Out of Limbo?

The favorite argument for dictators is that they impose order and thus smooth the way for improvements, but in 20 years of Francisco Franco, the Spanish economy has seen precious little improvement. Partly to blame were the aftermath of Spain's ruinous Civil War, the international war that followed, and the long years of political isolation. But the rest lay in Franco's inept administering, in Spain's archaic economic system, and perhaps in those national qualities described by a 19th century Spanish statesman: "I do not know where we are going, but I do know this--that wherever it is, we shall lose our way."

The $1.1 billion that the U.S. poured in since 1951 started a heady building boom, but the new factories have never had enough raw materials, were not sensibly geared to national needs, and were too expensive to run. Exports have fallen ominously behind imports, capital has fled to safe foreign banks, and since the government is too short of cash to buy raw materials, businessmen regularly resort to the black market. Last week, becoming a full-fledged member of the Organization for European Economic Cooperation, Spain vowed to change all that.

Tighten Up. To qualify for substantial foreign help, able Commerce Minister Alberto Ullastres (a former economics professor) flew home from a last round of conferences in Washington and Paris, to start a long list of major reforms. The government decreed that the peseta, which up until now has been subject to at least 13 different exchange rates, would be fixed at 60 to the dollar. Excused for the time being from paying $45 million in foreign debts. Spain would get an injection of $375 million in additional aid from the U.S., OEEC, the International Monetary Fund, private U.S. concerns.

Given Spain's economic history, the most impressive part of the program is that which concerns discipline at home. Though credit has already been tightened to such a degree that many industries have h,ad to suspend payment of debts, it will get even tighter. Spain has agreed to remove controls on a long list of imports, will set acceptable "global quotas" on others. The government has also ordered a six-month amnesty on the return of all fugitive capital in the hope of rebuilding cash reserves.

Hope for the Best. With so much to do in so short a time, a little confusion was inevitable, but the Franco regime has a special talent for it. Though the whole world knew about the devaluation of the new peseta, the government forgot to inform its own foreign-exchange institute, which tells the banks what to do. Furthermore, many prominent businessmen and politicians, including the Minister of Industry himself, have gone on record as opposed to the program, and while the government austerity drive against monopolies sounds fine on the surface, it excludes those that really count--the monopolies owned by the government itself.

But if all goes well, Spain expects that its reforms may bring in an additional $125 million a year from tourists, who will no longer buy their pesetas on the black market. The liberalizing of imports and the streamlining of the whole process of giving out import licenses should drastically cut down on the profession of smuggling, which now accounts for one-fourth of Spanish trade. Most important of all, membership in OEEC takes Spain out of limbo and into a Western Europe progressing healthily while Spain has been deteriorating economically.

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