Introduction

This chapter aims to cover those sectors of the state public sector (1.2.3) which, unlike the autonomous administrative entities dealt with earlier (6.3), can be defined as entities (entidades) or enterprises (empresas) rather than bodies (organismos) because of their more active involvement in the market economy. Some attention will also be paid to their counterparts at regional and local level which, according to some definitions, do not form part of the state public sector, although they are clearly part of the ‘public sector’ in its widest sense.

The Spanish Constitution of 1978, while recognising and protecting in article 38 the right to free enterprise, also acknowledges, in article 128, the right of the state to intervene in the economy in the public interest. Article 129, as well as providing the framework for the state's substantial involvement in social security and other welfare programmes (6.for example), also states that ‘the authorities will effectively promote the diverse forms of participation in public ownership’. Thus, the Constitution appeared to be recognising the mixed economy inherited by post-Franco policy-makers – an economy in which, for historical, political and economic reasons, the state sector had acquired a large share of the economic cake (1.1.2).

Under Franco, the pragmatic approach to economic policy had led to the creation of a complex web of entities which seemed to possess a momentum of their own, often removed from their original objectives and the prevailing needs of the time.

Introduction

As with political parties (chapter 10), the fate of trade unions in the past depended very much on the kind of political system prevailing at the time. For example, while they were allowed freedom to form and operate during the Second Republic (1931–36), during the Franco era all union organisations were proscribed by law and driven underground or into exile. The major unions affected in this way – indeed the major unions in existence since the nineteenth century – were the UGT (11.4.1) and the CNT (11.5.3); the latter, having been associated by Franco with the Anarchist movement, came in for particularly harsh persecution. In the place of these unions, the dictator established his so-called ‘vertical syndicates’ (sindicatos verticales), which in reality amounted to little less than submissive instruments of offical labour policy, strongly controlled by government. The 1960s, a period of rapid economic expansion (1.1.3), witnessed growing confidence and solidarity among workers and a tendency among certain employers to prefer to negotiate with the authentic representatives of labour in order to introduce new methods and to improve productivity. For a while, there was tacit toleration of unofficial bodies, such as the Workers' Commissions (11.4.2), until they were declared illegal in 1967. With the return of democracy after all unions were allowed to operate freely again and, reflecting the changed social and labour scene of the post-Franco era, a number of new unions were created at both national and regional level.

Preliminary note

Since the Spanish and English judicial systems are in many ways very different, it is not always easy to find exact equivalents in English for some Spanish legal terms. For example, juzgado, audiencia and tribunal may all be translated as ‘court’, and the only distinction between them seems to be the level at which they operate, the juzgados always being at the lower end of the hierarchy (see figure 14.p. 294). Likewise, both the words juez and magistrado may be translated as ‘judge’ – although the latter is always senior to the former. Certainly magistrado does not equate to an English magistrate with all the connotations which the latter has for the involvement of non-professionals in the judicial system (something very rare in Spain). Thus, although the term ‘magistrate’ will be used in the course of this chapter to translate magistrado, the difference in meaning must be understood.

It should also be noted that in general terms the Spanish system is one based on civil law as opposed to the UK and American system of ‘common law’. It is created by legislation and custom, applied by the judges rather than by jurisprudence – although with regard to the interpretation and application of the laws, the jurisprudence of the Supreme Court (14.5.1) is very significant.

Preliminary note

The institutions making up what is most accutately referred to, at least in Spain, as ‘local administration’ but is often called ‘local government’ in the UK context, include the municipal and provincial authorities. In legal documents, these institutions are known collectively as local corporations (corporaciones locales). Although, since the devolution of powers to the regions (chapter 7), these local institutions are subject to the legal framework of the autonomous communities, they remain financially, to a large extent, dependent on central government. On the other hand, in recent years the trend has been towards increasing co-operation between these bodies and the regional authorities in whose ambit they are located.

Introduction

The Franco regime, in combining political repression with excessive bureaucratic centralism, presided over the effective demise of local democracy. During the Franco era, local institutions were basically instruments for administering the policies of central government and enjoyed no real autonomy. Such was the degree of central control that mayors, for example, were directly appointed by Franco's minister for home affairs or the civil governor of the province concerned, both of whom were directly appointed by Franco. Moreover, local elections were rigidly controlled by the dictator's single party, the National Movement (1.12) which ensured that, to those few seats open to direct election, only officially sponsored candidates were elected.

Introduction

Like many democratic organisations in Spain, political parties in the past often experienced a precarious existence. For long periods, they were either outlawed or saw their activities severely curtailed. For much of the nineteenth and twentieth centuries, the political scene was dominated by the military, which conferred upon itself the right to intervene in political life whenever it judged that stability was threatened. From the beginning of the nineteenth century to the 1970s, neither democracy itself nor political parties in particular had the most favourable opportunities to take root; prior to the post-Franco era, the party system was subject to severe economic, social and political pressures that prevented it from establishing and consolidating itself as it had done in other countries of western Europe.

After the Civil War, Franco abolished all political parties, except his own subservient National Movement which was an amalgam of loyal right-wing groups (1.1.2). With the exception of the PSOE, the PCE, the PNV and the ERC (tables 10.1 and 10.pp. 188 and 208), all the parties that had occupied the political stage in the 1930s sank without trace. However, in the wake of the Political Reform Law of 1976 (1.1.4), there occurred a veritable explosion of political parties, at national and regional level, all eager to participate in the first democratic elections for over forty years, scheduled for 15 June 1977.

The first edition of this work was published in 1987. At that time, the Franco dictatorship was still a relatively recent experience in the minds of many Spaniards; it was still arguably appropriate to refer to Spain's ‘fragile’ democracy. Now a whole generation has emerged which remembers nothing of the Franco regime, and since 1986 Spain has matured into one more stable democracy within the framework of the European Union (EU). At last the country has shaken off its one-time image of a backward and isolated Latin nation dominated by the army and the Church; no longer can it be said that Spain has no relevance to the mainstream of European and world affairs. Indeed, in recent years, in parts of Latin America and elsewhere in the developing world, Spain's relatively smooth transition from dictatorship to democracy has been seen as a model for achieving peaceful political change. On the other hand, the curve of economic development has been subject to greater instability, and Spain has only recently begun to recover after suffering severely during the world recession of the early 1990s. Spain's levels of unemployment, for example, have consistently been the highest in the European Union. None the less, many countries which still suffer the kind of backwardness experienced by Spain not many decades ago will envy the standard of living now enjoyed by the majority of the Spanish people.

Introduction

Spain's financial institutions have been subject to considerable modification as a result of the process of harmonisation with the European Union and with the development of the Single Market in particular. Banking and other financial institutions were brought into line with those of other EU countries by the 1994 Law on the Adaptation of Spain's Financial Institutions to the Second Directive on Banking (Ley por la que se adapta la Legislatión Española en materia de Entidades de Crédito a la Segunda Directiva de Coordinatión Bancaria).

Spain's traditionally rigid financial system had already begun to experience a much needed overhaul prior to EU membership in the late 1970s. The 1978 legislation permitting the establishment of foreign banks in Spain for the first time since the Spanish Civil War helped to introduce new financial instruments and techniques as well as new institutions. Reforms also saw the beginning of the gradual phasing out of the obligatory investment ratios for financial institutions in specific areas of the economy and for privileged clients in both the public and private sectors. The 1978 report of the Comisión para el Estudio del Merc ado de Valores heralded a series of technical reforms in the securities markets which have come to fruition in the 1990s and which have helped to produce a more open system which is more capable of generating the resources needed to sustain economic growth.

Political and economic background

Franco's death in 1975 marked a watershed in contemporary Spanish history. Since then, Spain has witnessed the dismantling of his dictatorial regime and the gradual establishment of democracy. The first free elections since 1936 were held on 15 June 1977 and on 28 December 1978 a new Constitution came into effect, paving the way for the creation of a completely new political structure, as well as more democratic political and economic institutions.

Democratic tradition in Spain

It is sometimes forgotten that, in spite of her propensity for authoritarian regimes, Spain has a long, albeit turbulent, democratic history stretching back to when the first constitution was drawn up. Although weak in comparison with the forces of reaction, a democratic tradition, founded by the liberal politicians of the early nineteenth century, survived the vicissitudes of authoritarian rule and, prior to the post-Franco period, expressed itself first in the short-lived First (Federal) Republic of 1873–4 and later in the Second Republic of 1931–36. In fact, the Republican Constitution of far more progressive than anything that had preceded it in Spain, presented an important landmark in the development of the Spanish democratic Tradition.

Preliminary note

The term ‘public administration’ (administraciones públicas) in Spain is used to cover a variety of institutions and services operating at central, regional and local level, as can be seen in figure 6.1. Since the departmental reorganisation of July 1986, the co-ordination and overall control of this vast bureaucracy has been the responsibility of the Ministry of Public Administration (Ministerio de Administraciones Públicas).

This particular chapter is organically linked, as we have seen, to chapter 5 on central government and is primarily concerned with examining central public administration. The regional and local authorities are dealt with respectively in chapters 7 and 8. This chapter examines the structure and functions of the ministerial departments, with a section that examines the 'anatomy' of one particular ministry, the social security system and the numerous autonomous administrative bodies (organismos autónomos administrativos) (6.3) which are dependent on the government departments. However, autonomous commercial, industrial and financial bodies, which are linked to most departments, are seen as forming part of‘public sector enterprises’, and they are thus dealt with in chapter 9. Finally, although recent years have seen the transfer of many powers and functions from central administration to the autonomous communities, reference is made to the institutional structure through which central government is administered at a local level through the system of delegated administration (administratión periférica del estado) (6.5.1).

Introduction

Economically, Spain has been inextricably bound up with Europe since the early 1960s as the policy of economic self-sufficiency, autarky, gave way to liberalisation and the country began to trade more freely with the outside world (1.1.3). Politically, however, integration was long delayed. Spain's 1962 application to join the then European Economic Community (EEC) as an associate member was ignored by countries which found Franco's political regime unacceptable. The maximum to which the country could aspire – and that albeit with conditions that barely favoured Spain – was a preferential trade agreement signed in 1970. After the dictator's death, however, economic and political integration could follow parallel paths. Pending the outcome of the protracted negotiations on EC entry following the elections of the country's new democratic credentials were endorsed by her acceptance, as early as October into the Council of Europe (15.3.9.1). Membership of NATO, while not of course a purely European organisation, also conferred a degree of additional political respectability on Spain and gave her the opportunity to become involved in dialogue with her European neighbours, most of whom were also members. The major economic and foreign policy objective of successive Spanish governments, however, became reality when on 12 June 1985 King Juan Carlos signed the Treaty of Accession in Madrid, thus paving the way for Spanish entry into the European Community (EC) as from 1 January 1986. This date marks an important watershed in the political, economic, social and cultural evolution of Spain.

Introduction

Article 39 of the Constitution recognises and guarantees the rights of private enterprise in Spain. It specifies that this right is to be exercised in accordance with the overall needs of the economy and within the general framework of economic planning. The scope for private enterprise in Spain is, thus, similar to that of business in other EU countries and, in fact, the private sector has flourished under the PSOE despite initial fears to the contrary. Harmonisation with EU legislation has led to significant changes in Spanish company law in recent years. The Commercial Code (Código de Comercio) is the basic source of mercantile law in Spain and this has been subject to revision from time to time since it was first enacted in 1885. It was necessary therefore to introduce a substantial number of modifications to the Code in 1989 in order to bring Spain's mercantile legislation into line with EU directives on companies. This was done initially through the 1989 Law on the Partial Reform and Adaptation of Mercantile law to the Directives of the European Economic Community in regard to Companies (Ley de Reforma Partial y Adaptatión de la Legislation Mercantil a las Directivas de la Comunidad Económica Europea en materia de Sociedades). This was followed by other measures designed to consolidate the changes in specific area of business organisation.

Preliminary note

Since it is not easy to draw a line between ‘government’ and ‘administration’, logically these should be dealt with in one chapter. However, for reasons of presentation and balance, it has been thought preferable to make a break, however artificial, between the two. Thus, chapter 5 will deal with the executive or decision-making tier, including the prime minister, the ministers and the Council of Ministers, as well as those bodies which advise the government and central civil service. Chapter 6 will examine the administrative levels, including the ministerial departments and the various autonomous administrative bodies dependent on them. It is accepted, however, that there are risks in any neat form of categorisation and that, particularly in Spain where the term ‘central administration of the state’ is commonly used to embrace all the above institutions, there will inevitably be some measure of overlap between the two. This is especially so in the case of the ministers who belong to the executive but head large departments of public administration. Thus, chapters 5 and 6 should be regarded as a continuum.

In the course of chapters 5–it will also become apparent that in present-day Spain government and administration operate at three theoretical levels, which in practice function as four. These are: (i) central; (ii) regional (relating to the autonomous communities); and (iii) local – the latter being divided into the provincial and municipal tiers of administration (figure 5.1).

Introduction

With its 169 articles, the 1978 Constitution represents one of the longest in Spanish constitutional history, taking longer to draw up than any previous constitution. It was drafted and approved by both Houses of Parliament (Cortes Generates), the Lower House or Congress of Deputies (Congreso de los Diputados) (4.3.1) and the Upper House or Senate (Senado) (4.3.2). During the sixteen months of its gestation, it passed through an unprecedented number of committees and, in the course of its approval, over one thousand amendments were tabled; no previous constitution had been subjected to such searching scrutiny.

The 1978 Constitution started life in the Committee of Constitutional Affairs and Public Liberties (Comisión de Asuntos Constitucionales y Libertades Públicas) consisting of thirty-six members of the Congress drawn from the major parties represented in Parliament in proportion to their strength in the Lower House. The Committee appointed a seven-man working party with a similar composition, whose task was to draw up the original draft of the Constitution. The draft was passed to the Constitutional Committee of the Congress (Comisión Constitucional del Congreso) before being submitted for approval to the full Congress. Subsequently it was considered by the Constitutional Committee of the Senate (Comisión Constitucional del Senado) prior to being approved by the full Senate. In the final stage of the process, the draft was scrutinised by a joint committee of both Houses of Parliament before being approved in a full joint session of both Houses on 31 October 1978 (table 2.1).

Introduction

Prior to the restoration of the Bourbon monarchy in the last King of Spain was Alfonso XIII, who effectively ruled from 1902 to 1931. Following a period of political unrest, during which the monarchy fell into increasing disrepute and the political tide turned strongly in favour of republicanism, Alfonso fled the country in April 1931 ‘to save the country from civil war’. Until after the Civil War of 1936–the Spanish royal family was to remain in exile in Italy Shortly before his death in Alfonso abdicated in favour of his son Don Juan, Count of Barcelona, who was to live in exile in Portugal up to and beyond the end of the Franco era (figure 3.1).

Monarchical restoration

On 22 November two days after the death of General Franco, Juan Carlos de Borbón y Borbón, son of Don Juan and grandson of Alfonso XIII, was proclaimed King of Spain. In a simple ceremony, the new monarch was sworn in by the president of the Cortes; on this occasion, as in Juan Carlos pledged to uphold Franco's Fundamental Laws, which include the Succession Law (3.2.1.1) and the Organic Law of the State (3.2.1.2).

Since Juan Carlos had been appointed successor to the headship of state by a widely hated dictator and since in November 1975 his father, Don Juan, had not renounced his dynastic rights, it is worth asking what legitimate authority, if any, the new monarch had for ascending the long-vacant throne of Spain.

Since the death of Franco, on 20 November 1975, Spain has undergone substantial transformation. This is reflected in the way in which many of the political and economic institutions which characterised nearly forty years of Francoism have been either swept away or modified along democratic lines.

Largely as a result of these changes, the world in general, and Europe in particular, has focused increasing attention on Spanish affairs. Spain is once more regarded as ‘respectable’. Former barriers to international relations have been gradually removed as the country, for several years now a member of the Council of Europe and NATO, establishes herself as a member of the EEC. While post-Franco Spain saw intrinsic value in democratising her many outdated institutions, the determination to secure integration with Europe injected an extra dimension of urgency into the task of modernising the country's political and economic structures.

Thus, it appears an appropriate time to publish a reference work which describes and examines the political and economic institutions of post-Franco Spain, something which, we believe, has not been attempted before, at least in English. We expect that this publication will be of value and interest to all those who need to be informed about the new institutional framework of contemporary Spain.