[War & Business] The Misjudgment of Felipe II

Portrait of King Felipe II of Spain (1527?1598) painted by Belgian artist Rubens. [Image source: National Prado Museum of Spain website/www.museodelprado.es]

[Asia Economy Reporter Hyunwoo Lee] Spain in the 16th century, known as the "kingdom on which the sun never sets," was able to enjoy its heyday thanks to the enormous revenue from the Netherlands under Spanish rule. At that time, King Felipe II of Spain fought wars against all surrounding enemies such as France, England, and the Ottoman Turks, and most of the war expenses were covered by taxes imposed on the Netherlands.

Since the time of Carlos V, Felipe II's father, Spain's finances largely depended on the Netherlands. Carlos V, who was from the Kent region of the Netherlands, granted extensive autonomy and religious freedom to major Dutch cities in exchange for huge taxes. The autonomous Dutch regions developed a re-export trade by producing woolen fabrics from wool imported from England and selling them throughout Europe. Additionally, many Jews entered Europe under religious freedom, established banks, and the region grew into the financial center of Northern Europe.

However, Felipe II, who succeeded Carlos V, did not understand the autonomy and religious freedom granted only to the Netherlands. He believed that the entire kingdom should be governed under a unified religion and a strong centralized system to defeat enemies like France and England, and thought this would also resolve issues of fairness with Spain. He revoked the autonomy of the Netherlands and suppressed religious freedom. In response, Dutch nobles formed a delegation led by William I, Duke of Orange, demanding that Felipe II guarantee the autonomy and religious freedom that had been tolerated since the time of his father.

However, Felipe II ignored these petitions from the Dutch nobles, which angered the Dutch people, who began large-scale protests starting with the Iconoclastic Fury in 1566. The following year, Felipe II deployed Spain's top war expert, the Duke of Alba, and his special force of 10,000 troops to the Netherlands to wage all-out war against the Dutch nobles. The Spanish army attacked Dutch protesters, massacring about 18,000 people, and as the protesters dispersed, the rebellion seemed to end easily.

But this was only the prelude to the Dutch War of Independence, known as the Eighty Years' War. The unrest continued, and in 1581, led by William I, the Dutch Republic was declared. Subsequently, they allied with major powers such as England and France and continued the war against Spain. Like England, whose economy largely depended on the Dutch wool industry, France, closely connected to Dutch finance, continuously supported the Dutch independence movement.

Ultimately, after 80 years of war, the Netherlands gained independence in 1648. With the loss of the Netherlands, which accounted for most of Spain's revenue, Spain's golden age came to an end. It is evaluated that if Felipe II had continued to allow the Netherlands' autonomy and religious freedom as his father Carlos V did, Spanish history would have taken a completely different course.