Pedro Solbes became a man well known to the Spanish during his second term as minister, in the governments of José Luis Rodríguez Zapatero, in which he was responsible for the Economy and second vice president.
He was predicted by a reputation for being rigorous in budget management, after having been Minister of Economy in the last government of Felipe González –just in the period of recovery from the crisis after the Seville Expo and the 1992 Barcelona Games– and European Commissioner of Economic and Monetary Affairs.
And it was with that halo that he came to the ministry. And the economy began breaking records one after another. And it grew more year after year, which seemed to confirm his good work. Public revenue rose without limit, while deficits disappeared and public debt was reduced until in 2007 it reached a record low of 36% of gross domestic product (GDP), what the economy produces in one year.
A dream situation for someone like Solbes, who, however, did not have enough political strength to impose his criteria to manage that surplus. He lost the battle against Miguel Sebastián, the head of the Economic Office that Zapatero had set up in Moncloa and who had been his first candidate for the portfolio that the man from Alicante now held.
Sebastián won all the fights in this area to the vice president with his proposals for tax aid and more spending. The victory, almost pyrrhic for Solbes, occurred in the failed attempt to take control of BBVA by the construction group Sacyr, which Sebastián supported and he, with the Bank of Spain, did not.
Solbes opposed Sebastián’s spending proposals because of his conception of budget management, not because he saw what was coming to the Spanish economy.
He, like many others at the time, including his predecessor in the José María Aznar government, Rodrigo Rato, Fernández Ordóñez, his man at the Bank of Spain, and his own rival in the government, did not recognize that Spanish growth was driven by a huge housing bubble, fueled by financial imbalances in the euro zone. He thought in those days that the Spanish economy had made a structural and demographic change that explained the extraordinary length of the growth cycle that lasted until the fall of Lehman Brothers in September 2008.
It is true that, at that time, he did try to turn off the spending spigot and he was more harshly opposed to the spending measures that Zapatero was going to undertake. But he confirmed again that he did not have the necessary political support and a year after winning the most important electoral debate of the 2008 campaign against Manuel Pizarro, he quietly resigned from office.
