Socialist Chief Asks Forces of Change to Oust Rajoy in Spain

  • Parliament must choose a premier by May 2 to avoid new ballot
  • Socialist leader takes first crack at winning confidence vote

Socialist leader Pedro Sanchez asked lawmakers in Madrid to join a broad alliance to oust Acting Prime Minister Mariano Rajoy and take Spain forward.

Sanchez said all sides would need to accept compromises since no single ideological group can form a majority -- a nod to Podemos’s call for a progressive coalition -- as the anti-austerity group’s leader Pablo Iglesias shook his head on the benches opposite. Letting Rajoy stay in power would be the worst possible outcome, Sanchez said. His opponent sat chewing alongside his party lieutenants.

“It’s the forces of change that really won a broad majority,” Sanchez said. “There are only two alternatives: we keep Mariano Rajoy in power, or we move forward and get going.”

The chamber will vote Wednesday on Sanchez’s pitch, starting the countdown toward a repeat election. The legislature has two months to find a prime minister before a new ballot is triggered. With just 90 lawmakers in the 350-seat chamber, and another 40 from his pro-market ally Ciudadanos, he’s almost certain to be rejected at the first try.

Spanish bonds have underperformed Italy’s over the past year, even though Spain’s economy has been growing more than three times as fast. Spain’s 10-year debt yields 10 basis points more than Italy’s. In April last year it was yielding 8 basis points less.

Watching the Polls

Sanchez is betting his attempts to find a way out of the impasse will win him credit with voters and put pressure on Rajoy’s People’s Party and Podemos to drop their opposition.

“He is focusing on the idea that all the positive points of his program can be implemented from the first day,” said Pablo Simon, a political-science professor at Carlos III University in Madrid. “He is trying to pin the blame on those blocking the formation of the government for acting against the public interest.”

Spanish politicians are struggling to forge a governing majority after the country’s two-party system was swept away by the political fallout from the economic crisis.

King Felipe nominated Sanchez to try to form a government last month after Rajoy refused to face a vote, saying he lacked the necessary support in parliament.

“I understood the king’s invitation as a duty I couldn’t sidestep,” said Sanchez. “The most-voted party declined the responsibility.”

It’s a similar story across the rest of the continent as old certainties are questioned and new challenges strain the bonds holding the European Union together. The U.K. is preparing to vote on whether to leave the 28-nation bloc while Chancellor Angela Merkel faces the biggest challenge of her career as her allies recoil at the flood of refugees into Germany. Ireland is facing its own political stalemate after an election last week.

If Spain’s leaders fail to form a government, the election re-run would likely be held on June 26, three days after the so-called Brexit referendum.

Sanchez and Ciudadanos leader Albert Rivera signed an agreement last week that could form the basis of a governing coalition, should they manage to gain the support of other political forces. In addition to Podemos, the Socialists are also seeking support from the Basque Nationalist Party, the United Left and a party representing the Canary Islands, Antonio Hernando, who leads the Socialists’ parliamentary group, said last week.

His rivals -- and potential allies -- will explain their positions from 9 a.m. Wednesday before lawmakers vote later that day. The candidate needs the support of a majority to take office at the first attempt. If, as expected, he falls short, he’ll get a second shot 48 hours later when a plurality will suffice.

Policy Plans

Sanchez said he wanted to help the economic recovery reach more Spaniards, re-establishing welfare rights and collective-bargaining powers that Rajoy eliminated during the crisis. He aims to reduce the number of work contracts, clamp down on the use of temporary contracts and increase the cost of laying off workers.

He said a Socialist-led government would renegotiate Spain’s deficit reduction pace with officials in Brussels, targeting a shortfall of 1 percent of gross domestic product in 2019. To achieve that, he said he’d broaden the tax base as well as promoting equal pay, increasing the welfare entitlements of parents.

“Why don’t we put all this into effect next week?” he said.

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