Spain and Obama's America

Zapetero, to his eternal shame pulled out of Iraq after the Madrid attacks has done little to create a pro-growth atmosphere. The country has foreshadowed the affects of Obamnomics for some time now and its clear the Prime Minister has hit the classical definition of Insanity, doing things over and over even though they won't work:

Mr. Zapatero, 48, is a young Socialist visionary with an old entrenched economy. In an hourlong interview at the Moncloa Palace here on Wednesday, Mr. Zapatero explained how Spain could confront its economic crisis. His strategy is to invest in Spain’s future — education, research, biotechnology and renewable energy — without moving an inch to infringe on worker’s rights, and while extending government unemployment benefits.

In a country poised between innovation and stagnation, experts say, this could be a bold strategy — or pure naïveté. They contend Mr. Zapatero is long on visions for the future but lacks a plan for creating jobs in the medium term, or for financing his generous social policies.

Certainly, for many, the numbers do not add up. Spain’s budget deficit is expected to rise to 9.5 percent of gross domestic product in 2010, the Organization for Economic Cooperation and Development predicts, although Mr. Zapatero has promised to bring it back within the 3 percent limit set by the European Union by 2012.

Skeptics say that Mr. Zapatero, for all his imagination, has run up against his own unwillingness to implement the painful structural changes that business leaders and the country’s central bank say are inevitable if Spain is to fight unemployment and bring its economy into the 21st Century.

“My government’s ambition is to make this an innovative, creative, entrepreneurial country while upholding the social welfare state,” Mr. Zapatero said, sitting beneath a painting by Joan Miró, his blue eyes shining with conviction, his hands gesturing to drive home a point.

“Some people will say that a social welfare state and a competitive economy are incompatible, that innovation is incompatible with workers’ rights. They want to deregulate workers rights, deregulate social rights. That is exactly the same tune as people who say we have to deregulate the financial markets, and I do not dance to that tune.”

Instead, Mr. Zapatero said, “it’s a question of making companies more competitive and more innovative.” He said Spain should diversify its economy away from residential construction and instead focus on sectors in which it excels and which are showing growth, including renewable energy, biotechnology, civil engineering and high-speed rail.

This could be a talking point straight from Obama. And with Spain heading for 20% unemployment and the ETA getting aggressive again it looks like the Iberian peninsula is far from a rebound.