The economist and former minister Josep Piqué has launched doubt the “taxes extraordinary” to banks and energy companies announced by the President of the Government, Pedro Sánchez, in his speech yesterday, Tuesday, on the first day of the Debate on the State of the Nation, in which he “missed” that he proposed the “structural reforms” that Spain “follows needing”.
This is what he said, to questions from the media, in statements made in Santander, where Piqué, who is currently president of the Ibero-American Business Foundation (FIE), is participating in the VII Meeting of Multilatina Companies, within the programming of the Summer Courses of the Menéndez Pelayo International University (UIMP).
Pique has stated that “it seems good that they do efforts so that the sectors most affected by the crisis or inflation have some kind of relief” but he believes that financing them with extraordinary taxes “may have its problems” because, among other things, “it affects legal certainty and investor confidence”, something that “must be taken into account”.
Piqué has regretted that Sánchez did not raise in his presentation in the Debate of structural reforms that, in his opinion, are needed, such as tax, educational, or measures that deepen the labor market, when, as he has said, it would be “very interesting and very convenient” if they were placed on the table.
In addition, he believes that in order to address them, “as far as possible”, “agreements” must be sought because, as he has pointed out, the “uncertainty” and the current economic situation “will last for a long time” and, therefore, he believes that “they require approaches that go beyond a legislature or a specific government and have consistency and solidity beyond political alternation.”
“Spain, like Latin America, continues to need structural reforms,” said Piqué, who is currently president of the Ibero-American Business Foundation (FIE). Piqué has pointed out that Latin America and Europe are going through “an enormously complex and difficult situation” that requires, in his opinion, making “very serious decisions” about these “permanently pending” structural reforms as well as about monetary or fiscal policies.
He has pointed out that the current scenario is “of uncertainty” not only derived from the war in Ukraine but also from the effects of the pandemic, which are still going on and he believes will “probably” persist for “some time”. “These are novel situations that they force us to think with a certain originality and a certain open-mindedness because, in exceptional situations, it is probably also necessary to take exceptional measures”, he stated.
Regarding the United States, he believes that the situation is “very different” than in Europe and he believes that the Old Continent is in a “much weaker and more vulnerable” situation both because of its energy dependence –which the US does not have– and because of the characteristics of its inflation. In his opinion, the “proof” of the different situation in Europe and the United States is the evolution of the currency exchange rate, where “everything points” to the fact that “for the first time almost since the origin of the euro, it will be below the dollar. All this, as argued affects Latin American countries, which have their debt denominated in dollars and, therefore, “a strong dollar makes life difficult for them when it comes to repaying the debt and gaining room for fiscal policies.”
In addition to this issue, which in Piqué’s opinion constitutes a “fundamental part” of the problem facing Latin America, there is another, which is the “institutional and political situation that is derived, in general terms, from the disappearance of the system of traditional political parties” and their replacement by “presidents who normally start from platforms of a very personal nature and who do not usually have a parliamentary majority”, which “makes it extremely difficult to carry out any type of reform” that is needed.
Aid to Latin American governments and the role of Spain
Given the “complicated political and economic situation” that Latin America is going through, according to Piqué, the former minister and president of the FIE has underlined the need for external mechanisms to be articulated to help the governments of those countries in trouble.
“We have to think about how we use multilateral instruments to help”, said Piqué who, in this sense, has pointed out the importance of Europe and the States “coordinating” their policies in this regard and has also highlighted the role that institutions such as the World Bank or the International Monetary Fund must play in this aid.
Pique has underlined the “responsibility” that Spain has for Latin America to be on the “European agenda”, something that, in his opinion, “unfortunately” does not happen now. “We have to be very aware that Latin America is far behind most European countries. The Nordic and Central European countries are much more concerned about the problems of the East than of the South, although we have made some progress,” he said. .
A) Yes, believes that Spain should take advantage of its next Presidency of the EU, in the second half of 2023, to “put Latin America back on the European agenda”, something that, in his opinion, is “more necessary than ever”. Piqué has insisted that, at a time when “global value chains” are being “reconfigured”, “placing Latin America on the European agenda is extremely important” due to its power in terms of minerals.
Thus, he recalled that Latin America is an “essential producer and exporter” of copper and also accounts for 60% of the world’s lithium reserves, an element that has become “something completely strategic.” “That has to be worked on because if we are not going to depend on countries that we cannot trust completely”has pointed out.
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