At least for the moment, the promise of a €100 billion loan to refloat the country’s beleaguered banking system has not calmed the choppy waters in Spain or the Eurozone, for that matter.
Since being announced last Saturday, 10 June, by the Spanish Minister of Economy and Finance, Luis de Guindos, after the Eurogroup meeting held the same day, the decision to lend the Spanish State €100 billion to restructure and recapitalize its banking system – in particular its savings banks – does not seem to have made much difference, since Spain’s risk premium, after a timid drop, has again surpassed the 500 point mark, with Italy close on its heels.
In the last five days since the announcement was made, much has been said and written about the pros and cons of the bailout for Spain, with special emphasis on the damage that such a rescue plan – or loan, if preferred – could do to the country’s brand image. This is especially worrying in a country that – despite efforts to diversify its economy over the last 30 odd years – still depends heavily on tourism revenues. On the strength of Heathrow statistics, one online travel site has even gone so far as to state that Euro turbulence in the EU’s Mediterranean Member States is forcing holiday-makers to shun these destinations, in which Spain is also sadly included – obviating the fact that most travellers to these destinations use charter flights or low-cost carriers departing from other airports.
Evidently, when seen from a distance, the country would seem to be on its last legs. It is true that Spain’s unemployment figures are horrendous, but then one tends to forget that the country’s job market, along with its unemployment rate, has always been its Achilles tendon, even during boom years. Nevertheless, the truth of the matter is that the country is definitely not one step away from total anarchy; life goes on as before for the Spaniards, although with much tighter budgets. As the Government has not tired of saying, "Spain is not Greece". There are no paralyzing general strikes lasting for days; no pitched battles on the streets of the capital, or anywhere else for that matter (except in the mining region of Asturias, but miners, whatever their nationality, have always been famously belligerent); no sudden rise in crime…
But there is obviously a problem, because as Mercedes Garcia, deputy manager of the Barcelona Convention Bureau, mentioned during the MPI Day – held in the Carmen Thyssen Museum in Malaga on 5 June – some foreigners with whom she has spoken are practically convinced that the country is a war zone, and sadly the further away you get, the worse the perception. There is a communication problem and, as anyone working in the meetings and event industry knows, when the wrong message is transmitted there is havoc.
Returning to the bank bailout and its impact on Spain, as often happens in Brussels, decisions are taken at the last moment and under duress, meaning that the agreement’s small print is still a mystery, at least for the general public. Again, the media have bandied about a number of draconian conditions that Brussels will be demanding of Spain in exchange for the bailout: increasing the standard VAT rate (to bring it into line with the rest of Europe, it must be said) and the disappearance of the reduced 8% VAT rate benefitting the hospitality industry and transport; slashing public sector wages yet again; and reducing pensions and unemployment benefits, to name but a few. Nevertheless, this is all hearsay for the moment because the real conditions will not be known until July – political analysts feel that Brussels will not be too hard on Spain, despite the incipient murmurings from the other EU States that have been rescued to date.
It is not a money problem, but a lack of political will to take the bull by the horns once and for all. Whatever the conditions of the bailout, fortunately it also has positive connotations for Spain. Despite the prophets of doom, a healthy banking system will then be able to help cash-strapped companies and finance new business ventures, and also, what is just as important, with the country’s banks once again on a firm financial footing, the foreign press will have to look elsewhere for financial horror stories and start to depict the country as it really is: a normal place with a lot to offer the world.
The Spanish meetings and event industry, despite fears of higher VAT, will also certainly benefit from the bailout. The national market has been seriously hit by the crisis, both because of the large number of companies that have gone out of business since 2008 and because of the reticence to spend due to the reigning uncertainty. In the last four years, the industry has already undergone the restructuring process on which Spain’s banking system is about to embark. This process has been brutal, but it has also separated the wheat from the chaff or, as Phil Cross, corporate event director at CCIB, graphically put it at the MPI Day in Malaga, with his anecdote about the aborigines and their way of seeing the positive side of forest fires.
The Spanish meetings and event industry is alive and kicking, and in great shape to confront the future, as Jesus Gomez, CEO of Grupo Events and president-elect of MPI Spain, commented during the MPI Day in Malaga. Meetings, events and incentives are still being held in Spain, bids for world-class congresses are still being won, and, if the ICCA statistics for 2011 are anything to go by, in 2012 Spain will still be jostling for the lead in the association’s country and city rankings.
As the President of Spain is said to have remarked in a text message that he sent to Luis de Guindos during the Eurogroup meeting last Saturday, "Hang on in there, Spain isn’t Uganda." Well, by the looks of things, Greece is not either: the country has just won the bid for the 2016 WACS Congress, against stiff competition from Johannesburg and Istanbul, which just goes to show that not everyone thinks the end of the world in nigh.
