Spain: The Clock Is Ticking

If no candidate can muster a simple majority of votes in the Spanish parliament by October 31st, Spain will have to hold its third national election within a year.

That election will likely be held on December 18th, less than a week before Christmas. Spaniards already feel dismayed that the festive season may be spoiled with yet another election.

At first glance, the chance to avoid this looks slim. Last Friday, acting Prime Minister Mariano Rajoy (of the conservative Popular Party) got only the 170 votes of the parties that had pledged to support him.

All other 180 members of parliament voted against him, as they had done in a first round on Wednesday.

Two fronts

Despite significant public pressure to abstain in order to let Rajoy prevail, none of the Socialists broke ranks with their controversial party leader Pedro Sanchez.

Whether or not new elections can still be avoided will probably become clear only after regional elections in Galicia and the Basque country are held later this month.

The Socialists, the major opposition party at the national level may find it less difficult to compromise once these regional votes are out of the way.

Also, a bad regional result may suggest to them that they better not risk a crushing defeat at repeat national election which few voters want.

Inching toward a workable government

Rajoy, for his part, may try to strike a deal with the mainstream Basque nationalist PNV after the regional vote, especially if the PNV needed support from Rajoy’s Popular Party to lead the Basque regional government thereafter.

If Rajoy gets the five PNV members in the national parliament on board, he could win if only one Socialist MP abstains, a fact that could increase the pressure on the Socialists a lot to seek a compromise.

Time for Rajoy to move on?

If Rajoy were to make way for some other member of his own party to run for prime minister, for instance for the speaker of Parliament Ana Pastor, securing enough votes for such a government would probably be easier as the Socialists could then claim a significant success. While not impossible, this looks unlikely, though.

How about a left-of-center government?

Any alternative? That the Socialists could form a government instead, relying on the 180 parliamentarians who voted against Rajoy on Friday, is mathematically possible, but does not seem likely politically.

The reason is that, while the ultra-left Podemos and the Catalan nationalists insist that such a government would have to allow an independence referendum for Catalonia, major parts of the Socialist Party are strongly against that.

Evidently, jointly voting against Rajoy is very different from agreeing with one another on key questions of national identity.

Does it matter whether or not Spain’s political stalemate continues until potential repeat elections in December? Yes and no.

Yes, Spain needs a proper rather than a caretaker government to prepare a 2017 budget and discuss it with the EU. The political uncertainty is also weighing on business confidence, likely heralding some slowdown in growth from the impressive pace of 3.6% annualized achieved so far this year.

But for Europe, the Spanish stalemate is not a major concern. As Rajoy had delivered many key reforms, Spain is fundamentally in satisfactory shape.

Whatever the outcome of the Spanish political situation, it poses no significant threat to the stability of the eurozone or the EU. After all, in Spain even the radical-left Podemos party is largely pro-European.