~e2000/08/16 : NLJ-001-204-3-E-8 SC No. 00603/64B Copy N~. · 3 SPECIAL REPORT I ·1 1 THE ECONO.MIC AND POLITICAL ENVIRONMENT IN SPAIN i 25X1A -\ ' CENTRAL INTELLIGENCE AGENCY OFFICE OF CURRENT INTELLIGENCE ... ' NO FOREIGN DISS EM S ECRET-­Approved For Release 2000/08/16 : NLJ-001-204-3-33-8.;rwup 1 ~xclud~c1 from ~".torr~'' ' dowrqrnc11n!J ono d1•rlo~\d1rot1()" ..• ...,. --------imt-lilillll1B1a•.:11DmlliDl~•JAc ~ ~. . • ., ... >-··''Y .~F ;)( ' ·):6.:;:;, ro· :::,-,...,t~'--:" · l ·-t ...., ,-.. l ;, ' iT': •"'..... ., 1,.. I>"·/' ! I , I 1 .., \ . .J t ,ji I . , ~ . , " -~ • \...,.. : ,.,_... rl. . t ':-' 1 " • ' ' • J -.,,: --·' • ._, •' r ''-.... ' . . ,._ -·--"'6 • ­ ~ -1 I ; . ( • 'he 001:'..,.t...JE''o m~1'5t er:. !'"1u~·-1 : e·::: 'N1tnir • I ~ ~. t:-! !rnlroric1.. '(; :nip ·.:i~c-~. Approved For Release 2000/08/16 : NLJ-001-204-3-33-8 Approved For Relepse 2000/08/16 : NLJ-001-204-3~-8 SECRET 24 January 1964 THE ECONOMIC AND POLITICAL ENVIRONMENT IN SPAIN* The Spanish economy, which has been ex­panding markedly since the inauguration of a stabilization program in 1959, will receive a further boost during the next four years under the $5.6-billion economic and social develop­ment plan announced by Madrid on 1 January. As in the past, collateral effects of this effort to modernize the economy and free it from con­trols will be felt in domestic politics. There are no signs, however, that Franco and his cir­cle are ready to make more than token gestures toward a return to anything like representative government. Except among the Communist~, it is clear that organized opposition to the regime remains fragmented and weak. There are indications, how­ever, that organized labor, rather than politi­cal groups, is more likely to induce pressures for a gradual easing of some of the more re­pressive official limitations on political ex­pression and activity. Economic Factors Spain's economic stabiliza­tion program of mid-1959 halted infla.tion and achieved financial stability during the ensuing 12 months. The program had the ef­fect of permitting considerably greater freedom from government controls in key sectors of the national economy. Now, practi­cally all the economic indexes show an upward trend. The gross national product increased in 1962 by more than 7 percent and probably continued to grow at about the same rate in 1963. Al­though Spain ran a substantial trade deficit by mid-1963, this was more than offset by receipts from private foreign investments, the growing flood of tourists, and the increasing number of 25X1A Spanish workers employed in industry abroad. Since early 1962 Spain has been showing increasing interest in ties with the European Eco­nomic Community (EEC). This has been behind the regime's efforts to encourage further economic · development, and thereby bring the country closer to economic parity with the members of the EEC. The latest move in this effort is the government's new economic and social development plan aimed at achieving a 6-per­cent annual increase in GNP by heavy public and private invest­ment. Political Trends The regime nevertheless re­mains firmly authoritarian. Approved For Release 2000/08/16 : NLJ-001-204-3-33-8 SECRET Significant political and social changes are probably going on beneath the surface in Spain, but in the absence of any of the usual forms of expression these are hard to identify and evalu­ate. Some government effort has been made--apparently wlth Euro­pean public opinion in mind--tonake it appear that Spain is prepar­ing to divest itself of some of the trappings of Franco's per­sonal rule and move toward a parliamentary democracy. The regime has granted a modicum of freedom to Protestant religious groups and even replied to let­ters from oppositionist intel­lectuals protesting its policies toward striking workers. It soon terminated this correspond­ence, however, and an apparent relaxation of press censorship in the sununer of 1962 has proved to be only temporary, despite re­peated references by regime of­ficials to the new freedom of the press. The constitutional changes which elements within the Franco regime have proposed thus far are very limited in nature and look ahead to the post-Franco era. Meanwhile, severe restric­tions on most civil liberties continue. Critics of the re­gime may not organize, except clandestinely and with heavy risk of discovery. There is thus little likelihood that any united opposition to Franco could develop. The proposed constitutional changes are embodied in a project for a new state organic law which, according to a senior gov­ ernmcnt official, has been under consideration by ~ranco since mid-November. This legislation provides for a prime minister who, with his cabinet, would be appointed by the chief of state --whether king, president, or regent. The prime minister would be in charge of day-to­ day operations of the government and would exercise the functions of the chief of state in the event of the latter's incapacity or death in office. The cabinet would have a fixed period of tenure--possibly three years-­ during which time the prime minister could not be dismissed by the chief of state. It would be subject to initial parlia­mentary approval, but presum­ably could not be subsequently overthrown on a vote of confi­ dence. Under the new proposal the unicameral legislature, or Cortes, which has been little more than a rubber-stamp body under Franco, would be expanded and made into the lower house of a two-chamber parliament, and its members would apparently be elected rather than appointed as at present. Doth chambers would have increased powers, but would not be directly rep­resentative of the electorate, since there is no provision legalizing political parties other than the entrenched Pa­lange. Indeed, a major objec­tive of the proposed legisla­tion appears to be to strengthen the Falange's popular appeal. The changes proposed in the executive and legislative branches 2 SECRET Approved For Release 2000/08/16 : NLJ-001-204-3-33-8 Approved For..aelease 2000/08/16 : NLJ-001-2~3-33-8 __,"_SECRET ...... may have been contrived partly with an eye to easing Spain's public relations problems in other Western European countries~ More significantly, however, they reflect an awareness among regime supporters of the need to make advance preparations for the conduct of government after Franco leaves the scene, in order to allay domestic fears that his departure will result in political instability. Since the draft law would not take effect during Franco's tenure of office, it seems likely th~t he will not reject it out of hand. The Opposition One of Franco's assets is that his opposition is deeply divided. Although non-Commu­nist groups have made some slight progress toward mending their differences, this has not gone far enough to affect their capa­bility for joint thinking and efforts. The major opposition groups--Christian Democrats, Socialists, Anarchists, Monarch­ists, and Communists--might total 14,000 active members, although this is purely guesswork. Their incurable factionalism is prob­ably the main cause of their failure to win wide popular sup­port. hlost Spaniards feel that the political alternatives to the Franco regime are risky, and that another civil war mfist be avoided at all costs. The Christian Democrats and the Socialists probably would have the largest follow­ing if they were free to organize. The Christian Democratic right wing, together with the Anarch­ists and Monarchists, persist in remaining aloof from the Union of Democratic Forces, a coalition established in June 1961, of the Christian Demo­cratic left, the Socialists, and several minor groups, in­cluding the Basque Nationalists. The Socialists inside Spain are becoming increasingly alien­ated from those who have been in exile since Franco's advent to power. Their views diverge par­ticularly on the question of collaborating with the Commu­nists, which is favored by the Socialists inside Spain. Their falling out will be widened as the result of a reported demarche recently made by Socialist lead­ers within Spain advocating a post-Franco parliamentary re­gime which would permit Social­ist representation. Some cabi­net ministers and high military officers have reacted sympatheti­cally to this proposal. The So­cialists in question claim to have broken completely with the exiles, arguing that the latter are out of touch with develop­ments in Spain and can never play an important political role. The regime seems to see some advantage in tolerating this group in order to foster splits among the Socialists. The underground Socialist and Anarchist labor unions have also tried to set the Socialist exiles at odds with those inside the country. In the fall of 1962 the two unions formed the Spanish Workers Syndical Alliance, ---8ECRE1' Approved For Release 2000/08/16 : NLJ-001-204-3-33-8 -SECRET reportedly with the aim of creat­ ing a unified labor movement. Their agreement provides, how­ ever, that each group shall re­ tain the right to act autono­ mously. A major objective may have been to have secure, direct access to financial aid from the international free labor organi­ zations and to avoid dependence on allocations from the exiles' headquarters. Among all the opposition groups, the Communists alone appear to be gaining ground in attracting a popular following. 25X1C They are thus able to give their followers a feeling that they are making a contribution to hastening the overthrow of the Franco regime. Labor's Position Organized labor in general, despite substantial wage boosts won through collective bargain­ing during the last three years, is becoming increasingly disil­lusioned with the state-con­trolled syndicate organization in which it and management are grouped by industrial sectors. The workers' principal complaint is that the syndicates are not responsive to their needs. They also resent the syndicates' ties to the Falange and the fact that syndicate officials are appointed, not elected. The workers' dissatisfaction with the syndicates was one of the factors underlying the protracted strilrn last August and Septem­ber by the coal miners in the Asturias. The regime's efforts to resolve this with concilatory measures rather than the re­pressive tactics it had employed on previous occasions led to ru­mors of impending change in the syndicates. However, the constitutional changes proposed for the post­Franco period do not envisage any far-reaching reforms in the labor field beyond the implica­tion that the tie between the Falange and the syndicates may be broken. Meanwhile, the syn­dicates are not likely to take early action increasing the num­ber of elected officials, al­though they have been debating such a move since early 1962. Scrapping the syndicates in favor of bona fide trade unions now seems even more improbable in the foreseeable future since Franco, in his year-end address to the nation on 30 December, described the syndicate organiza­tion as 11dynamicfl and essential to the success of the Economic and Social Development Plan. Nevertheless, there appears to be strong sentiment among some cabinet members for doing away with the syndicates at a 4 -s.P.Ef'rl-rCP'Tl:R.r-rE:--.'1,....,-­Approved For Release 2000/08/16 : NLJ-001-204-3-33-8 future date. Vice· ·President Munoz Grandes, Information Minis­ter : Fraga Iribarne, and Jose Solis Ruiz, minister -secre­tary general of the National Movement (largely the Falange party) and chief of the snydi­cate organization, are reliably reported to feel that "free" nonpolitical trade union or­ganizations of Socialist, Catho­lic and other non-Communist per­suasion must eventually replace the syndicates. They reason that the greater the number of labor movements, the .less the political threat to the govern­ment, because they expect that the various groups would have nothing to do with one another. Even if this reasoning proved to be valid, however, such labor unions would prob­ably lose their "nonpolitical" status under any democratic type of post-Franco government. The various political parties would then seek closer links with them in order to exploit the appeal that the unions have traditionally e~rted among large sectors of the population. The Falange The Falange--Spain's only legal party--which makes up the bulk of the regime's National Movement, has been steadily de­clining in power and prestige over the years, and now is not much more than a bureaucratic machine with little popular fol­lowing. In this process it has lost most of the fervor of its initial crusade for social jus­tice. Left. wingers among its leaders, increasingly concerned that there would be no niche for it in the post-Franco era, have recently been holding na­tionwide meetings to drum up popular support. Falangist speakers have attacked the many existing social injustices, the inadequacy of the syndicates for furthering the workers' cause, and what they regard as the present outmoded capitalist society. When a substantial number of intellectuals last fall signed protest letters to In­formation Minister Solis Ruiz, alleging police brutalities to striking Asturias miners in the summer of 1963, Falangist and syndicalist officials also wrote a letter urging that the government investigate the in­tellectuals' charges. They argued that the public was con­fused by press accounts and not convinced that the accusations were untrue. The letter assailed the regime's labor policy and claimed that the Asturias strikes were only a beginning of labor strife, and that violent strikes would follow .since the workers had no other outlet for express­ing their dissatisfaction. It maintained that the syndicates no longer truly represent the working class, that the regime had been taken over by capital­ists and technocrats, and that the Falange should take the side of the workers. A more recent indication that the Falange is trying to expand its influence is to be found in a mid-January public 5 SECRE1' ­ Approved For Release 2000/08/16 : NLJ-001-204-3-33-8 -SEeR:ET statement by its deputy secre­ tary general that it is Spain's mission to help the developing Latin American countries find new political and social struc­ tures. Falangist hopes for at­tracting a strong labor follow­ing are not likely to be real­ized in view of the party's fail­ure to keep up with the .times. It is even less likely that the party could ever become a popu­lar political force. A senior Falange official recently told the US Embassy that a reconsti­tuted Falange would within five years have evolved a social program sufficiently compre­hensive to win the support of the great majority of the popu­lation, leaving the opposition parties without grass-roots fol­lowing. This reveals the depth of wishful thinking inside the party. Outlook Although the Franco regime is not likely to undertake any far-reaching reforms in the governmental system or permit the full exercise of civil lib­ erties, it has in effect served public notice that it antici­ pates political change. In his year-end address in which he praised the National Move­ ment and the syndicates, Franco also stated that evolution was possible in the present system. Public opinion is becoming some­ what bolder in criticism. As liberalization of the economy continues, public pressure for a beginning of political reforms will grow. This pressure will be stimulated by increasing con­ tact between Spaniards and grow­ ing numbers of foreign tourists from democratically governed countries. Of even more signifi­ cance, returning Spanish workers will spread the word of Labor's political and economic gains in other Western European coun­ tries where they have lived and worked. Spanish labor may well become the motive force behind growing pressure .for a gradual lifting of restrictions on political lib­erties.. Because it is an indis­pensable factor in continued eco­nomic expansion, it is in a rea­sonably strong position to exert pressure on the regime. Unless some democratization of the syn­dicates takes place soon--and this seems improbable--labor will be tempted to dispense with them as a channel for bringing its grievances into the open•. It may more and more seek to arouse the government to action by mani­festations of widespread unrest and serious work stoppages. Un­der such conditions, the opposi­tion groups may become more alert to exploiting their opportunities for unit of action. ~~o 25X1A -8E C'.RE1 I - Approved For Release 2000/08/16 : NLJ-001-204-3-33-8