Zapatero’s Socialists Head for Local Vote Defeat as Spain Protesters March
Spain's Prime Minister Jose Luis Rodriguez Zapatero
Nelson Ching/Bloomberg
Spanish Prime Minister Jose Luis Rodriguez Zapatero ’s Socialists are headed for defeat in local and regional elections after a week of street protests and sits-in against his policies, polls show.
Spanish Prime Minister Jose Luis Rodriguez Zapatero ’s Socialists are headed for defeat in local and regional elections after a week of street protests and sits-in against his policies, polls show. Photographer: Nelson Ching/Bloomberg
May 20 (Bloomberg) -- Bloomberg's Eric Coleman reports on the outlook for local and regional elections in Spain after a week of street protests against Prime Minister Jose Luis Rodriguez Zapatero’s policies. (Source: Bloomberg)
Spanish Prime Minister Jose Luis Rodriguez Zapatero’s Socialists are headed for defeat in local and regional elections after a week of street protests and sits- in against his policies, polls show.
Thirteen regions accounting for 60 percent of the economy and more than 8,000 municipalities hold elections on May 22. Polls show Zapatero’s Socialists will be defeated in most regions, including traditional strongholds, and may lose the city of Barcelona for the first time in three decades.
Support for the Socialists has flagged as Zapatero turned his back on traditional allies to push through wage reductions and spending cuts to fight the sovereign-debt crisis. The run-up to the vote, a year before polls to choose Zapatero’s successor, has seen demonstrations against budget cuts, bank bailouts and a 30-year-old democracy that protesters say safeguards entrenched interests.
“The conservative victory will be pretty much a punishment vote for the Socialists,” Alejandro Quiroga, a political science professor at Newcastle University in the U.K., said in a telephone interview. “It will add to the perception that this is a government on its way out.”
Pitching Tents
Protesters pitched tents in Madrid’s central Puerta del Sol square on May 15 and have demonstrated there ever since. They are calling for changes to the electoral system to reduce the dominance of the two main parties and stem corruption. Demonstrators oppose spending cuts and a youth unemployment rate of 45 percent, which the International Monetary Fund has said raises the “specter of a lost generation,” and want to be able to vote for lawmakers directly rather than for party lists.
Spain’s electoral board ruled last night to ban the protesters from demonstrating tomorrow, which is traditionally a “day of reflection” before the election. Deputy Prime Minister Alfredo Perez Rubalcaba declined to say whether authorities will break up the protest, telling reporters today that the “police know perfectly well how to do their job and to balance the different rights that are in play.”
Zapatero’s Socialists, their popularity eroded by the highest unemployment rate in Europe, stand to lose nine of the 13 regions as well as the national elections due by next March, polls by the Madrid-based Center for Sociological Research show. Castilla-La Mancha, the central region with the largest budget deficit last year, may fall to the opposition People’s Party after three decades of Socialist rule, a May 5 poll showed.
Larger Deficits
As the central government seeks to tame its deficit with the deepest austerity measures in at least three decades, the handover to new local officials threatens to reveal larger shortfalls than their predecessors reported, says Angel Laborda, chief economist at Madrid-based Funcas, the savings-bank foundation.
After elections in Catalonia last year, the new government said the region’s deficit would be 60 percent wider than its predecessor had forecast, undermining confidence in regional governments that together have 115 billion euros ($164 billion) of outstanding debt. Catalonia’s long-term issuer credit rating was cut to A from A+ by Standard & Poor’s yesterday, which cited the deficit and debt. The outlook was negative, S&P said.
New administrations in the regions, which control health and education spending and hire half of all public workers, will also have to implement spending cuts postponed during the campaign period, Laborda said. Maria Dolores de Cospedal, the PP’s candidate in Castilla-La Mancha, has pledged an “audit” of the region, which she says is “practically bankrupt.”
‘Serious Jitters’
“The bigger worry is that new governments will reveal larger deficits than previously estimated,” Madhur Jha, an economist at HSBC Bank Plc in London, wrote in a research note this week. “This would raise serious jitters about Spain’s fiscal austerity program.”
Spain is seeking to convince investors that it can lower its deficit and avoid following Greece, Ireland and Portugal in seeking a bailout. Zapatero said today he could “guarantee” there will be no more spending cuts following the regional elections, even after the European Commission forecast on May 13 that Spain’s overall shortfall will be 6.3 percent of gross domestic product this year, missing the 6 percent target.
The premium investors demand to hold Spanish 10-year bonds instead of German equivalents, Europe’s benchmark securities, widened to 238 basis points today, compared with 228 basis points yesterday.
Unpaid Bills
Spain’s 8,000 municipal governments, which are also suffering from a revenue slump caused by the collapse of the property boom, owe 33 billion euros in unpaid bills, according to the Platform Against Late Payment, a pressure group. Cospedal said today there may be 100,000 unpaid bills in her region.
After the polls, the Socialist party will turn its attention to a leadership contest as Zapatero said last month he won’t seek a third term. Elections are due in March 2012 and Zapatero said today that bringing forward the vote wouldn’t be good for the Spanish economy.
Polls show the favorites are Rubalcaba and Defense Minister Carme Chacon. While the party has given a mixed response to the protests, Chacon said May 18 that she was “listening” to the protesters and some of their objectives are “not only reasonable but possible.”
To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net.
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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