Not long ago Spain was considered Europe's model student. With its dynamic economy, sensational construction projects and creative arts and film scene, it succeeded in attracting international attention and putting the dark years of the Franco dictatorship behind it. The death of the general in 1975 ended the nation's long-running political lethargy and enabled a shift toward democracy. The country's 1986 entry into what was then the European Community, and its participation in the blocs economic and currency unions, paved the way for a promising future.
But in 2007 the situation began to change. The financial crisis burst the real estate bubble and dragged the Mediterranean country into recession. Thousands of companies went bust and the banking system collapsed. Kilometers of unfinished buildings along the country's coastline, reveal the extent to which Spain had been living off credit, and wrongly speculating that the only way was up.
Spain - along with Greece - has now become Europe's greatest worry. At the end of 2012, unemployment was at 26 percent, which meant six million Spaniards - that is one in four of those fit for work - was jobless. Among the under 25 years, the figure reached a massive 52 percent. According to statistics from the central bank, Spain entered 2013 with debts of 884 billion euros, which is equivalent to 84 percent of its economic performance, and in excess of the 60 percent upper limit set out in EU treaties.
The government in Madrid has spent months enforcing drastic austerity measures in a bid to meet EU's stipulations. At the heart of the reform program are fundamental changes to the job market, including greater employer flexibility such as the ability to fire staff more easily. Jobs have been cut in the education, health and public sectors, and the tax screw has been tightened.
Protests against austerity measures
The reforms also pose a threat to social order, with tens of thousands of people turning out to protest the cuts and changes in the big cities almost every week.
Until now the only violence has been in smaller protests at the fringes of major demonstrations, and Walther von Plettenberg, managing director of the German Chamber of Commerce for Spain, told DW that Spaniards are dealing with their fate extremely well. "People know that they lived well beyond their means for 10 to 15 years," he said, adding that they are now prepared to make sacrifices. "But it is getting extreme now, because pretty much everyone is affected by the austerity measures."
The lack of perspective for Spain's graduates, has led to them being dubbed the "lost generation." Many well-educated and highly motivated youngsters are leaving their homeland in search of work abroad, although they are exactly the kind of people the country needs in order to pull itself out of the crisis. The extent of the economic and social woe is reflected in an initiative led by the Spanish Red Cross, which recently began to call for donations for the needy in Spain rather than those in developing countries. Some three million Spaniards currently rely on the support of aid agencies for their food.
Those who benefit from the economic situation and public anger at the austerity measures are regional nationalists. In Catalonia, which already enjoys some autonomy from Madrid, calls for independence are growing ever louder.
At the end of January this year, Catalonian members of parliament voted overwhelmingly in favor of granting their region, which is the wealthiest in the nation, the right to sovereignty. The Spanish government plans to appeal the declaration at the constitutional court, not least because Catalonia recently followed in the footsteps of other needy regions and applied to the central government for state funds to reduce its own debts.
Corruption made public
Prime Minister Mariano Rajoy's cabinet can't put out all the new fires quickly enough, and on top of that, is also facing personal strife. According to newspaper reports, leading members of the conservative "Partido Popular" (PP), including the premier himself, have been taking money from companies since 1990.
The government has already said it plans to fight corruption, but the claims have done little to convince a skeptical public.
In times of crisis the monarchy is keen to ally with the people. As such, King Juan Carlos and Crown Prince Felipe announced in June 2012 that they would accept a 7.1 percent cut in their gross annual salaries. Until that point, the king had received 272,000 euros annually from the state, and his son, half that. Given the wealth and other sources of income available to members of the royal family, the gesture is seen as a symbolic one. Or as an attempt for the monarch to polish his tattered image.
Royal house in disgrace
Just a year ago, Juan Carlos was well-liked by his people, who considered him a modern, open king who supported Spain's path to democracy in the post-Franco era and opposed the military coup of 1981. But his popularity has waned since April 2012, when he left his people to face austerity measures while he went elephant hunting in Botswana. Rumors of a possible lover, who is alleged to have accompanied him on his safari jolly, and corruption claims involving members of his family, have added insult to injury and done nothing for his image.
And so as things stand, Spain is a deeply divided country in search of stability and is home to millions who feel abandoned not only by their politicians, but by their monarch.