The saga is by now well-known. Germany screwed down wages after the launch of EMU, while Spain succumbed to an inflationary credit bubble – La Burbuja – caused by real interest rates of minus 2pc (set by Frankfurt) that were far too low for its exuberant fast-growing economy.
The result was a 30pc rise in labour costs compared to Germany, though this oft-cited number is misleading: Spain joined EMU at a greatly undervalued rate – unlike Portugal, which locked in too high.
But the Devil is in the details. A study by Natacha Valla at Goldman Sachs found that Spain had the eurozone’s highest skew towards "price inelastic" exports with a score of 60, compared to 59 for Germany, 55 for France, 53 for Italy, 50 for Greece, and 48 for Portugal. This is a complex stuff – Balassa theory to anoraks – but it broadly means that Spain’s exports are high enough up the technology ladder to let quality trump price.
Economy Secretary Jose Manuel Campa said Spain had lost 15pc in competitiveness against euroland by the peak in 2008 but has since clawed back a third through wage restraint and a blast of labour reform. Much of that loss was in reality "convergence," he said. If so, the claim that Spain has priced itself out of monetary union falls apart.
ITP has clearly not been broken by the crisis. It has cut costs with a partial pay freeze but is now bullish enough to launch an investment blitz aimed at doubling sales by 2015. ITP is building a plant in Mexico to hedge costs in an industry where sales contracts are in dollars. Mr Alzola said a euro near $1.20 rather than $1.36 would make life a lot easier, but the firm is maintaining core engineering in its Basque homeland.
In Madrid, the computer logistics group Indra has just pulled off the impossible. The 30,000-strong company – which supplied the electronic voting system for the London Mayor’s election – has not only astounded Chancellor Angela Merkel by taking charge of Germany’s upper airspace, it has also won the contract to manage 80pc of China’s air traffic from the control centres at Chengdu and Xian.
China’s deputy premier Li Keqiang said last month that he has his eye on Indra’s flight simulator, already used by the US Navy for Harriers and F18s. It lets pilots fly in virtual 3D through eerily convincing terrain, adjusted for speed and time.
Indra’s foreign sales jumped a tenth last year to 40pc of the total while sales in Spain fell 3pc, keeping earnings nearly level through the crisis. It is a textbook case of rebalancing, yet achieved without the crutch of Peseta devaluation as in the early 1990s.
Strategic director Juan Jose González said the company is cutting costs by shifting plant to cheaper areas within Spain, rather than to Asia. "We have our own 'near offshore’ a few hundred kilometres from Madrid where unemployment is higher and wages are lower," he said.
Nearby at the ZED Group – which struck rich with the video game "Commandos" and is now the world leader in digital content for mobile phones – chairman Javier Pérez Dolset told me it was a myth that Spain had let wages soar into the stratosphere. "It still costs less than half to produce here than in the UK or Northern Europe, and the level of skill and artistic talent is greater," he said.
Anthropologically, you could say that Spain has refound its 14th Century creativity when it was the most dynamic society on earth, before Conquista gold corrupted the Iberian soul. Its chefs are sought everywhere, its sportsmen are triumphant. Even its boom-bust ordeal is the symptom of a thrusting nation in a great secular upswing, like Holland in the 1630s, or England in the 1720s. It is the declining plodders you need to worry about.
Spain’s current account deficit was second only to the US in absolute terms in 2007. It has since plummeted from 10pc to 4pc of GDP, in stark contrast to Portugal where the rot is structural. The trump card is Asiatic levels of savings, which makes it easier for the country to carry a public-private debt near 300pc of GDP.
Mr Campa said the investment rate reached 30pc of GDP during the boom. While a chunk was squandered on construction, most was spent on machinery and infrastructure. "This was real investment for the future, and that is the difference with Portugal and Greece," he said.
Spain is not out of the woods yet. It must raise €300bn of sovereign, regional, or bank debt this year in a hostile market. Unemployment is stuck at 20pc. There is an overhang of almost 1m unsold homes on the market.
A Chinese hard-landing and a US-EU relapse would vastly complicate matters, and there is always the risk of a temper tantrum in Berlin or a ruling by the German constitutional court that the EU bail-out machinery is illegal. Yet short of an external shock, Spain should pull through.
Perhaps too much Rioja has gone to my head, but I no longer think it matters whether Portugal follows Greece and Ireland in needing an EU-IMF rescue. The risk of instant contagion across the Rio Guadiano – undoubtedly real a few months ago – has diminished with each passing week, while the EU bail-fund is at last taking a half-way credible form.
This does not mean that EMU’s yawning North-South chasm has been bridged, or that monetary union has yet proved itself workable without fiscal transfers and a debt union, or that such political union could ever be democratically healthy and accountable if achieved.
But those who still thinks that Spain will trigger the break-up of the euro are barking up the wrong tree.
Germany is another matter, of course, and so is France.
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