If I was to bet on how the European Union was going to collapse, I would not lay money on Greece being expelled or the UK voting in a referendum to withdraw. Both are quite likely, but I believe that the first domino to fall will be Spain. The country is in an absolute mess, has a long history of passionate politics, and was a dictatorship under the vile Franco as recently as 1975. It is also in the process of splitting up, and the state has blood on its hands with its handling of immigrants. I can foresee a Spain under martial law and expelled from the EU this year.

The collapse in Spain was caused by a fundamental mismanagement of the economy. The blame lies with the voracious appetite for public spending for political goals, and a stupid belief that growth by debt was a sensible idea. The banks were willing accomplices, of this there is no doubt.  The effects were dramatic:

The country is embroiled in a series of massive political corruption scandals involving many senior figures:

  • Magdalena Alvarez, who is European Investment Bank’s (EIB) second head was named as an official suspect in a case involving fictitious early retirement and severance payments from a public fund in Andalucia.  An estimated 140 million euros (USD 190 million) was either misused or embezzled from the fund between 2001 and 2010.
  • In the country’s biggest-ever corruption trials, 53 people, including former top officials in the city of Marbella, were convicted on October 4 2013 of accepting bribes in exchange for building permits.
  • Prime Minister Mariano Rajoy’s conservative party came under fire after Spain’s daily El Mundo published excerpts from the ledger entries of a secret slush fund run by the People’s Party, implicating the premier and other senior party members in a corruption scandal.
  • The king’s daughter, Princess Cristina, is in the newspapers daily as the corruption trial of her husband continues.

The situation is getting so dire that Spain is in danger of splitting up. Catalonia intends to hold a referendum on splitting from Spain in November this year. Containing about 16 percent of Spain’s population, it provides about 20 percent of its GDP and one-third of the total industrial production and exports. The region contributes about 25 percent of Spain’s total taxes. Spain has a lot to lose.

However, the Prime Minister declared that should the Catalans vote to seceded, Madrid will simply not let them.  “The state is prepared for any scenario that may occur. The law will be enforced. There will be no referendum that calls into question the sovereignty of the Spanish people. There will be no independence of Spanish territory while I’m president [of the government],”Mariano Rajoy said in January, guaranteeing to inflame emotions within the fiercely political region.

Spain is also crumbling in the face of illegal immigration, in a crisis that cost the lives of 15 people who drowned after being shot by police using rubber bullets, and saw 1,600 immigrants try and break into Spanish territory in one wave. The situation is so bad that Interior Minister Jorge Fernández Díaz spoke of a “state emergency”, and has seen the country demand €45 million from the EU to help stem the flow of up to 30,000 immigrants camping in Morocco waiting their turn.

Forget talk of a Grexit or a Brexit, Spain is the flashpoint that will bring down the EU.

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