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Published by EH.Net (December 2023).

Fernando Guirao. The European Rescue of the Franco Regime, 1950-1975. New York: Oxford University Press, 2021. 496 pp. $145 (hardcover), ISBN 978-0198861232.

 

Reviewed for EH.Net by Oscar Calvo-Gonzalez, World Bank and Georgetown University.

“Spain is the problem, and Europe is the solution,” wrote José Ortega y Gasset, the most influential Spanish intellectual of the first half of the twentieth century. Few have better captured the sentiment that would animate the history of Spain in the second half of the twentieth century, especially after the launch process of European integration made “Europe” a concrete solution to Spain’s problems. However, the existing academic literature on such a consequential process is patchy at best. This is not for lack of book-length accounts of Spain and the European integration process, but for their omissions. In particular, the evolving economic relationship between Spain and the European Economic Community is seriously under-researched. This book by Fernando Guirao, The European Rescue of the Franco Regime, 1950-1975, stands out in what is otherwise a relatively shallow historiography.

Drawing on a treasure trove of material from archives all over the continent, this book corrects some common misperceptions in the existing literature. Spain has often been portrayed as the junior partner that got stuck with the short end of the stick. Guirao, in detailing the back and forth of trade negotiations over more than two decades, paints a very different picture–one in which Spanish policymakers and bureaucrats consistently carry the day. The author has a knack for telling the tale while at the same time offering a useful guide to the complex decision making of the evolving European institutions. The book is also remarkable for the sheer number of new primary evidence pieces uncovered. For example, the account of the relationship between the Spanish authorities and the European Coal and Steel Community is simply not found elsewhere in the literature.

The contributions of the book do not stop there. In addition to skillfully covering the detailed back and forth on trade negotiations, it also provides a truly novel interpretation of events. It is this dual contribution that makes this book particularly valuable and engaging. This volume is not only essential for students of Spain but also has critical insights for those interested in the interplay between seemingly weak countries and supra-national bodies.

In short, the main argument of the book can be presented in three blocks. First, the trade relationship between Spain and the European Economic Community was systematically lopsided in favor of Spain. This provided a boost to Spain’s economic development and to such an extent that the author concludes that the concept of the “European rescue” (coined by Alan Milward) of the nation state applies here. The evolution of trade flows over the 1960s and 1970s, which show a much greater growth in Spanish exports to the Six (EEC founding members Germany, France, Italy, the Netherlands, Belgium and Luxembourg) than to other countries provides prima facie evidence in support of this claim. Setting that claim aside for a moment, the book stands out in providing numerous examples of how, throughout all trade negotiations, issue after issue got resolved in favor of the Spaniards.

This brings to the front the question of how the seemingly weaker party, Spain, managed to outsmart the Goliath in the relationship. Answering this question is the second and third building blocks of the book’s argument. In short, the book provides compelling archival evidence about the sophistication of the Spanish negotiators. This may come as a surprise to many, as the existing literature has tended to claim that, due to the dictatorial nature of the Franco regime, it could achieve only limited objectives in its relationship with the EEC. A canonical example of this argument is that Spain was not granted an Association Agreement, unlike Greece, but rather a seemingly less beneficial Preferential Trade Agreement, which was negotiated during the 1960s and signed in 1970.

In sharp contrast to the conventional wisdom, Guirao convincingly demonstrates that the Preferential Trade Agreement was in fact particularly beneficial for Spain, which achieved all it sought, including full access to European markets for its industrial products while limiting the opening up of the Spanish market for European industrial products, non-discrimination for Spain’s agricultural products, and, above all, no political conditionality. While conventional wisdom emphasizes how European institutions issued numerous declarations admonishing the Franco regime, Guirao simply and persistently “follows the money,” providing a devastating critique of much of the existing literature. This is a particularly valuable contribution. Perhaps no other scholar was as well-placed as Guirao to deliver on this ambitious exercise. It involved a monumental archival effort spanning multiple countries and languages, and a familiarity with economic technicalities that escape others.

The third block, and probably the most interesting one for a broader audience, deals with the European side of these negotiations. What explains the ineffectiveness on the side of the European counterparts? Guirao’s answer to this most difficult question is full of intriguing insights. The most important point is that the lopsided nature of the relationship was an unintended consequence. The European negotiators of the 1960s simply failed to imagine that Spain would come to develop in the 1970s as strong an industrial export sector as it did. They also failed to imagine the capacity of the Spanish bureaucrats to come up with obfuscating tactics that allowed the Spaniards to get away with measures such as import controls that were in theory not allowed by the Preferential Trade Agreement. The author also usefully reminds us of the fact that decision-making on trade matters at the time resided solely with the Council of Ministers and on a consensus basis. Such a governance structure led to the European countries spending more time and attention to agricultural products, where individual countries had red lines not to be crossed, as opposed to considering the potential threat from Spanish industrial products that at the time of negotiations did not exist. Because the Council was presented with decisions one at a time, it fell into a pattern of reacting rather than engaging in strategic thinking.

The book is a tour de force, but no review would be complete without identifying some potential quibbles or unresolved areas. Let me point to a few. The first is about how far can we take the idea of the “rescue.” The book is not explicit about the counterfactual we should have in mind to assess the idea of a “rescue.” At one extreme we can think of a counterfactual in which the European partners had stopped all trade and foreign investment, not allowed immigrants from Spain and thus curtailed remittances, and impeded European citizens for traveling to Spain for tourism. In such an extreme scenario one can think of a collapse of the Franco regime had it not been for the links to Europe. But such a scenario, which may have been possible in the 1940s, was already out of the question by the early 1950s. Spelling out what a realistic counterfactual would have looked like would seem important. The text is explicit about the relationship with the US being outside the scope of a book which is already voluminous because it does so much. But this prompts the following question: Even if Europe had had a much tougher trade stance against the Franco regime, could the developing relationship with the US not substitute for some of the growth led by exports to Europe?

A related question refers to the interplay between trade and investment. Part of the appeal of Spain as a destination for European investors was precisely that it was a protected market. To what extent did this play a role in the positions adopted by the European capitals? The book understandably focuses on trade but, as our extreme counterfactual example illustrates, the ancillary issues of investment, migration and remittances, and tourism are also important for understanding the economic relationship between Spain and its European neighbors. And one that would seem to play a role in the ultimate thesis of the “rescue” even in the nuanced form in which it is presented in the text, namely that “[w]ithout material assistance from Western Europe, it would have been considerably more challenging for the Franco regime to attain the stability” that allowed the dictatorship to maintain its rule for as long as it did. The link between trade and investment also casts some doubts about the argument with which the book concludes that all this effort by the Spanish authorities to preserve protections of the domestic industrial market was on balance harmful for the welfare of the Spanish consumer. Maybe so, but it would be hard to argue that access to a protected market still played a role in critical policy moves such as the Ford decrees from 1972 which led to a massive increase in car exports. Whether the net effect of all these trade and investment measures is negative or positive is an empirical question, and a hard one that goes beyond this book, calling for a nuanced assessment on the overall welfare implications.

Finally, one of the big questions that the book addresses is the extent to which the ideological foundation for European policy towards Franco’s Spain, namely that engagement would help drive economic and social change, and ultimately lead to liberal democracy, proved to be ill-founded. The author thinks so, and the fact that the Franco regime became even more repressive in its last few years while experiencing no consequences in terms of market access would seem to support the argument. But, if we extend the horizon further beyond, the political evolution of the late 1970s Spain would seem to be exactly the type of evidence that vindicates the wisdom of the stance of European institutions. One can only hope Guirao will explore this and other significant questions in a new book that extends beyond 1975, where this book concludes.

 

Oscar Calvo-Gonzalez is a Director at the World Bank and an Adjunct Professor at Georgetown University’s School of Foreign Service. He is the author of Unexpected Prosperity. How Spain Escaped the Middle Income Trap (Oxford University Press, 2021).

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