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Spain

Spain readies for historic, four-way election on December 20

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Spain's new young king, Felipe VI, may ultimately shape his country's new country from the Palacio Real if the unprecedented four-way race leaves no party with a majority after December 20.
Spain’s new young king, Felipe VI, may ultimately shape his country’s future from the Palacio Real if the unprecedented four-way race leaves no party with a majority after December 20.

Five days before the Christmas holiday, Spanish voters will go to the polls to choose a new government in an election that’s being hailed as the country’s most important since 1982.Spain_Flag_Icon

Indeed, voter turnout may well exceed the 80% levels not seen since 1982, when Spain had only just emerged from its Francoist dictatorship and was four years away from joining the European Economic Community, the predecessor to today’s European Union. Moreover, it will also be the first general election to take place under Felipe VI, whose father Juan Carlos I abdicated in June 2014 after guiding the country’s transition to democracy in the mid-1970s.

But what makes the December 20 election so unique is that economic crisis has shattered Spain’s stable two-party electoral tradition, leaving a four-way free-for-all that could force unwieldy coalitions or a minority government at a time when the country has only just started its economic recovery. Distrust in both major parties, moreover, has opened the way for a popular far-left movement at the national level and greater discord at the regional level, most notably in Catalonia, where support for the independence movement is growing. No matter who wins power in the eurozone’s fourth-largest economy, the next Spanish government will face difficult decisions about GDP growth, lingering unemployment, and federalism and possible constitutional change.

For decades, Spanish elections were essentially, at the national level, a fight between the conservative Partido Popular (PP, the People’s Party) and the center-left Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party). In the most recent 2011 election, the PP won 186 seats in the 350-member Congreso de los Diputados (Congress of Deputies), the Spanish parliament’s lower house, while the PSOE won 110 seats.

Both parties can point to massive successes over the past three decades. Under longtime PSOE prime minister Felipe González, Spain consolidated its liberal democracy and benefited greatly from closer economic and financial ties to Europe, while Barcelona’s emergence as the host of the 1992 Summer Olympics catapulted it into a world-class city. Under conservative prime minister José María Aznar, Spain joined the core of western European countries as a founding member of the eurozone in 2002 and developed widening security ties with the United States. When the PSOE returned to power in 2004 under José Luis Rodríguez Zapatero, the government enacted same-sex marriage in 2005 and later negotiated a peaceful ceasefire with the paramilitary Basque nationalist group Euskadi Ta Askatasuna (ETA).

The pain in Spain

Widespread anti-austerity protests, spearheaded by the 'indignados' movements mobilized even before the previous elections in 2011. (El País / Carlos Rosillo)
Widespread anti-austerity protests, spearheaded by the ‘indignados’ movements mobilized even before the previous elections in 2011. (El País / Carlos Rosillo)

But the global financial crisis of 2008-09 and subsequent eurozone crisis of 2010 knocked Spain off its pedestal.

Not unlike Florida, Nevada and parts of California in the United States, property values in Spain fell as rapidly as they once climbed, and an economy driven by construction and easy credit sputtered to near-depression levels of contraction. Despite running a more parsimonious fiscal policy in the 2000s than even Germany, Zapatero’s government soon found its expenses far exceeding revenues, and his government engaged in a series of tax increases and spending cuts.

The Spanish electorate ousted Zapatero in December 2011, ushering the People’s Party back to power under Mariano Rajoy, whose main goal was to prevent Spain from needing to seek an emergency bailout. Despite some scares over the Spanish banking system in 2012, Rajoy succeeded in keeping Spain bailout-free, but at the cost of ever greater spending cuts and tax hikes. The Rajoy government’s tough fiscal medicine, to some degree, has worked. Yields on Spanish 10-year debt have steadily fallen from a high of over 7.2% in July 2012 to less than 1.8% today. For a country without economic expansion since 2008, the Spanish economy returned to fragile growth in 2014, and it maintained growth throughout 2015 — notching 1% growth in the second quarter of this year and 0.8% in the third.

But voters are not enthusiastic about the prospects of reelecting Rajoy, a leader who never quite managed to win over Spanish hearts. Spain’s unemployment rate today is still 21.2%, a drop from the record-high 26.9% level recorded in early 2013. But that’s still a far higher jobless rate than anywhere else in the European Union (with the exception of Greece).

In the 2008 election, before the bottom fell out of the Spanish economy, the two major parties together won 83.8% of the vote. By 2011, that percentage fell to 73.4%. If polls are correct, that percentage could fall below 50% on Sunday, as both the PP and the PSOE struggle against the surging popularity of the anti-austerity Podemos (‘We can’) on the left and the liberal, federalist Ciudadanos (C’s, Citizens) on the right.

If the election were held today, the PP would win around 110 seats, the PSOE around  90, and Podemos and Ciudadanos would each win around 60, leaving none of them with a clear majority. The uncertainty of the four-way race has both energized the electorate (in  a manner reminiscent to those first early elections in the post-dictatorship era) and enhanced the chances of post-election uncertainty that both Greece and Portugal have endured this year.  Continue reading Spain readies for historic, four-way election on December 20 →

Spain

New PSOE leader Sánchez faces uphill struggle to unite Spanish left

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He’s a disarmingly handsome economics professor, and he’s the first major Spanish party leader who grew up chiefly in the post-Franco era and in the era of Spanish democracy.Spain_Flag_Icon

But Pedro Sánchez, who leapfrogged the more well-known Eduardo Madina to become the leader of Spain’s Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party) earlier this month, and who will assume the leadership later this week, will have his work cut out for him before elections that will take place within the next 17 months, with the party’s traditional voting base increasingly supporting both new and established alternatives on the Spanish left. 

Sánchez (pictured above), just 42 years old, has only been a member of the Congreso de los Diputados (Congress of Deputies), the lower house of the Spanish parliament, the Cortes Generales, from 2009 to 2011 and  since January 2013, representing Madrid, where he served as a city councillor for the preceding five years.

Sánchez won the PSOE’s first direct contest to elect the party’s general secretary in a three-way race, with 48.7% of all votes against just 36.1% for Madina and 15.1% for the more left-wing José Antonio Pérez Tapias.

Though Madina, at age 38, is even younger than Sánchez, he’s been a member of the Congress of Deputies since 2004 and the secretary-general of the PSOE’s congressional caucus since 2009. A Basque federalist, he was perceived as the frontrunner in the race, especially after taking a republican stand in the aftermath of Juan Carlos I’s abdication from the throne. But the favorite to lead the PSOE, Andalusia’s 39-year-old regional president, Susana Díaz, endorsed Sánchez instead, as did many former officials from the administration of former prime minister José Luis Rodríguez Zapatero, including former public works and transportation minister José Blanco.

That effectively lifted the more unknown Sánchez, who holds a doctorate in economics, above Madina, who once lost part of his left leg in a Basque nationalist bomb blast.

On his election, Sánchez declared the ‘beginning of the end of Rajoy,’  challenging the unpopular center-right government of prime minister Mariano Rajoy, which has presided over the worst of Spain’s recent economic crisis.

Not so fast.  Continue reading New PSOE leader Sánchez faces uphill struggle to unite Spanish left →

Spain

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 →

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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) →

Catalunya, Spain

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

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rajoy isolated

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 →

Andalusia, Spain

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

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susanadiaz

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 →

Spain

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? →