The IMF has bluntly informed the Spanish government of the murderous conditions attached to the supposedly "unconditional" European Union EU100 billion bailout of the Spanish banking system promised one week ago. The lie that the bailout for Spain was condition-free was so ballyhooed, that Irish, Portuguese, and Greek leaders demanded the terms of their bailout packages be renegotiated, too, to match Spain's "no conditions."
They need not have worried that the British Empire would spare their brother nation. The conditions demanded of Spain were spelled-out in the Concluding Statement of the IMF 2012 Article IV Consultation, released on July 14.
"No options should be ruled out," to meet fiscal targets, it instructs. It specifies that "indirect" tax revenue must be increased, "by broadening the base and raising and unifying rates, especially on the VAT and excises—actions that should be taken now." That is, the most regressive of all taxes, value-added taxes on the basic necessities of life which no one can escape, must be increased and extended to more products and economic activities. A reduction of deductions required to pay into the social security system must wait. The tax deduction for mortgage payments which had been reintroduced must be eliminated.
Wages, both public and private, must be cut. In the private sector, the "reform" of labor law protections just passed must be strictly implemented, because "wages are still insufficiently sensitive to the very high level of unemployment." The IMF suggests the way to overcome politicians' fears of legislating public sector wage cuts, as well as the increases in the VAT and excise taxes, is to pass laws implementing "future" cuts and increases which would be cancelled if fiscal targets are met—targets which the IMF acknowledges cannot be met.
Likewise, privatization of public companies "should be more aggressively pursued," and stricter controls on regional budgets enforced. The IMF would like to see both the federal and autonomous region governments put into defacto receivership, with the creation of "an independent fiscal council" encharged with reviewing budgets, major programs, etc.
To demand this of a country where officially a quarter of its households are already unemployed and living under the poverty line, is to willfully demand people be thrown out to die. Child poverty has already risen in 2012 almost 5% over the 2011 average, according to a UNICEF Spain report of May 25, with 26% of Spain's children now living below the poverty line. Leaders of the Catholic charity Caritas charged in releasing their 2011 annual report on June 5, that poverty in Spain is now comparable to what Spain lived through in the post-war period. Last year, Caritas provided basic assistance (mostly food) to almost 1.1 million people, nearly three times more than in 2007. A third of those requesting aid in 2011 had never had to ask for help before, and there was a notable increase in young men and young couples or single-parent families with young children.
Thus, as of this weekend, Prime Minister Rajoy was still insisting his government will not raise the VAT tax in 2012, and Minister of Development Ana Pastor said no privatizations will occur in the transportation sector.
Leading government figures have already expressed worries privately about how long the government can last, with these policies. Two trade union federations (the UGT and CCOO) and the United Left (IU) coalition launched campaigns this week for a referendum on the legitimacy of the government and its bailout policies. The miners have been protesting in the streets for days, under such slogans as "If There Is Money For The Banks, There Has To Be Money For Coal Mining, Too;" "There Are Not Too Many Miners, But Too Many Bankers," and "Let the next unemployed person be a congressman."