News / Europe

Corruption Accusations in Spain May Hamper Economic Recovery

Former Popular Party's treasurer, Luis Barcenas, arrives at the anti-corruption prosecuting office in Madrid, Feb. 6, 2013.
Former Popular Party's treasurer, Luis Barcenas, arrives at the anti-corruption prosecuting office in Madrid, Feb. 6, 2013.
Caroline Arbour
In Spain, new details keep emerging in a corruption scandal that reaches to the top ranks of the ruling party.  Some analysts believe the Bárcenas affair and the numerous other cases of political dishonesty coming to light could spell trouble for the country's economic recovery.  There was some evidence last week recent revelations were shaking investor confidence when Spain's debt costs rose after months of relative stability.  Any setback for Spain could send shockwaves throughout the eurozone.  
 
When Spanish newspaper El País published handwritten ledgers two weeks ago indicating the ruling Partido Popular operated a secret slush fund for years benefitting top party officials like Prime Minister Mariano Rajoy, the party fought back, questioning their authenticity.

This week El País reported that handwriting experts confirmed the documents were genuine and there was no indication of tampering.

Plus, there were revelations that the party continued until December to make severance payments to the man at the center of the scandal, the party’s former treasurer.

And this, even though Luis Bárcenas has been under investigation since 2009.

It is just the latest in a string of allegations of corruption that have been making news headlines in Spain in recent months, making austerity measures a tougher pill to swallow for Spaniards.

Jesús Lizcano, president of Transparency International Spain and an economics professor at the Autonomous University of Madrid, says the corruption scandals are certainly affecting Spain´s image and are not helpful in attracting foreign capital.

But Lizcano believes their overall impact on investor confidence will be limited.

He notes that in the Transparency International latest corruption perception index, Spain ranked 30th out of 176 countries.

Not bad, he says, even though there is room for improvement.

Some market analysts are predicting rough times ahead, however.

News of the Bárcenas affair caused Spain´s debt costs to increase slightly last week.

Bond prices are still low, but Joe Rundle, head of trading at ETX Capital in London, says they may rise to critical levels.

He says the eurozone crisis is not over and investors may pressure the European Central Bank to definitively act to put an end to it with its bailout plan.

“I think any risk, political risk, or further deterioration in economics, will cause the market to have a push of these yields up to six percent to see whether there is appetite for Draghi and the ECB to actually activate the program," said Rundle.

Rundle says a bailout would have “massive” consequences.

“France isn´t really in a position to do the bailout and it´s going to come down to Germany to decide how the eurozone is going to be shaped in the coming years," he said.

A bailout may be what the markets wish for, but it´s not something either Spain or Germany want and the tone at the meeting between Spanish Prime Minister Rajoy and German Chancellor Angela Markel last week was positive.

Meanwhile, Spain is working on polishing its credibility.  

The government introduced a transparency bill last fall.

And this week Prime Minister Rajoy stated the law would not only apply to public institutions, but also to political parties.  

Critics have argued the bill is hard to be enforced, but that with some amendments, it is a good start.

You May Like

Ukraine Purges Interior Ministry Leadership With Pro-Russian Ties

Interior Minister Avakov says 91 people 'in positions of leadership' have been fired, including 8 generals found to have links to past pro-Moscow governments More

US Airlines Point to Additional Problems of any Ebola Travel Ban

Airline officials note that even under travel ban, they may not be able to determine where passenger set out from, as there are no direct flights from Liberia, Guinea or Sierra Leone More

Nigerian President to Seek Another Term

Goodluck Jonathan has faced intense criticism for failing to stop Boko Haram militants More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid