Spain’s Rajoy Wins Only Election Debate

Spanish opposition leader Mariano Rajoy defeated Socialist Alfredo Perez Rubalcaba in their only pre-election debate, polls showed, strengthening the People’s Party’s chances of clinching a record majority on Nov. 20.

A poll by the newspaper El Pais, a traditional Socialist backer, showed Rajoy won last night’s debate in Madrid by a margin of 5 percentage points, while broadcaster La Sexta gave him an 8.7-point advantage. Another poll by El Mundo newspaper showed 51 percent thought Rajoy won, compared with 44 percent for Rubalcaba.

Rubalcaba, who spent most of the debate interrogating Rajoy on his spending plans, said Spain should delay proposals to meet the European Union’s deficit ceiling of 3 percent of gross domestic product by two years to 2015 and called on the European Central Bank to keep cutting interest rates. He accused Rajoy of planning cuts to unemployment benefits to bring the deficit into line as well as reducing pensions and using public money to bail out banks.

“Rajoy did what he had to do, which was to not make any significant huge mistake,” Ken Dubin, a political-science professor at Carlos III University in Madrid, said in a telephone interview. “He managed to not take any of Rubalcaba’s baits to clarify more uncomfortable pieces of his non-specific electoral program.”

Third Undecided

With pre-election polls showing almost a third of Spaniards undecided, Rajoy, 56, and Rubalcaba, 60, debated how to haul Spain out of the debt crisis that has already pushed three euro- region leaders from power after bailouts. Socialist Prime Minister Jose Luis Rodriguez Zapatero called elections four months ahead of schedule after imposing the deepest austerity measures in three decades and failing to rein in the highest unemployment rate in the EU.

Polls indicate that Rajoy’s Peoples Party may win the largest majority it has ever secured and the biggest any Spanish government has clinched since 1982, strengthening the opposition leader’s hand to enact pledges to slash the deficit and stem surging borrowing costs. The extra yield on Spanish 10-year debt fell to 383 basis points today from 385 basis points yesterday, when it neared the euro-era record close of 398 basis points reached on Aug. 4.

Zapatero decided not to seek a third term, paving the way for Rubalcaba to lead the party in the election. The vote pitches the opposition’s plans for spending cuts and lower company taxes against Socialist pledges to create new levies on banks and the rich. Rajoy has said he wouldn’t deviate from the deficit target of 4.4 percent of gross domestic product for next year “under any circumstances.”

‘Will Not Cut’

“I repeat for the last time, I will not do what you did, I will not cut the subsidies for unemployment,” he said. Banks won’t get a “single euro” of public money, and pensions won’t be frozen, said Rajoy, who read from his notes for most of the debate.

“Rubalcaba was on the offensive and Rajoy on the defensive,” Antonio Barroso, an analyst at Eurasia Group, which monitors political risk, and a former state pollster, said in a telephone interview in Madrid. “I don’t think this debate is going to change the trend in the vote fundamentally, even though Rubalcaba was better.”

Spaniards don’t rate Rajoy higher than Rubalcaba individually, according to a poll by the state-run Center for Sociological Research on Nov. 4. Rubalcaba inspires “a lot of confidence” in 5.3 percent of those polled, compared with 4.5 percent for Rajoy, while 39.7 percent said Rajoy inspired “no confidence,” compared with 35 percent for Rubalcaba.

Stagnating Economy

While the two candidates offer opposing solutions for Spain’s stagnating economy, both are former deputy premiers and education ministers who have also fought the Basque terror group ETA as heads of the Interior Ministry. They are both older than Zapatero, who came to power aged 43 in 2004. Rubalcaba, a doctor of chemistry, served under former Prime Minister Felipe Gonzalez, and Rajoy, a civil servant, worked for former Prime Minister Jose Maria Aznar.

The PP, which already controls 11 of the 17 regional governments, has promised to cut “superfluous” spending while protecting pensions. It hasn’t given details of how it will get the public deficit, which was 9.3 percent of gross domestic product last year, down to 4.4 percent in 2012 and 3 percent in 2013.

Rajoy’s party, which eliminated a 6.5 percent budget deficit and shepherded Spain into the euro when it was last in power, says it wants to regain the nation’s AAA credit rating and has promised to overhaul the financial system.

Zapatero turned his back on Socialist policies in May 2010 as he slashed wages and froze pensions in an attempt to protect Spain from the Greek crisis. Rubalcaba has tried to woo back the party’s traditional voters with pledges to protect the welfare state and create new levies for the wealthy, while accusing the PP of endangering public services.

To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net; Angeline Benoit in Madrid at abenoit4@bloomberg.net.

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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