No-confidence vote throws a Spaniard in the works

No-confidence vote throws a Spaniard in the works

Spain’s right-of-center People’s Party (PP) was turfed out of office on Friday after being defeated in a no-confidence vote. At a time of Eurozone market jitters, following uncertainty over the new Italian government which was finally sworn-in Friday, the Spanish Socialist Workers’ Party (PSOE) will now try to form an administration as soon as Monday.

This latest political power play in the Eurozone’s fourth largest economy come after a corruption scandal in the PP that triggered the no-confidence vote. It is the first time in modern Spanish history that a prime minister has been forced from office in this way, and the long-standing national leader Mariano Rajoy, 63, has handed power to a much younger successor, Pedro Sánchez, 46.

While the no-confidence vote heralds a new era in Spanish politics, uncertainty could still be on the horizon with fresh elections in 2018 or 2019 quite likely. This is because the PSOE, which is still widely blamed for the fact that it was the ruling party around a decade ago when the Spanish economy went into deep recession, currently has only 84 MPs in the 350-seat Spanish legislature. This follows the Socialists’ worst national election showing, in 2016, since Spain transitioned to democracy after the 1975 death of General Franco.

The fragile legislative position of the PSOE, which will now head a minority government that will be a staunch supporter of the EU and its single currency, comes in the context of an even bigger story in Spanish politics following the June 2016 election in which no party emerged with an overall majority. A dominant narrative of that ballot, the second in the space of six months, was the shattering of the long-running post-Franco political duopoly of the PP and PSOE that has dominated the country since the late 1970s. Indeed, the combined vote of PP and PSOE, which was about 85 percent of the ballot in the 2008 general election, fell to about 55 percent in 2016. 

In this context, Friday’s vote is a personal victory for Sánchez, despite the potential difficulties he faces. This is especially so as he was ousted as Socialist leader by his party after its disappointing 2016 election performance, but made a comeback in May 2017 after being voted back into the top job by activists.

Two “new” parties have helped fill the political vacuum left by PP and PSOE. Firstly, the anti-austerity Podemos and Izquierda Unida (collectively known as Unidos Podemos), seen as the sister grouping of the ruling Syriza in Greece. And secondly, the centrist, business friendly Ciudadanos (which supported Rajoy in the confidence vote on Friday). The rise of both these groups has been fueled by popular anger over political scandals, the fall-out from the deepest economic recession for over a generation, and the growing political clamour for independence in Catalonia.

While the no-confidence vote heralds a new era in Spanish politics, uncertainty could still be on the horizon with fresh elections in 2018 or 2019 quite likely.

Andrew Hammond

Take the example of Podemos, formed in 2014 to provide a stronger structure for Spain’s so-called “indignados” political protest movement, and secured the third largest number of votes in 2016. Already, it can also boast more than 100 seats in regional parliaments, five MEPs in the European Parliament, while candidates associated with the party have also won mayoralties in Madrid and Barcelona.

As well as the economic pain and political scandals of recent years, a key backdrop to Friday’s confidence vote is the tension between Madrid and separatists in Catalonia over the enduring territorial and political crisis. This week, Sánchez reached out to Catalan independence parties to encourage dialogue on the vexed issue, and Basque and Catalan nationalist groups voted with the PSOE on Friday, but it is unclear whether they will support the new government.

Separatist tensions reached a spike in October when Catalonia sought to break away from Spain in a referendum. While this dramatically escalated the issue, the backdrop for the event was rising support for Catalan independence since 2010 when a reform to extend the regional government’s powers was struck down by the Spanish Constitutional Court. 

Whereas the PP has taken a hard-line stance on the separatists since its election victory, other parties have talked about the need for reform of the Spanish constitution to try to quell the regional demands for independence. Podemos has previously gone farthest by calling for a referendum on independence, and a new Spanish federation of semi-independent nations.

This issue will now be a key one for Sánchez to tackle, and comes at a potentially pivotal moment with a window of opportunity for him to act. This is because on Friday a green light was given to a new separatist executive in Catalonia, that does not include jailed or exiled former ministers, paving the way for Madrid to end direct rule over the region that has been in place for several months.

Despite the potential for continuing political uncertainty, Spanish financial markets have welcomed the new Sánchez government, in the immediate term at least. From this market perspective, the no-confidence vote has ended the turmoil over the end of the Rajoy administration, but jitters remain as Friday’s outcome does not provide nearly as much stability as when Rajoy first assumed power after the 2011 election when the PP won an outright majority of 186 seats. 

If political uncertainty were to rise significantly in coming weeks, this would have the potential to undermine the economic recovery that has followed the worst recession in decades, with a property crash, and unemployment peaking at 27 percent (almost 60 percent for young adults under 24). While the jobs market is improved since then, unemployment remains higher than the pre-crisis rate of 8.5 percent, and one of the highest in Europe behind Greece, even though the Spanish economy is currently performing stronger than Eurozone counterparts such as Italy.  

Taken overall, Friday’s vote marks a new chapter in Spain’s politics. However, while the new Sánchez minority government now has a window of opportunity to make its mark, its legislative position makes it vulnerable and fresh elections as soon as the second half of this year cannot be ruled out.

 

  • Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics
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