Spain’s Establishment Hurt by Graft as Podemos Gathers Force

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Podemos Party Leader Pablo Iglesias
Pablo Iglesias, secretary general of the Podemos party. Photographer: Pau Barrena/Bloomberg

Spanish voters embraced parties seeking to overturn the political establishment in local elections Sunday, signaling time may be up for the two-party system that has dominated the country for a generation.

The anti-austerity party Podemos claimed its biggest victory in Barcelona, where activist Ada Colau seized control of the city hall. Podemos and Ciudadanos, which proposes market-based solutions to Spain’s problems, made advances across the country that will give them a chance to shape policy for the first time.

See: Catalan Independence Bid Rocked by Podemos Victory in Barcelona

“Tomorrow’s Spain doesn’t feel identified with the establishment parties,” Jose Juan Toharia, president of polling firm Metroscopia, said at an event in Madrid Monday.

Prime Minister Mariano Rajoy’s People’s Party suffered its worst result in a municipal election for 24 years, paying the price for four years of austerity and a raft of corruption scandals that left many of its supporters disenchanted. Rajoy has to call a general election by the end of the year.

Spanish stocks slipped 1.3 percent at 9:26 a.m. in Madrid and the yield on the country’s 10-year bonds rose 2 basis points to 1.8 percent.

“Fragmentation is the word for the next few years,” said Antonio Barroso, a London-based analyst at Teneo Intelligence, which advises investors on political risk. “Ciudadanos and Podemos are here to stay.”

In Madrid, the PP edged out Podemos by less than 50,000 votes in the race for city hall. With just 21 representatives in the 57-seat chamber, the PP could still be ousted if Podemos can reach a deal with the Socialists.

PP Strongholds

The PP lost 24 lawmakers in Madrid’s regional assembly, but could retain control of the government if it can secure backing from Ciudadanos, which won 17 seats contesting the election for the first time. Podemos got 27.

“The people of Madrid have shown that they want a PP government,” Cristina Cifuentes, the party’s regional leader, said in a radio interview on Monday.

Rajoy’s party has controlled Madrid’s city hall since 1991, making the national capital one of the PP’s key strongholds. Madrid is also the birthplace of Podemos, which was set up by a group of political scientists from the city’s Complutense University who drew on support from the ‘Indignados’ movement.

“This is a magical night,” Podemos’s leader Pablo Iglesias said. “The end of the two-party system is starting to be written in Spain. The two major parties have had one of the worst results of their history.”

With the new parties still to develop their operations in much of rural Spain, the PP won the most votes overall in the municipal elections. Its 27 percent support down from 38 percent in 2011. The Socialists came second with 25 percent.

Punishment for Rajoy

The PP has claimed at least 34 percent of the votes in all local elections since 1995 so anything below 30 percent would be considered a “severe punishment,” according to Floridablanca, a pro-market research group close to the party. It would be “catastrophic” if the party failed to get the 25 percent it won in 1991, the group said on its website.

The party may lose a second fiefdom in Valencia, where incumbent PP mayor Rita Barbera lost half her representatives. While still the biggest party in the city assembly, the PP was reduced to 10 representatives in the 33-seat chamber.

The party’s no. 2, Maria Dolores de Cospedal, faces a fight to cling on to her position as president of Castilla La Mancha after losing her majority.

Castilla-Leon, the northern region where former Prime Minister Jose Maria Aznar made his name, was one area where polls had forecast that the PP would maintain its majority. The party won 42 representatives in the 84-seat legislature.

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