The reporter who mistook his bias for success

Nuno Ferreira Santos/Público
A demonstration in Lisbon against the “troika”

Thomas Urban, the Madrid-based Iberian correspondent of the German newspaper Süddeutsche Zeitung, just wrote an article about the recent change in the “right track” that both Portugal’s and Spain’s reforms used to be on.

His argument is simple:
1. The socialists created a problem in both countries’ economies. (Let’s leave that in peace, although it is easy to find on Wikipedia that in the last 26 years, since 1990, both in Portugal and in Spain, Socialists and Conservatives have been roughly 13 years each in cabinet*).
2. The Conservatives, then, “solved” both countries’ problem.
3. And finally, Urban seems to argue, voters messed up in the last elections, both in Lisbon and in Madrid.

Urban is neither the first, nor the last, writer to blame citizens’ electoral choices. I dare to say that at least once in our lifetimes, each one of us has blamed a choice of a given people.

But as a journalist Urban should present accurate proof of these assertions. Instead, he leaps into moving sands: “However, although the saving recipes succeeded, in the parliamentary elections in autumn 2015 in both countries, the Conservatives lost their parliamentary majorities.”

To claim that both countries “succeeded” in their adjustment programs is a very bold, and inaccurate, claim. On the contrary: both Portugal and Spain are facing excessive budget deficit procedures in Brussels for – guess what – failing to succeed.
Budget deficit, growth, unemployment and debt: In all of these items, the goals established by the Memorandum of Understanding signed between the Portuguese government and the troika (ECB, European Commission and IMF) have failed. That you can easily confirm in the “macroeconomic scenario” prediction. For a more detailed overview there’s this unsuspicious IMF post-program monitoring report.

But the worst part comes next. Let’s check his report, and concentrate on Portugal, the country I write about every day.
Urban lists some examples of how things are going wrong in Portugal right now. But his examples are… wrong.

– The public sector salaries and pensions have been reversed, he claims. It is true that they are being gradually reversed. But that has got nothing to do with the reporter’s “right” or “wrong track” narrative. This is due to a Constitutional Court decision that forced the salaries and pension cuts made under the troika years to be temporary. Even the center-right coalition that made these cuts, promised to reverse them gradually if elected. Plus: The “sharp increase” of the minimum wage, as the reporter calls it, turns out to be a €25 euros per month raise. It was €505 euros per month in 2015. It is now €530.

– As a “consequence of this”, Urban argues, there is a “seasonally adjusted stagnant unemployment”. That is blatantly false. The number of unemployed Portuguese workers fell 10 per cent (the same happened in the Euro-zone, 6 per cent, and in the whole EU, 7 per cent).

This is a fact that anyone can check out at the English version of the Portuguese Statistics Department. For those of you that only want to read the title: “Unemployment rate: June’s definitive estimates continue the downward trend.” The unemployment rate is now the lowest since the beginning of the 2011 crisis. And this happens while outward migration is also decreasing.

– Finally, Urban claims that “in recent months, Portuguese bonds were massively rejected; they are again listed just above junk status”. This is also false. Again, there’s an official site, in English, where anybody can check the accuracy of this claim with the Portuguese Treasury and Debt Management Agency. The final part of this sentence, about the “above junk status” is really funny. Because it all started there, back in 2011.

There’s only one rating agency (DBRS) that ranks Portuguese debt above junk status in the investment grade. The others (S&PFitch and Moody’s) all downgraded Portuguese sovereign debt to junk status in 2011. And in spite of the German reporter’s will to find “success” in the adjustment years, there hasn’t been a re-evaluation of this status by the rating agencies. So wrong again, dear Thomas. Portuguese bonds are not above junk status, but below, according to three out of four rating agencies. And they stayed this way for the last five years, with no change, so forget about the “recent months” and “again listed” temporal marks.

This is probably the main problem of this article. The reporter writes as if he was assembling bullet-points for an op-ed column, or a political talk-show on TV, with no real regard to the “burden of proof”.

In the first paragraphs, the author describes what he sees, but the image is blurred. Urban claims that the Portuguese and Spanish construction clusters are boosting with “magnificent growth figures” that allegedly are pleasing real-estate renewal companies.

Let’s now look at the actual “growth figures”, below zero for years:
Construction in Portugal declined, consistently, in the last years. Construction’s value to GDP in Portugal has fallen, once more, in the last three months.

The same can be shown in two other key figures: the demand for concrete fell 4,9 per cent (link in Portuguese) and steel is falling too, not to mention the loans given to the real-estate sector. Loans to households (official Central Bank public data, in English) dropped in April, May, June and July. Would that mean there’s a construction boom?

In short: Thomas Urban saw a hypothesis and jumped into a thesis. He didn’t land safely from that jump.

Then, our reporter jumps to shaky conclusions again: “Never before have so many tourists been on the beaches of the Costa Brava in the north-east to the Algarve in the south west.” But he fails to explain why tourism is somehow related to a return to the “wrong track” of the economy, policies that he one-sidedly summarises in brief: “In both capitals the ruling Socialists courted disaster with economic programs, but failed, leaving only huge budget deficits.”

Tourism has been one of the main economic drivers of both Portuguese and Spanish economies. This is obvious for several reasons, like climate and location. It is not a political choice: Any government can advertise its countries beaches and historic sites in every international media outlet, but that doesn’t force tourists to follow that advice. And every German reader of SZ has the common sense to understand that more important than the local governments choices is the geo-political situation. The terrorist threat, the South Mediterranean crisis and Turkish unrest are good hints why Portugal and Spain are benefiting from a tourism increase.

There is a very difficult question that all journalists aim to answer: Why?

I have no answer to this particular why. Or to how one of the most influential German newspapers can report so many wrong facts in one piece about Portugal’s and Spain’s economic situation? Can an ideological bias be presented as a journalistic report? And what does an article like this say about the misinterpretation of current European problems?

Journalism is an important tool to provide citizens with accurate information that allows them to make informed political choices. But it can also be a veil that covers truth with prejudice and false facts. With false facts there can be no real debate.
In Europe today, too many things are at stake to ignore such distortion of reality.

NOTE: After this post, Süddeutsche Zeitung added, Thursday September 15th, an Editor’s Note” to its online report, underlining two corrections in the article: One about the “stagnant unemployment” figures and one about the Portuguese sovereign debt yields’ “almost junk status”. These amendments do not address the main point: This is not a debate about austerity vs expansionism. This is a debate about journalism. Most of the presented facts were simply wrong and with no evidence of accuracy check.

* Governments in Portugal and Spain since 1990:

Portugal: Cavaco Silva (center-right) until 1995; António Guterres (center-left) 1995-2001; Durão Barroso (center-right) 2001-2004; José Sócrates (center-left) 2004-2011; Passos Coelho (center-right) 2011-2015; António Costa (center-left) 2015-present

Spain: Felipe González (center-left) until 1996; José Maria Aznar (center-right) 1996-2004; Rodriguez Zapatero (center-left) 2004- 2011; Mariano Rajoy (center-right) 2011-present.

In brief: Since 1990, Portugal had 13 years of center-left governments and 12 of center-right. Spain had 13 years of each.