Mariano Rajoy is headed for another term as Spanish prime minister following two inconclusive elections.
It’s been 10 months since Spain has had a government, but King Felipe asked Rajoy to try one more time while pressuring the socialists to support or abstain in a parliamentary procedure.
Abstain it is.
Bloomberg reports Rajoy Faces Vote This Week as He Moves to Reclaim Power in Spain.
Caretaker Prime Minister Mariano Rajoy will face a second confidence vote in the Spanish Parliament on Thursday, this time with the tacit support of his Socialist rivals, as he seeks to confirm his return to power.
Rajoy said that King Felipe has asked him to seek lawmakers’ backing at a meeting in Madrid Tuesday. Speaking at a press conference, Rajoy pledged to reach out to other parties as he aims to govern for the next four years, though his People’s Party has just 137 out of 350 deputies.
“I will focus on the issues that unite us, setting aside those which divide us, or making an effort to turn them into topics that don’t divide us any longer,” Rajoy said. “It’s obvious that we’re entering an era when it will be necessary to talk and negotiate. That’s what I’ll say during my investiture speech.”
Spain’s establishment parties are set to seal an unprecedented compromise to end a 10-month political stalemate which has included two elections since December and risked triggering European Union budget sanctions. The settlement between the two biggest groups in parliament will bring a measure of stability to Spain as the rest of the major euro economies face national votes over the next year.
Expect No Stability
Bloomberg has two key details wrong. First, Rajoy does not have the tacit “approval” of the PSOE socialists. Rather, the PSOE will abstain, under pressure, for political reasons.
Second, even with the help of Ciudadanos, a party that will begrudgingly enter a coalition with Rajoy’s PP party, Rajoy’s parliamentary math falls short of 50%, the essence of a minority government.
No End to Political Gridlock
The Financial Times provides better analysis in its report Second Term for Rajoy Will Not End Spain’s Political Gridlock.
After 10 months of drift and two inconclusive general elections, Mariano Rajoy has all but secured a second term as prime minister. His path to power was finally cleared on Sunday, when the opposition Socialist party (PSOE) grudgingly agreed to lift its veto against a new conservative-led government. In a deeply fragmented parliament, Mr Rajoy will be elected with the votes of his own Popular party (PP) and the centrist Ciudadanos party, but also thanks to the abstention of most Socialist deputies.
His problem is that the underlying parliamentary arithmetic has not changed. The PP controls just 137 seats in the 350-seat legislature. Add in the deputies from Ciudadanos, and Mr Rajoy is still seven votes short of a majority. The prime minister, in other words, will have to beg and scrape for a majority on every law he hopes to pass. He will lead a minority government with a hostile majority in parliament from day one.
The Socialist abstentions are born of exhaustion and fear, not conviction. The PSOE hates the thought of another Rajoy government but it hates the thought of yet another election even more. Polls showed the party was in freefall. Another ballot could have delivered a knockout blow.
Even in areas where the Socialists and Mr Rajoy share some common ground, the PSOE will be deeply reluctant to offer parliamentary support.
The first crucial test of Mr Rajoy’s powers will come almost immediately. Madrid is under intense pressure from Brussels to bring its wayward deficit back into line. Mr Rajoy won a reprieve from the European Commission earlier this year but even the revised, less ambitious deficit target for 2017 is now out of reach. Spain promised to reduce its budget shortfall to 3.1 per cent of gross domestic product next year. On current calculations, the country is heading for a deficit of 3.6 per cent. Somehow, the new Rajoy administration will have to find tax increases or spending cuts worth about €5bn.
Most likely, the prime minister will try to assemble an ad hoc coalition made up of his own PP, Ciudadanos, the conservative Basque National party and a couple of regional lawmakers from the Canary Islands. In return, Mr Rajoy will have to spice the 2017 budget with financial rewards for the Basque country and the islands — concessions that will please neither his core voters nor the antinationalist Ciudadanos leadership. But it can, just about, be done.
Mr Rajoy holds one trump card. He can always force an early election, in the hope that voters will return him to office with a proper governing majority. But even that threat may not work on a Socialist party that has already tested the tolerance of its supporters to the limit. It should surprise no one if the next legislature turns out to be nasty, brutish, short — and mostly unproductive.
Problems Start Day One
Rajoy to form minority gov’t. Day 1 instability: Brussels will hound Spain for tax hikes, benefit cuts, budget cuts. https://t.co/SJ3JUojrul
— Mike “Mish” Shedlock (@MishGEA) October 25, 2016
The tax hikes will not go over well for his PP party. Rajoy promised cuts. The socialists (PSOE), and the radical left (Unidos Podemos – United We Can), will not like any budget cuts and will especially dislike benefit cuts.
Rajoy’s only trump card is the threat of early elections. But there is no guarantee he could win. Moreover, should the socialists reorganize, Rajoy could easily find himself facing a vote of no confidence in a year or so.
Rajoy is corrupt as they come. Ciudadanos had to hold its nose to enter this fragile minority coalition. There is nothing at all stable about this setup.
Mike “Mish” Shedlock.
