities reported 674 new deaths on Sunday, April 5, over the past 24 hours. It was tthe lowest figure since the pandemic started, and the grisly numbers have been steadily dropping for several days in a row.

Nonetheless, the nationwide lockdown has been extended for another two weeks, and Prime Minister, Pedro Sanchez, said in a televised speech that modern Europe - born on the lessons learned after World War II - now has to draw new lessons from the first global pandemic of our time which still batters the entire European continent.

Spain will not give up on the proposed euro-bonds scheme, Sanchez claimed, because the public debt incurred by the crisis across the continent must be distributed evenly. At the same time, Sanchez called on the leaders of EU countries to create a "new Marshall Plan" to stimulate European economy after the pandemic.

Sanchez claimed that, as commendable as they are, the initiatives the EU has undertaken are still not enough, because the crisis Europe is facing is threatening its very foundations.

“We must establish a war economy, and initiate resilience, reconstruction, and economic recovery. To do this, we must mobilise significant resources through a plan that we have called the New Marshall Plan. This requires the support of all EU member states,” Sanchez wrote in an open letter.

“Cracks between Europe's north and south should be avoided. Nobody shoiuld be left to fend for themselves. These are particularly difficult times, which require bold decisions. Millions of Europeans believe in the EU project. We must not disappoint them. Let’s give them reasons to continue to trust us. It is now or never, because the future of Europe is at stake.”

The following conversation was lightly edited for clarity.

Mr Molina, what's your view of the current coronavirus situation in Spain?

I'm not an expert on public health, or the management of the national health service. The situation is quite difficult, particularly with regard to critical cases in hospitals. But not all over the country, it's basically Madrid and Catalonia, and to some extent the Basque country. It's interesting, because if you think about these three regions, they are the most interconnected with the world - Madrid, Barcelona, the Catalan region, and also the Basque country. And many cases have been traced back to trips that businessmen or students from there made to Italy or China.

So places which are more globalised, more connected with the wider world, are much more vulnerable, rather than rural areas. We saw the same thing in Italy - northern Italy has been hit much more than southern Italy - and this was also the case with London in the UK, or New York in the United States. If, for example, you ignore figures from Madrid and Barcelona, the case count for Spain would be quite similar to what other European countries are seeing.

The Spanish health care system has a very good reputation. In international ranking it has a good standing, and if you look at the general quality of health among Spaniards, you'll see that their longevity is among the highest in the world, along with Italy and Japan. We have very good hospitals and very good primary health care centres.

But because of austerity, which came about after the 2008 financial crisis - which caused secondary crisis of debt in the periphery of the euro zone, primarily felt in Greece, Ireland, Italy, Spain, Portugal, from 2010 to 2013 - and because of this we had to implement austerity measures, not just cuts, in education, social welfare, and health care.

During that time, Catalonia, ruled at the time by the regional government of Artur Mas, implemented even more radical austerity measures, because in Spain the health care system is managed by regional governments.

But you look at othe regions, or Madrid, the situation is perhaps less dramatic. But the truth is that in the last ten years we saw some erosion of quality in the health care system, even though the system overall is still very good. The problem, which I think is common to all western European countries, is that we have a system prepared for diseases that we normally have in Europe, not for pandemics. So we don't have that many beds, or that many intensive care units.

Why? Well, because normally if you have a very good primary health care system, in which you can deal with diseases early, or if you mainly deal with things like heart attacks or cancer, you don't need that many beds. So it would be unfair to judge the resilience of the system based on how it reacts in a pandemic.

That said, it's true that we had a problem of coordination, the supply of masks and ventilators, also because we depend so much on China and Asian suppliers. Nearly 80 percent of sanitary supplies for hospitals comes from China. And this is also true for other European countries and the United States, so this crisis is an interesting test to think strategically about the future and about the extent to which we depend on the supply from China.

As for emergency measures, which includes the military and military hospitals, the system has more or less resisted so far. So far, 95 percent of deaths here have been very old people with underlying health conditions. It's very sad, especially if you look at some cases at nursing homes where they have just been abandoned and left without proper care. But in general, 98-99 percent of all people infected have received proper care, and most of them recover.

People are generally complying with measures adopted, even though there is some resistance. But overall, I think we are now in a situation where people are more concerned with thinking about the economic future rather than the management of the health crisis.

The economic recovery will also be a political issue, not only for Spain but for the entire European Union. Southern Europe still remembers the harsh consequences of the 2008 financial crisis and austerity measures. Although this situation is different, of course, we are already starting to see some discord within the EU about the best way to alleviate the economic consequences of the pandemic. What do you think will happen with European solidarity, how will Europe deal with the debt caused by this crisis and also this rift between Europe's north and south, shich still seems to dominate the mindset ever since 2008?

This is a huge challenge for political legitimacy and credibility of the European Union, in countries such as Italy, and Spain, and Portugal. This is a critical juncture for the EU. In the early days of this crisis, the EU institutions failed to react. Why? Well basically because they don't have competence on health, mobility, or emergency measures - these things are within the domain of member states.

So EU institutions reacted slowly at first, but to be fair, when they realised this will be a huge problem from the health point of view, but also from the political and economic point of view, they did better. I really think that the European Central Bank is doing quite well, and the European Commission is looking into its political and economic resources, and I think an adjustment (for the better) should be possible.

The problem is that we have disagreement in the European Council between member states. But we don't need to be so dramatic. In 2008, it was so clear, so obvious, that the shock was asymmetric, there was a clear difference between southern and northern countries of the euro zone, those who were debtors and those who were creditors. And to some extent - even if I disagree with that - it could have been said that countries' fiscal capacities were responsible for this to some extent.

It's much more difficult to say that now. I think that the Dutch government, and German government, perhaps showed a lack of empathy at the very beginning, but I think the reactions from southern Europe, from Italy, Spain, or Portugal, should be more cautious. You are asking empathy from the north, to show empathy for the south, but you have to understand that the public opinion in the Netherlands is very critical about "too much" solidarity, and at the end of the day you have to find some kind of compromise. So, solidarity in exchange for some commitment to reform, commitment to change some pattern of policy-making in some countries.

But is it possible to talk about changing patterns in political decision-making when we are dealing with the consequences of a global pandemic?

The problem is that the idea of conditionality, the idea of some sort of a Troika to go and rescue countries, by sending "men in black" to decide which kind of structural reform you have to do, to be considered for a loans from the EU or the IMF - this would be very terrible for the political legitimacy of the European Union.

Political leaders - and I'm sure Spanish government will be very constructive in that - political leaders must find a compromise, and also to be very careful with words, with the narrative of this kind of solidarity.

Obviously, if you receive money, that makes you a debtor. Whether it is through so-called corona euro-bonds, or the European Stability Mechanism, or loans, at the end you know you will have to repay that money. But the point is that the narrative around this lending should be a positive narrative, not the narrative of conditionality we had seen in Greece or Portugal ten years ago.

There's also a political dimension. In Italy the situation is different from Spain - in Spain, the public opinion is largely very pro-European. It's true that we have recently seen the rise of the right-wing populist party Vox with a euro-sceptic message. But their support was never higher than 16 percent according to polls - and even the support they have is mainly on account of the issue of Catalonia and recent developments there. So it's unlikely that we will see an eurosceptic rebellion in Spain.

But in Italy the situation is different. Italy has a very weak government, and one of the parties in the government is the Five Star Movement, which is an eurosceptic party. And one of the main opposition parties, which is doing well in the polls, is Salvini's right-wing Lega party. That's a huge difference compared to Spain.

So Italian Prime Minister Giuseppe Conte needs to be very serious and careful about conditionality, when he is negotiating in the European Council. In Spain, Prime Minister Pedro Sanchez has much more political room. Of course, we in Spain need compromise and solidarity, but politically the issue is not as dramatic as it is in Italy.

You mentioned the importance of narrative, which also brings us to the cultural stereotypes which sometimes enter of the discussion. At the time of the 2008 financial crisis, there was a lot of talk about "lazy Greeks and Spaniards." This time around, there is an emphasis in the way lifestyle is different in southern countries, with people normally being much more affectionate compared to Europe's north where people are traditionally more socially distant. How do you see this crisis through that lense?

That's a very good question. And you are right, this is very sad for countries such as Spain or Italy, as their very own culture or way of life is such that they kiss or embrace each other much more often than northerners. This is very obvious.

But also, the housing situation is different - in the Netherlands of the UK, people normally live in detached houses whereas we live in apartments. So we have much more physical daily contact with others, and this is also inter-generational. We have much more contact between grandparents and grandchildren, compared to other countries.

This probably had an impact and helped spread the epidemic, but you can't blame people for kissing, you can't blame the fact that grandparents and grandchildren often have daily contact. And how do you manage that going forward? It would be so difficult to change that, because it's part of the culture.

One of the important questions for the future of Europe is preserving the rule of law and democratic principles amid the pandemic. Spain was one of the 13 countries which recently signed a statement expressing concern that emergency measures imposed to contain the outbreak may lead to violations of fundamental democratic principles of the European Union. The statement was made after Hungary's Prime Minister Viktor Orban was given the right to rule by decree. Will this affect Spanish politics, and can we preserve our democratic standards amid all of this?

It's very interesting that you are asking this from Croatia. I read the common statement this morning and I was surprised to see that not a single Central or Eastern European country of the EU signed this statement - although this makes sense in the case of Croatia as it is currently chairing the rotating Presidency of the EU and as such is considered an honest broker. But no Baltic country, nor Slovenia, and of course, none of the four Visegrad countries.

If you look at signatories of the statement, it's the EU15, the group of 15 countries which had been members of the block before the last big round of enlargement in 2004, with the exception of the UK, obviously, and Austria - and I can only assume Austria did not sign because it wants to maintain good relations with Hungary.

I think it's a very interesting statement. I would like to see more Central and Eastern European countries on board. But it's an interesting situation, this idea that the pandemic might jeopardise rights and freedoms.

In case of Spain, apart from emergency measures which concern mobility related to the lockdown, there is no reason to think that the quality of democracy is going to erode. Except for two points of concern. The first one has to do with transparency and freedom of information. There have been many journalists who criticised the government because all questions in government's press conferences are filtered. Because of the lockdown, the conferences are held virtually, so reporters' questions are filtered by the government's spokesperson. This obviously may affect transparency and accountability.

And the second concern has to do with privacy. We know that at some point we will have to start implementing some kind of an exit strategy, and that strategy will likely be linked to maybe something like a mobile phone app which would guarantee some sort of immunity certificate. And if you look at something similar already happening in China, this is something that we Europeans should be concerned about.

And what about possible effects on political stability in Spain? Before the coronavirus, Spain had several elections in close succession and ended up with a minority government. Is the pandemic likely to affect the political landscape there?

There are some polls that show stability, i.e. voters who supported the government before the crisis still support it and those who were opposed to it are still very much against it. That said, there is a general agreement that the pandemic situation is so critical that all parties have to support government measures.

Of course, there is some criticism, and I'm pretty sure that in a few weeks we will have a much more polarised situation in which opposition parties will criticise the government for lack of coordination, but probably much more for their response to the economic fallout.

We have a very polarised political system, very conflict-ridden, much like Italian politics, we have a very confrontational scene, and this is not going to change, on the contrary, this is probably going to be much more radicalised. But I think Socialist Party's Prime Minister Sanchez is going to resist that. Even though he has no majority in parliament and leads a coalition government with Podemos, there is no reason to think that voters of the Socialist Party and Podemos would abandon the government in that situation. So my forecast for Spain is stability in polarisation and confrontation.

Before this crisis, a key issue in Spanish politics was the issue of Catalonia, so what do you expect would happen regarding that?

Two things. First, for obvious reasons, this is not so high on the agenda. And that is good for the political situation, in terms of the conflict between Catalonia and the rest of Spain. After three years of discussions about the Catalan issue, it's obvious right now that that issue is not a priority. It was displaced in political discourse by this crisis.

The second point is that I think that the core of nationalist coalition in Catalonia are more radical than ever. They are even blaming the government for the deaths in Catalonia. Ten years ago, the rhetoric was that "Madrid steals Catalonia," and now it's that "Madrid kills Catalonia." So, they are very radical.

But although the core is getting radical, at the same time there are fewer and fewer of them. In the big picture of Catalan society, most people feel that this is not the time for this kind of discourse, all other places are also experiencing poor crisis management, even in Italy, US, UK, France, and so on.

In terms of credibility, the message of supporters of independence is going to suffer, because in this situation instead of thinking that we have to deal with this all together, they are still thinking about Catalan independence as a priority. This view may be supported by the radicalised base, but their support among the public will erode. Most people there believe this situation requires a much more moderate approach.

Spain had a huge problem with unemployment even before the crisis, can we expect things to worsen because of the pandemic?

Unemployment rate in Spain was very high, at 14 percent, before the crisis - and that was even after six straight years of economic growth. It's also true that we have a large informal economy, so probably that figure is not entirely real, but nevertheless, 14 the official figure is still very high. Compared to last March figures, the number of jobless people is likely to double.

We are going to have some social unrest, that's for sure. But there are two elements to think of here. The first one is the economic policy, the government had reacted very early in the beginning, but this is why we are going to need the support of the EU. The stimulus package announced to help the unemployed and small businesses is going to be very expensive.

And politically, contrary to what happened ten years ago, we have Podemos - the left-wing anti-establishment, anti-austerity party - we have it in the government now. So in terms of social unrest, for those who are the weakest segment of society - the unemployed, people earning very low wages - it is much more difficult for them to react as they did before. In 2011 there was the anti-austerity leftist Indignados movement, and this is not going to happen again because we have a left-wing government in office.

But could we potentially see the rise of a right-wing Indignados movement?

Well that's an interesting question. Right-wing Indignados are more likely to conclude that for them it would be better to vote for the conservative Popular Party rather than the right-wing Vox party.

And this is an interesting question I don't have an answer for, not only in Spain but also in other European countries - the reaction to the health problem and the economic problem looks like it is not going to be more populism. On the contrary, it seems that populist politicians and policies are not the answer when you are dealing with real, serious, problems, so people go for more traditional parties.

Traditional parties rely on experts, on serious policy-making and not on easy answers. But we don't know yet.

My guess is that people voting for Vox are former voters of the Popular Party because they are Spanish nationalists, in reaction to the Catalan crisis - and since this crisis is not related to any anti-immigration or nationalist reason, but is portrayed as a public health mismanagement or economic mismanagement issue, Vox is not going to score very high ratings. So in my view, we may end up seeing such voters re-align with the Popular Party.

Spain has a large tourist sector, like Croatia, and we can tell already that this summer season will be disastrous, so what can we expect to happen in terms of tourism in Spain?

Tourism accounts for 12 percent of Spain's GDP. And I agree that this is the main reason of concern for Spanish economy.

Because for example in Germany, the crisis may bring down internal demand, your economy might suffer a downturn, and your exports may fall. But nevertheless, you still have a manufacturing industry, and you can still sell those products in other parts of the world, and you can adapt easily to that situation.

But when you rely on tourism - which is based entirely on people travelling, which was the first thing shut down by this crisis - you can imagine how huge of an impact that would be. It accounts for about 12 percent of Spain's GDP, 15 percent of its work force, and the summer is coming.

This year is going to be lost in terms of the tourist season. This means you have to transfer huge amounts of money to people who were employed at restaurants and hotels. And you must organise a very good system for the future - which is why I referred earlier to the mobile apps - some system which will allow people to remain confident in the idea of travelling to foreign countries.

This is not going to be something short-term, but mid-term, or even long-term, this might affect the behaviour of consumers, or travellers, of tourists. And this is very dangerous for the Spanish economy.

Has Spanish government prepared some plan to help the country's tourism industry?

Yes, the government is working on an exit strategy, and is trying to strategically coordinate its plans with the European Union andeven with the World Tourism Organisation - whose headquarters is in Madrid - to introduce some technology, some system which would use coordinated credentials to ease and facilitate the recovery of tourism in the future.

As for businesses in tourism, the government will try to support them, at least to get through this year, and that will be very expensive because so many people depend on tourism and leisure industries. Croatia is also going to be hit, as it is a famous summer destination. For all countries that rely on tourism, this is going to be a terrible summer.

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