Talking to Alfredo Rubalcaba, Socialist candidate for Spanish prime minister

Trailing in the polls three weeks before Spain’s national elections, Alfredo Rubalcaba, the prime ministerial candidate from the governing Socialist party, sat down in Madrid last week with The Washington Post’s Lally Weymouth to outline his positions and vision for boosting the struggling Spanish economy. Excerpts:

After 2008, when the economic crisis stuck, Prime Minister Jose Luis Rodriguez Zapatero didn’t take much action until President Obama called him in May 2010 and told him he had to do something. Then he began a serious austerity program. Do you back this program, and would you change it?

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The whole world had a financial crisis. But in Spain we had a unique element, which was the real estate bubble, which has had a tremendous impact. In fact, 90 percent of our unemployment is actually due to that property bubble bursting. We did have to introduce these austerity packages, and of course public revenues dropped significantly.

Would you have introduced these measures
earlier if you had been prime minister?

It is very easy to look back and say, “I would have done it differently.” But there is no use crying over spilled milk. We should have made the real estate bubble burst sooner.

Wasn’t the real estate bubble a private investor problem?

Yes, but there were things we could have done from the public sector. For instance, it took us a long time to eliminate tax breaks for housing purchases, which was a perverse incentive to keep the bubble going in construction and investment in that area. It’s really hard when you are in government to suddenly burst a whole economic bubble. If you do, revenues and employment drop. We were hoping for a soft landing.

You have just completed a big deal with [the terrorist group] ETA. They have said they won’t kill anymore, but they haven’t apologized or put down their arms. Was the deal acceptable to you?

ETA has now renounced violence because they could not continue with it. They were so weakened, and their numbers were so tiny. In the Basque country, there was no one left who believed their violent approach was going to get them anywhere. It’s not that they suddenly got a conscience. They were just completely defeated by law enforcement. I am personally completely convinced that ETA will never kill in Spain again. It is over.

Is Spain the next Greece?

No.

Why not?

First of all, because our fundamentals are entirely different from Greece. Our accounts are accurate; we have never deceived Brussels in our figures, nor have we ever reported to the markets anything other than accurate portrayals of our accounts. Spain is completely different from Greece.

Do you feel you are fiscally sound enough to satisfy the markets?

There is work to be done still. We will finish the year with a deficit of 6 percent, which was the target. We have another two years to bring it down to 3 percent [and] we will.

You have to bring it down according to the European Central Bank targets?

That’s right, that’s the agreement with the Central Bank and the IMF.