Tag Archives: PSOE

With Spanish left reeling, Rubalcaba steps down as PSOE leader

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The European parliamentary elections have claimed their first national leader in Alfredo Pérez Rubalcaba, the general secretary of the Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party), Spain’s traditional center-left party.Spain_Flag_Icon

In Sunday’s elections, Spanish voters elected 54 members of the European Parliament. The ruling Partido Popular (the PP, or the People’s Party) of prime minister Mariano Rajoy won the largest share of the vote, around 26%, and the largest number of seats, 16.

The PSOE placed second with just 23% and 14 seats — that’s a loss of nine seats in the European Parliament.

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Rubalcaba, taking the blame for his party’s losses, announced he would step down from the leadership, calling a meeting on July 19-20 to select a new general secretary of Spain’s largest center-left party:

“We have not managed to regain the trust of the citizens,” Mr Rubalcaba told a press conference in Madrid on Monday, adding that he would not stand for re-election at an extraordinary party conference in July. “We have to take political responsibility for the bad results, and this decision is absolutely mine,” he added.

There’s no guarantee that the next PSOE leader will be able to unite the Spanish left, which has fractured in the face of the economic crisis in the past five years.

The PSOE’s performance was hardly much worse than Rajoy’s party, which lost eight seats. Taken together, the two major Spanish parties won around 49% of the vote. That’s down from nearly 84% in the 2008 Spanish general election, 80% in the previous 2009 European elections and 73% in the 2011 general election.

So while the greater pressure fell on Rubalcaba and the PSOE, the results are hardly heartening for Rajoy. Continue reading With Spanish left reeling, Rubalcaba steps down as PSOE leader

A detailed look at the European parliamentary election results (part 1)

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We now have most of the results from across Europe in the 28-state elections to elect all 751 members of the European Parliament.European_Union

At the European level,  the center-right, Christian democratic European People’s Party (EPP) emerged with about 25 more seats than the center-left, social democratic Party of European Socialists (PES).

That immediately gives former the EPP’s candidate for the presidency of the European Commission, former Luxembourgish prime minister Jean-Claude Juncker, a boost in his efforts to actually become the Commission president. But it’s still far from automatic, despite Juncker’s aggressive posture at a press conference Sunday evening:

“I feel fully entitled to become the next president of the European Commission,” Juncker, a former Luxembourg prime minister, told supporters late yesterday in Brussels after the release of preliminary results. Premier for 18 years until he was voted out of office in December, Juncker also gained recognition in his dual role as head of the group of euro-area finance ministers during the debt crisis.

Juncker (pictured above) still must to convince the European Council to propose him as Commission president, and he’ll still need to win over enough right-wing or center-left allies to win a majority vote in the European Parliament.

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RELATED: Here come the Spitzenkandidaten! But does anybody care?

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That process, which could feature a major battle between the European Council and the European Parliament, will unfold in the days, weeks and possibly months ahead.

But what do the results mean across Europe in each country? Here’s a look at how the European elections are reverberating across the continent.  Continue reading A detailed look at the European parliamentary election results (part 1)

In refusing Catalan vote, Rajoy risks isolating himself and Spain’s future

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It’s not like Spanish prime minister Mariano Rajoy didn’t have any warning.cataloniaSpain_Flag_Icon

Catalan regional president Artur Mas called early regional elections for November 2012 for the express purpose of winning a mandate behind the call for greater autonomy and/or independence for Catalunya.  That didn’t work out so incredibly well for Mas and his autonomist center-right Convergència i Unió (CiU, Convergence and Union), which lost 12 seats in the 135-member Catalan parliament, and was forced to form a unity government with the pro-independence, leftist Esquerra Republicana de Catalunya (ERC, Republican Left of Catalunya).  Nonetheless, the election largely ratified the strength of the Catalan separatists, who control 87 seats to just 48 for Catalunya’s federalist parties. catalanmap

Three months ago, on September 11 — upon the celebration of Catalan national day — nearly 400,000 Catalan citizens formed a human chain stretching from the Pyrenees to the coast to emphasize just how fervently they support their right to self-determination.

Rajoy, much to his discredit, has ignored those Catalans, and Mas’s government has now set November 9, 2014 as the date for a referendum on Catalan independence — with or without the Spanish federal government’s blessing — after a vote last Thursday in the Catalan parliament that enjoyed the universal support of Mas’s Convergence and Union, the Republic Left and the Iniciativa per Catalunya Verds (ICV, Initiative for Catalonia Greens).  Rajoy (pictured above) and his justice minister Alberto Ruiz-Gallardón (pictured below) have made clear that not only is a referendum unacceptable under the Spanish constitution, but that they won’t be coerced into negotiating with Mas over devolving greater power (and funds) back to Catalunya, one of the wealthiest regions in Spain.  With over 7.5 million people, the region account for one-fifth of Spain’s economic output.

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If the vote actually goes ahead next November (and there’s some reason to believe that Mas is bluffing), it could constitute the most severe constitutional crisis since Spain’s return to democracy in the late 1970s.

To some degree, it’s easy to sympathize with Rajoy.  Though he took office just over two years ago when the center-right Partido Popular (the PP, or the People’s Party) ousted the center-left government headed by José Luis Zapatero and the Partido Socialista Obrero Español (PSOE, Spanish Socialist Worker’s Party) in November 2011, Rajoy’s popularity has plummeted as he’s pushed Spain through higher taxes and budget cuts.  That fiscal adjustment is plausibly both the cause and effect of a cycle of economic depression that’s left Spain reeling, including an unemployment rate of 26.6% that may be peaking only after five years of GDP contraction.  Spanish finances remain in tatters, despite the budgetary efforts of both the Zapatero and Rajoy governments, and Rajoy simply can’t afford to send more euros to Barcelona.  It’s not difficult to see the slippery slope that would begin once Rajoy starts negotiating with Rajoy over Spanish federalism.  An equally pro-autonomy regional government in Euskadi (Basque Country), which is also wealthier than the Spanish average, will be sure to follow with their own demands.  Other regions, like Galicia and Andalusia, the latter one of Europe’s most economically forlorn, might also make demands for stimulus.

It’s equally easy to see the naked political game that Mas is playing.  You need only look to the way that the referendum will be structured — Catalans will first be asked, ‘Do you want Catalonia to be a state?’ Those who agree with the first question will subsequently be asked, ‘Do you want Catalonia to be an independent state?’  The vote will be an easy way for Catalans to register their disapproval with Madrid without taking the kind of steps that could truly rupture Catalunya from Spain and that could leave Catalunya as an independent country outside the European Union (if only temporarily).  Mas is clearly using the referendum as a game to strengthen his hand vis-à-vis negotiations with Rajoy and, perhaps, to maximize his own standing within the Catalan electorate.  Some relatively moderate voices within the CiU coalition have even said that the referendum should only be held if it’s ultimately deemed ‘legal’ by Madrid.  The shell game of posing two questions to determine whether Catalunya should be a state or an independent state conveniently blurs the line of independence — it’s such a cynical ploy that it’s hard to take Mas seriously as a statesman, despite the legitimate sentiment of millions of pro-independence Catalans.

But Mas can get away with such demagoguery largely because of Rajoy’s intransigence.   Continue reading In refusing Catalan vote, Rajoy risks isolating himself and Spain’s future

In Andalusia, Díaz takes office with staggeringly high unemployment, economic woes

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Andalusia, the most populous of Spain’s ‘autonomous communities,’ has one of the most distinctive cultures in Europe — it’s the home of flamenco musical tradition, the Moorish architecture of Córdoba and Granada, the Baroque splendor of Seville and the birthplace of sherry.andalucia flagSpain_Flag_Icon

For all of its cultural riches, however, Andalusia has recently distinguished itself as one of the most economically challenged regions in Europe.  Last year, it had the second-highest unemployment rate (34.6%) in the entire European Union, with a youth unemployment rate of over 60%.  When you think of the European periphery that’s been choked off from economic growth by the eurozone sovereign debt crisis and the European Central Bank’s monetary policy, you should think of Andalusia.

Enter Susana Díaz, who took over last week as Andalusia’s new president (and its first female president), following the resignation of José Antonio Griñán, who had served as the Andalusian president since April 2009 and led the Partido Socialista Obrero Español (PSOE, Spanish Socialist Worker’s Party) to a nearly historic defeat in what’s long been a heartland of the Spanish left, stemming from the stridently leftist response to the latifundio culture that dominated economic life in the region through the early 20th century.  The lack of political competition in the region has done Andalusian residents few favors, however, and Socialist bosses control the region’s government as surely as the caciques of the old aristocracy.

Díaz marks somewhat of a break from the immediate past (up to a point) — from Griñán, and also from his predecessor, Manuel Chaves, who served as the Andalusian president from 1990 until 2009.  That’s good news in light of ongoing investigations into corrupt practices of past governments because past Socialist officials, including potentially Chaves and Griñán, are implicated in the fraudulent diversion of funds from ERE, a publicly subsidized fund that pays severance to laid-off workers.

Griñán announced he wouldn’t run for reelection as leader of the Andalusian Socialists earlier this year in part to shield the Socialist government from being further soiled by the ‘EREgate’ investigations.  Díaz won the leadership easily in July as Griñán’s preferred candidate, despite the promise of a robust party primary, and Spain’s national Socialist leader Alfredo Pérez Rubalcaba worked to hasten the transition to Díaz, given the ethics cloud hanging over Griñán and Chaves.  It’s become somewhat standard practice for Andalusian Socialist presidents to stand down between elections, however, allowing new leaders the benefits of incumbency in advance of the next election.  For Díaz, that won’t likely come until 2016.

Though it’s not yet clear whether Díaz marks a true rupture from the old Socialist bosses that have controlled the Andalusian government for three decades, she has a long and difficult road of governance ahead.

Somewhat promisingly, Díaz has already replaced three of the eight leading ministers in the Andalusian government, including the top economic officials from the Chaves-Griñán era and appointed her own economic team — headed by Andalusia’s new economics commissioner José Sánchez Maldonado, a former professor of public finances and a Socialist heavyweight who hopes to emphasize employment, growth and social justice.

But just ask Sicilian president Rosario Crocetta how much leverage he has had in repairing another struggling peripheral Mediterranean economy, even with all the anti-corruption, pro-growth, pro-employment sentiment he can muster.  Frankly, Díaz holds few of the political and economic levers that would allow her to radically change Andalusia’s destiny, which will be determined to a larger degree in Berlin, Brussels and Madrid than in Seville.  Last autumn, the region requested an additional €1 billion to meet its financial obligations, and the government has long been suspected of hiding the true extent of its debt obligations from federal officials.

Continue reading In Andalusia, Díaz takes office with staggeringly high unemployment, economic woes

Catalans form region-wide human chain to demand vote on independence

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Unwilling to wait until 2016 or later for Catalan independence, regional political leaders organized a protest today — on September 11, the Catalan national day — in the form of a human chain that stretched from the French Pyrenees to the Mediterranean coast. Spain_Flag_Iconcatalonia

They did so as more of Catalunya’s 7.5 million citizens favor independence from Spain, with Catalan president Artur Mas still locked in a battle with Spanish prime minister Mariano Rajoy over federalism and over the issue of whether Catalunya can unilaterally call a referendum to determine its future.

‘La Via Catalana’ — which drew over 500,000 people today — highlights just how strongly many Catalans feel about independence these days, especially in light of an economic crisis that’s taken a toll on all of Spain.  Catalunya, as one of the wealthier regions of Spain, contributes a relatively greater amount to the federal budget and receives comparatively less back from the federal government in return.  Ultimately, Catalans resent sending revenue to poorer regions of Spain in the same way that Germans resent sending revenue to bail out Greece and other poorer countries in the European periphery.  A recent survey shows that 52% of Catalans prefer independence to just 24% who favor remaining part of Spain.

Mas took his case today global with a high-profile op-ed in The New York Times demanding a referendum for Catalan independence:

We also seek no harm to Spain. We are bound together by geography, history and our people, as more than 40 percent of Catalonia’s population came from other parts of Spain or has close family ties. We want to be Spain’s brother, as equal partners. It goes beyond money or cultural differences. We seek the right to have more control over our economy, our politics, our social services.

The best way to solve any problem is to remove its cause. We seek the freedom to vote. Every individual has a right to expect this from his government, while also sharing equally in the benefits. In Europe conflicts are resolved democratically, and that is all we ask.

Mas pointed to the examples of Canada, where the federal government worked with Québec to hold two independence referenda in the past three decades, and to the United Kingdom, where prime minister David Cameron and Scottish first minister Alex Salmond have agreed to the terms of a September 2014 referendum on Scottish independence.

Last week, Mas hinted that he would be willing to back down from his demand of a 2014 referendum, indicating that a vote in 2016 would be largely acceptable.  Mas is still requesting Madrid’s approval to hold a status referendum, but Rajoy, the leader of the center-right Partido Popular (the PP, or the People’s Party) unequivocally opposes Catalan independence and has warned Mas that any referendum held without Madrid’s consent is a violation of the Spanish constitution.  But as popular support for Catalan independence rises to even higher levels, it’s becoming increasingly difficult for Rajoy to refuse the opportunity for a clear vote — even Cameron has gently nudged Mas toward agreeing to a referendum.

Complicating the matter is the fact that many Catalans now believe they have the right to hold a vote in 2014 no matter what Rajoy says — and not in 2016 or some future date.  The ‘referendum now’ camp includes the pro-independence, leftist Esquerra Republicana de Catalunya (ERC, Republican Left of Catalunya) as well as many members of Mas’s own autonomist center-right party, Convergència i Unió (CiU, Convergence and Union).

For his part, Mas is willing to delay the referendum until 2016 because a constitutional confrontation with Rajoy might prompt another round of early elections — a mistake Mas is unlikely to make again after calling snap elections shortly after last year’s Catalan national day for November 2012.  Mas did so with a thinly veiled goal of riding the pro-independence wave to an even larger majority in the 135-member Catalan parliament (the Parlament de Catalunya).  But the strategy backfired and the CiU instead lost 12 seats, mostly to the pro-independence Republican Left that, for now, is supporting Mas’s regional government.  Polls earlier this summer showed the Republican Left leading voter opinion for the first time ever, which means that Mas hopes to avoid elections anytime in the near future.  Continue reading Catalans form region-wide human chain to demand vote on independence

What Iceland’s election tells us about post-crisis European politics

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Iceland was supposed to be different.Iceland Flag IconEuropean_Union

In allowing its banks to fail, neo-Keynesian economists have argued, Iceland avoided the fate of Ireland, which nationalized its banks and now faces a future with a very large public debt.  By devaluing its currency, the krónur, Iceland avoided the fate of countries like Estonia and others in southern Europe trapped in the eurozone and a one-size-fits all monetary policy, allowing for a rapid return to economic growth and rapidly falling unemployment.  Neoclassical economists counter that Iceland’s currency controls mean that it’s still essentially shut out from foreign investment, and the accompanying inflation has eroded many of the gains of Iceland’s return to GDP growth and, besides, Iceland’s households are still struggling under mortgage and other debt instruments that are linked to inflation or denominated in foreign currencies.

But Iceland’s weekend parliamentary election shows that both schools of economic thought are right.

Elections are rarely won on the slogan, ‘it could have been worse.’ Just ask U.S. president Barack Obama, whose efforts to implement $800 billion in stimulus programs in his first term in office went barely mentioned in his 2012 reelection campaign.

Iceland, as it turns out, is hardly so different at all — and it’s now virtually a case study in an electoral pattern that’s become increasingly pronounced in Europe that began when the 2008 global financial crisis took hold, through the 2010 sovereign debt crisis in the eurozone and through the current European-wide recession that’s seen unemployment rise to the sharpest levels in decades.

Call it the European three-step.

In the first step, a center-right government, like the one led by Sjálfstæðisflokkurinn (Independence Party) in Iceland in 2008, took the blame for the initial crisis.

In the second step, a center-left government, like the one led by Jóhanna Sigurðardóttir and the Samfylkingin (Social Democratic Alliance) in Iceland, replaced it, only to find that it would be forced to implement harsh austerity measures, including budget cuts, tax increases and, in Iceland’s case, even more extreme measures, such as currency controls and inflation-inducing devaluations.  That leads to further voter disenchantment, now with the center-left.

The third step is the return of the initial center-right party (or parties) to power, as the Independence Party and their traditional allies, the Framsóknarflokkurinn (Progressive Party) will do following Iceland’s latest election, at the expense of the more newly discredited center-left.  In addition, with both the mainstream center-left and center-right now associated with economic pain, there’s increasing support for new parties, some of them merely protest vehicles and others sometimes more radical, on both the left and the right.  In Iceland, that means that two new parties, Björt framtíð (Bright Future) and the Píratar (Pirate Party of Iceland) will now hold one-seventh of the seats in Iceland’s Alþingi.

This is essentially what happened last year in Greece, too.  Greece Flag IconIn the first step, Kostas Karamanlis and the center-right New Democracy (Νέα Δημοκρατία) initially took the blame for the initial financial crisis.  In the second step, George Papandreou and the center-left PASOK (Panhellenic Socialist Movement – Πανελλήνιο Σοσιαλιστικό Κίνημα) overwhelming won the October 2009 elections, only to find itself forced to accept a bailout deal with the European Commission, the European Central Bank and the International Monetary Fund.  In the third step, after two grueling rounds of election, Antonis Samaras and New Democracy returned to power in June 2012.

By that time, however, PASOK was so compromised that it was essentially forced into a minor subsidiary role supporting Samaras’s center-right, pro-bailout government.  A more radical leftist force, SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς), led by the young, charismatic Alexis Tsipras, now vies for the lead routinely in polls, and on the far right, the noxious neo-nazi Golden Dawn (Χρυσή Αυγή) now attracts a small, but significant enough portion of the Greek electorate to put it in third place.

The process seems well under way in other countries, too.  In France, for examFrance Flag Iconple, center-right president Nicolas Sarkozy lost reelection in May 2012 amid great hopes for the incoming Parti socialiste (PS, Socialist Party) administration of François Hollande, but his popularity is sinking to ever lower levels as France trudges through its own austerity, and polls show Sarkozy would now lead Hollande if another presidential election were held today.

It’s not just right-left-right, though. The European three-step comes in a different flavor, too: left-right-left, and you can spot the trend in country after country across Europe — richer and poorer, western and eastern, northern and southern. Continue reading What Iceland’s election tells us about post-crisis European politics

Can Spanish prime minister Mariano Rajoy survive the kickback scandal?

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It’s hard not to feel some compassion for Spanish prime minister Mariano Rajoy’s government, which limped to its one-year anniversary only in December 2012.Spain_Flag_Icon

In that time, Rajoy’s government has weathered all of the following:

  • the passage of four budget cut packages and painful tax increases — income tax rates have increased, tax breaks for home owners have been eliminated and the Spanish value-added tax increased from 18% to 21%;
  • a volatile bond market that saw Spanish 10-year rates peak at 7.50% briefly at the end of July 2012, and the constant specter of yet another sovereign debt crisis;
  • an increase in the Spanish unemployment rate to 26%, just narrowly below Greece’s 26.8% unemployment rate;
  • yet another contraction in 2012 to Spanish GDP (1.4%) with a 1.5% contraction forecast for 2013;
  • a European bailout in June 2012 of €40 billion for Bankia, a conglomerate of conglomerate of cajas (savings banks) with exposure to Spain’s sagging real estate market, despite Rajoy’s campaign promise not to seek or accept a bailout;
  • the avoidance of a full European bailout of Spanish sovereign debt, while cagily working to ensure that the terms of any eventually bailout are on terms as favorable as possible (in part by holding out until the last possible moment for any potential future bailout);
  • a separatist coalition, propped up by former leftist supporters of the Euskadi Ta Askatasuna (ETA), took control of the regional Basque government in October 2012;
  • a high-profile showdown with Catalan premier Artur Mas in advance of Catalunya’s regional elections in November 2012 that exacerbated federal-Catalan tensions and all but assured a showdown over holding an independence referendum in 2014.

But now Rajoy’s government — and Rajoy personally — is facing perhaps its biggest crisis yet, in the form of an entirely self-inflicted scandal over slush funds, when it was reported last week that Luis Bárcenas, the former treasurer of Rajoy’s Partido Popular (PP, People’s Party), had been keeping unofficial books that provided expense payments for party leaders, including Rajoy, who received payments of up to €25,000 annually from 1997 to 2008.

The accusations come in addition to an ongoing investigation into the prior PP government of José María Aznar, the so-called Gürtel scandal involving kickbacks for contracts.  The most recent allegations involve slush funds, whereby proceeds came to Bárcenas from private construction companies and went out as payments to top party officials.  So the latest allegations could now also become a major focus of a judicial inquiry into the Gürtel corruption matter, endangering Rajoy’s government.

Alfredo Pérez Rubalcaba, leader of the center-left opposition Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party), called on Rajoy to resign as prime minister last Sunday, and 10-year bond rates are already creeping back up once again.

Rajoy’s resignation could open a further Pandora’s box of adverse outcomes for Spain, including the appointment of an even more right-wing prime minister (ahem, Esperanza Aguirre) and early elections result in strengthening more radical leftists, in the same way that Greece’s 2012 parliamentary elections strengthened SYRIZA, a coalition of the radical left, in the Hellenic parliament.

Rajoy didn’t help matters much on Monday, when he perplexingly explained that reports are all ‘untrue — except for some things.’

That’s certainly not a great reassurance for Spain or for Europe — the last thing the European Union wants, with a Cyprus bailout now on the horizon, is for a political scandal to launch Spain into even more turmoil or cause financial panic anew.  German chancellor Angela Merkel, of course, is widely seen as hoping to wait through her reelection campaign later this year before pursuing any dramatic action on a new European treaty or more decisive action in the eurozone.  Continue reading Can Spanish prime minister Mariano Rajoy survive the kickback scandal?

Rajoy survives election season in Spain’s most separatist regions

It’s not exactly accurate to say that Spanish prime minister Mariano Rajoy has ‘won’ in the aftermath of three regional elections in the past two months in Galicia, Euskadi (i.e., the Basque Country) and Catalunya.

But it’s fair to say that, compared to the worst-case result in each region, Rajoy’s government is likely relieved at the results of each of the three elections, especially last weekend’s Catalan elections, which threatened not only to undermine Rajoy’s federal authority, but to undermine the stability of Spain as a nation-state.

Rajoy (pictured above, right, with Catalan president Artur Mas) has had an incredibly difficult first year since taking office in December 2011 — he’s  continued Spanish austerity policies in the face of continued recession and amid the highest unemployment within the eurozone (over 25%).  With Spanish voters disillusioned about the economy and with Catalan voters, in particular, agitating for greater autonomy — if not full independence from Spain’s federal union — Rajoy and his center-right Partido Popular (the PP, or the People’s Party), together with the PP’s various local, regional iterations, were playing defense, at best, in each region.

In each election, however, there are reasons for Rajoy to take heart.

It’s obvious that the autumn’s regional elections could have been much worse: Rajoy’s party could have lost power in Galicia, the former radical leftist ETA sympathizers could have won control of the Basque government, and an outright majority win by Mas and the CiU in Catalunya would have likely caused an immediate political and, indeed, constitutional crisis — and, given the bond market’s jitters, likely a financial crisis as well.

Continue reading Rajoy survives election season in Spain’s most separatist regions

Spanish conservatives take Galicia; Basque nationalists win Euskadi

Sunday’s regional elections in Galicia and Euskadi (i.e., the Basque Country) have given just about everyone in Spanish politics something to be happy about.

In Galicia, the ruling center-right Partido Popular de Galicia (PPdeG, People’s Party of Galicia) of Galician president  Alberto Núñez Feijóo (pictured above, top right), the local branch of Spanish prime minister Mariano Rajoy’s Partido Popular (PP, People’s Party), extended its majority in the 75-member Parlamento de Galicia from 38 to 41 after winning 45.72% of the vote.

In Euskadi, the Partido Nacionalista Vasco (PNV, EAJ, the Basque Nationalist Party or, in Basque, the Euzko Alderdi Jeltzalea) emerged with the largest number of seats in the Eusko Legebiltzarra (Basque parliament), with 27 seats on 34.64% of the vote.  Like Galicia, Euskadi’s unicameral parliament has 75 members.

As such, the PNV fended off a strong challenge from a more radical leftist and more firmly pro-independence coalition of Basque nationalists — the contest was widely seen as a fight between the more centrist PNV and the coalition of the ezker abertzalea (‘patriotic left’) formed this year, the Euskal Herria Bildu (EHB).

 The PNV, however, is now likely to form a government and its leader, Íñigo Urkullu (pictured above, bottom), is very likely to become lehendakari (president) of Euskadi.  Urkullu is the former PNV leader in Biscay, a stronghold for the party, and he became party leader in 2008.  The likely return of the PNV to government will put it back in power after only its first stint in opposition in the past 30 years.

So what do Sunday’s regional elections means more widely for Spain?

The result will give some comfort to Rajoy (pictured above, top left), who hails from Galicia, a center-right heartland within Spain.  Rajoy once served in Galicia’s parliament, and Rajoy and his party will be delighted to see Feijóo’s local Galician allies extend their majority.  After extending the center-right majority in Galicia and winning a plurality, if not an absolute majority, of seats in the March 2012 regional elections in the center-left stronghold of Andalucía, Spain’s most populous region (despite remaining in the opposition), Rajoy can take respite that his party retains some support throughout the country, which is suffering its fourth year of consecutive economic malaise and unemployment that’s perhaps the highest in Europe at just over 25%.

But the result will also embolden nationalist movements throughout Spain, especially Catalunya, where the separatist movement has taken an increasingly popular turn in the past couple of months.  Catalan president Artur Mas called snap elections early last month, and Mas is engaged in a high-profile political fight over regionalism with Rajoy — Catalunya votes on November 25.  Urkullu, who called for calm following the election, has been vague about his plans for the region, and he has not said whether he intends to seek full independence for Euskadi or merely greater regional autonomy.  But he is seen as the more moderate of the two Basque nationalist party leaders in a region where the armed separatist group, the ETA (Euskadi Ta Askatasuna), signed a ceasefire just one year ago.

The result will also provide some small amount of delight for the radical left, which can point to gains in both regions.

Continue reading Spanish conservatives take Galicia; Basque nationalists win Euskadi

Six ways in which Sunday’s Galician and Basque elections will affect the Rajoy government

Just over 10% of Spain’s population will vote in regional elections this weekend in two key regions, Galicia and Euskadi (the Basque Country), but the elections will play a role in shaping the national politics that affect the remaining 90% of Spain at what’s an especially precarious time for the government of center-right prime minister Mariano Rajoy (pictured above with Galician president Alberto Núñez Feijóo).

Although Rajoy’s Partido Popular (PP, People’s Party) only recently came to power in November 2011, after the eight-year government of prime minister José Luis Rodríguez Zapatero and the center-left Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party), Rajoy has faced an unenviably difficult climate.  Spain’s economy is contracting this year after two years of tepid growth under 1%, which followed a contraction in 2008-09.  Unemployment is now just over 25%, among the highest in the eurozone.

Despite the tough economic conditions, Zapatero’s government, and now Rajoy’s government, have been relentless in slashing the Spanish budget.  Although Spain ran a fairly tight fiscal policy throughout the 2000s, the drop in tax revenue has resulted in an exploding budget deficit, which Rajoy hopes to reduce to just 6.3% of GDP this year (and 4.5% next year and 3% in 2014), in order to prevent yields on Spanish debt from rising to dangerous levels.

In less than a year, Rajoy has passed at least four different budget cut packages, including a raise in the Spanish income tax rate, a 3% hike in the Spanish value-added tax from 18% to 21%, the elimination of tax breaks for home owners and spending cuts for education and health care.  Furthermore, each of Spain’s regions are responsible for cutting their own budgets to just 1.5% of GDP.

Although Rajoy campaigned on a promise not to seek any bailouts from the European Union, like Greece has done, everyone in the EU believes it’s only a matter of time before Rajoy requests one — the European Central Bank has already provided emergency funding to prop up Bankia and other beleaguered Spanish banks in June.  Unlike with Greece, however, the most likely path for a Spanish bailout would be through a temporary credit line through the European Stability Mechanism, triggering the purchase of Spanish debt by the European Central Bank.

So on Sunday, when election results roll in from Galicia and Euskadi, here are six items to consider about how the results could affect the Rajoy government and Spain’s national politics: Continue reading Six ways in which Sunday’s Galician and Basque elections will affect the Rajoy government

Economy and budget woes, not regional independence, mark Galicia’s election campaigns

Galicia, this Sunday, joins Euskadi (i.e., the Basque Country) in holding regional elections, each of which will have national significance for the center-right government of prime minister Mariano Rajoy.

But unlike in Euskadi and especially in the upcoming November elections in Catalunya, the election in Galicia isn’t about the increasingly polarized fight over regional autonomy and independence, but about the budget priorities of the national and Galician government at a time of prolonged economic duress.

In Galicia, Rajoy’s home region, polls have consistently shown that the center-right government of Galician president Alberto Núñez Feijóo (pictured above) will win by law the largest share of the vote, although it will need to win an absolute majority of the 75 seats in the Parlamento de Galicia in order to continue governing Galicia — the difference between 37 seats and 38 seats could mean the difference between government and opposition.

Since Feijóo announced the early elections last month, polling has shown remarkably stable support for Feijóo’s party, the Partido Popular de Galicia (PPdeG, the People’s Party of Galicia), the Galician branch of Rajoy’s own Partido Popular (PP, People’s Party).

But if the PPdeG wins less than 38 seats on Sunday, the three opposition parties could unite to form a leftist coalition.

For example, the center-left Partido dos Socialistas de Galicia (PSdeG-PSOE, Socialist Party of Galicia), the Galician version of the Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party) and the nationalist Bloque Nacionalista Galego (BNG, the Galician Nationalist Bloc), a nationalist Galician party, which also tilts to the left, formed a narrow one-seat governing coalition from 2005 to 2009.  That coalition was Galicia’s first center-left government since the normalization of democratic politics in Spain in the early 1980s.

In addition, the Esquerda Unida-Izquierda Unida (EU-IU, the United Left), the regional variation of the stridently leftist Izquierda Unida (IU, United Left), essentially the remnants of Spain’s communist party, looks set to win its first seats ever in Galicia, reflecting a nationwide resurgence for the radical left in the wake of four years of economic depression, unemployment and increasingly stringent budget cuts from governments of both the center-left and center-right.

As such, the Galician election is the first major electoral test for Rajoy’s government, which is already unpopular in its first year after passing increasingly severe austerity measures.  If Feijóo loses the election, it will an incredible embarrassment, given that it’s Rajoy’s home base (he once served in the Galician parliament) and Galicia has long been a traditional center-right stronghold in Spain.

In some ways, the Galician election is for Rajoy and the PP what the earlier March 2012 regional elections in the left-leaning Andalucía region of southern Spain were for the PSOE.  In that election, the PP marked its best performance yet — winning three more seats than the PSOE.  Although the PSOE continues to govern in coalition with the Andalucian version of the United Left, and the PP did not win an absolute majority of seats, as some had predicted, it marked a low point for the PSOE in what should be its traditional stronghold. Continue reading Economy and budget woes, not regional independence, mark Galicia’s election campaigns

Galicia regional elections will be the first test of Rajoy’s austerity measures

Galicia’s premier Alberto Núñez Feijóo on Monday announced that his province, too, would join the Basque Country in holding early regional elections on October 21, rather than waiting for his term to run out in March 2013.

In so doing, Feijóo (pictured above, right) who hails from the center-right Partido Popular de Galicia (PPdeG, the People’s Party of Galicia), the local version of Spanish prime minister Mariano Rajoy’s Partido Popular (PP, People’s Party), has launched the first electoral test for Rajoy’s government, after just eight months in office.

Given Rajoy’s ties to Galicia and its status as a traditional PPdeG stronghold, it’s very much more fraught for Rajoy (pictured above, left) than the simultaneous Basque election, where two nationalist parties lead polls and where unique local and autonomy issues will figure nearly as much as national issues.

Rajoy’s party won the Spanish general election in November 2011, but his government is already facing mounting unpopularity as it’s made increasing cuts to the Spanish budget, notwithstanding an economy that’s back in recession — the economy has contracted by 0.7% so far this year and grew just 0.4% in 2011 — and an unemployment rate of 24.8%, as of June.

So far, Rajoy has pushed through at least four different austerity packages, designed to bring the Spanish deficit to just 6.3% of Spanish GDP, down from an 8.9% deficit in 2011.  Rajoy has raised the Spanish income tax rate, raised the Spanish value-added tax by 3% to 21%, eliminated tax breaks for home owners and reduced spending on education and health care — and that comes after two years of cuts implemented by the government of Rajoy’s predecessor, José Luis Rodríguez Zapatero.

For all its efforts, Spain is still straining under yields on its sovereign debt that rose from 5% (on 10-year bonds) when Rajoy entered office to 6.5% now, down from a crisis-level high of around 7.5% in mid-July.  So notwithstanding the harsh austerity, it seems more likely than not that Spain will seek a bailout from the European Union, possibly later this year — earlier in June, the European Central Bank intervened to provide funds for ailing Spanish banks.  That, too, has caused Rajoy to lose credibility after promising that he would never seek a bailout during his campaign.

The austerity push has affected the regions, which are responsible for cutting their own budgets to a combined 1.5% of GDP, and Galicia has not been unaffected by cuts at the regional level.

Since the end of the Franco era, the PPdeG has been out of power for just four years.  As such, it will be somewhat of an embarrassment if Feijóo and the PPdeG cannot win reelection in a region that’s historically been a bastion of Spanish conservatism — Rajoy himself is from Galicia and who once himself served in the Parlamento de Galicia Continue reading Galicia regional elections will be the first test of Rajoy’s austerity measures

‘Politically bankrupt’ Rajoy running out of options in Spain

Speigel International earlier this week described a bit of the hopelessness of prime minister Mariano Rajoy who, only eight months into a government that was supposed to allow Spain to turn the corner, is watching his country sink even further into crisis.

Read it all, but this part, in particular, struck me as particularly insightful:

For too long, the prime minister believed that his mere presence at the head of the government was enough to ensure that Spain would stop “being a problem and become part of the solution.”

Rajoy’s bet was that a win by his center-right Partido Popular (PP, People’s Party) over the center-left Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party) would be enough to assure investors that Spain could make it through the crisis. Sure enough, Rajoy’s PP won 186 seats to just 110 for the PSOE, even after José Luis Rodríguez Zapatero, prime minister since 2004, made clear he was stepping down as prime minister.

But that hasn’t stopped the crisis — if anything, Spain’s nightmare has accelerated in the past eight months, which makes Spiegel‘s description all the more depressing:

And what has Prime Minister Mariano Rajoy done? He hasn’t given a television address or uttered so much as an explanatory or reassuring word to Europe or his people. Instead Rajoy, 57, has disappeared into his office at the Moncloa Palace on the outskirts of the capital Madrid. Some say that he spends his time there staring helplessly and powerlessly at charts. He meets with business leaders like Siemens CEO Peter Löscher in rooms decorated with modern art, and he has even met with Spanish trade union leaders for the first time, though it was after they had already spoken off the record with German Chancellor Angela Merkel. Others say that Rajoy is irritating his European partners with hectic phone calls.

This behavior doesn’t inspire confidence. It seems more like a declaration of political bankruptcy.

What went so wrong? Continue reading ‘Politically bankrupt’ Rajoy running out of options in Spain

Spain set to seek European bailout this weekend

If true, at least this would put Greece on the backburner for a while. From Reuters, which has the scoop:

Spain is expected to ask the euro zone for help with recapitalising its stricken banks at the weekend, EU and German sources said on Friday, becoming the fourth country to seek assistance since Europe’s debt crisis began.

Five officials in Brussels and Berlin said the finance ministers of the single currency area would hold a conference call on Saturday morning to discuss a Spanish request for aid, although no figure on the assistance has been set.

The Eurogroup, which comprises the 17 euro zone states, will issue a statement after the call, which is scheduled to take place before midday (1000 GMT), the sources said.

“The announcement is expected for Saturday afternoon,” one of the EU officials said.

The dramatic move comes after Fitch Ratings cut Madrid’s sovereign credit rating by three notches to BBB on Thursday, highlighting the Spanish banking sector’s exposure to bad property loans and to contagion from Greece’s debt crisis.

Spain, with a nominal GDP (as of 2010) of $1.4 trillion, dwarfs that of either Ireland (nominal 2010 GDP = $229 billion), Portugal (nominal GDP = $204 billion) or Greece (GDP = $305 billion).  It is the eurozone’s fourth largest economy, after Germany, France and Italy, and it is the world’s 12-largest economy.

So this bailout would go much further to the heart of the eurozone than the previous bailouts to Greece, Ireland and Portugal.

Spain’s growth has stalled (or has been in recession) since 2009 and unemployment was 24.3% as of April 2012.  Although Spain’s banks have been fairly conservative, and Spain ran a surplus (or a very modest deficit) for much of the prior decade, the bust of a construction and property-value boom has left it in the midst of a staggering economic decline that brought Mariano Rajoy and the Partido Popular (PP — People’s Party) to power in December 2011 after nearly a decade of rule by prime minister José Luis Rodríguez Zapatero, whose Partido Socialista Obrero Español (PSOE — Spanish Socialist Workers’ Party) took much of the brunt of Spanish anger about the sudden economic turn, after implementing harsh budget cuts in response to the reality of reduced revenues and rising anxiety among Spanish bondholders.

So just a little over half a year after taking power, it will be on Rajoy’s watch — Rajoy promised never to accept an aid package — that Spain seeks a bailout. Continue reading Spain set to seek European bailout this weekend