• Podemos, Ciudadanos leaders hold meetings with Rajoy
  • King Felipe may play role as mediator if impasse continues

Spain’s political impasse deepened as the Socialists said they won’t consider forging a partnership with supporters of a Catalan independence vote in a move that will complicate creating a ruling coalition.

The anti-austerity party Podemos, a possible governing ally that finished third in the election this month after the People’s Party and the Socialists, has indicated it would seek a referendum on Catalonia’s separation from Spain.

“The country we want to rule isn’t up for discussion,” Pedro Sanchez, the head of the Socialists, said in a meeting with the party’s regional heavyweights on Monday in Madrid. Territorial integrity is one of the party’s convictions, Sanchez said.

Spain is in the midst of multi-party negotiations to form a government after acting Prime Minister Mariano Rajoy’s People’s Party lost about a third of its parliamentary seats in the Dec. 20 elections. Socialist lawmakers are planning to vote against Rajoy, prompting a process that could take months to resolve, including the possibility of new elections.

Andalusia, Castilla-La Mancha and Extremadura, which are regions ruled by the Socialist party, oppose a Catalan referendum, which could complicate coalition building. The three areas are beneficiaries from the regional distribution of taxes in Spain, while Catalonia is a net contributor.

Podemos leader Pablo Iglesias and Ciudadanos’s head Albert Rivera held separate meetings Monday with Rajoy, who is trying to muster support for a second term.

“We can work to keep our country united,” Iglesias said in a press conference after the meeting in the premier’s palace.

The PP remains the biggest group in parliament, but the most fragmented election result in Spanish history means the Socialists can effectively block Rajoy’s investiture if they vote against him. Sanchez said he wants to see a Socialist named speaker of the new parliament.

“The candidacy of Mariano Rajoy is ongoing and moving ahead,” Fernando Martinez-Maillo, a PP deputy secretary general, said in a press conference Monday, adding that the party could still reach an agreement with the Socialists.

The Socialist leader, who said corruption allegations meant the prime minister was unfit to govern during the campaign, said last week that Rajoy had earned the first chance to form a government. Rajoy denies any wrongdoing.

Ciudadanos’s Rivera proposed last week a three-way pact with the PP and the Socialists to confront the threat of Catalan separatism.

“We won’t support a government that seeks to break apart Spain,” Rivera said on Monday after meeting with Rajoy.

As the post-election impasse stretches on, King Felipe may have an important role to play as a mediator. Under normal circumstances the King’s responsibility for nominating a prime minister after the election is a formality. If the political leaders are unable to broker a resolution, his role could become crucial.

“It’s more necessary than ever to recognize all that unites us,” Felipe said on a Christmas Eve speech from The Royal Palace in downtown Madrid. The election results “bring a form of doing politics based on the dialogue, agreements and compromises.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE