Rajoy Under Pressure as Allies Reassess Support on Lost Vote

  • Opposition parties say he is not fit to lead government accord
  • Rajoy failed to win backing of parliament in confidence vote

Spanish caretaker Prime Minister Mariano Rajoy, who lost a confidence vote in parliament last week, came under renewed pressure as his rivals hardened their opposition and allies reassessed their support.

Opponents ranging from the Socialist party to anti-austerity group Podemos reiterated their refusal to back Rajoy for a second term. His allies in the liberal Ciudadanos party called for a “viable” candidate while saying they will not participate in another failed attempt to form a government behind Rajoy.

“What Spaniards are asking of their political representatives is that we at least talk and propose solutions to the blockade derived from the failure of Mr Rajoy’s investiture,” said Socialist leader Pedro Sanchez in a news conference Monday in Madrid. “We will have to find a solution between all of us.”

While his People’s Party won the most seats in parliament in the June ballot, Rajoy has been unable to get backing to form a government as most groups refuse to deal with him, citing a series of corruption cases involving high profile PP officials. Rajoy has repeatedly denied any wrongdoing. Rivals say he has lost legitimacy to lead a government after the run of political scandals.

Sanchez hardened his opposition to Rajoy after the government on Friday nominated former industry minister Jose Manuel Soria for a role at the World Bank where he would earn about $250,000 a year. Soria quit the Rajoy administration earlier this year after his name appeared in the Panama Papers, an investigation that revealed details about offshore financial accounts. The government chose Soria for the World Bank post after he won a selection process conducted by civil servants, Rajoy said in a televised news conference from Hangzhou, China.

Soria’s appointment may be “hard to understand for a lot of people,” said Alberto Nunez Feijoo, the head of the Galician government who is running for a third term as a PP candidate, at an event in Madrid Monday, El Pais reported.

Sanchez said Soria’s appointment showed why the Socialists can’t support Rajoy in government. He said he would to reach out to other political parties to explore alternatives to a Rajoy-led government without proposing himself to lead it.

Expired Deal

Meanwhile, the pro-market Ciudadanos called on Rajoy to explain the decision and said their agreement to ally with PP and form a government expired after he lost the vote, casting doubt on their future support.

On Sunday, El Mundo newspaper in an editorial said Soria’s nomination was an “unacceptable error” that would compromise the PP’s position in reaching a deal with other parties. El Pais, Spain’s largest newspaper by circulation, urged Rajoy and Sanchez to step aside if they aren’t able to strike an accord that can avert a third election and throw Spain into a deeper crisis.

Still, the PP sought to unify behind Rajoy over the weekend, describing his candidacy as unquestionable after top party officials met on Saturday to discuss the next steps. Rajoy is in China attending the weekend G-20 summit of leaders, where he cited Spain as an example of “healthy growth” due to the structural reforms carried out by his government, Europa Press reported.

Even so, the country’s growth will slow down partly as a consequence of not being able to form a government, Moody’s Investors Service’s said in a report. The growth of the euro-region’s fourth-largest economy will slow to 2 percent in 2017 down from 2.9 percent this year, according to the credit rating company’s estimates.

“The economic and fiscal costs stemming from the ongoing leadership vacuum are rising,” Moody’s analysts Sarah Carlsone and Mickael Gondrand said in report published Monday. “We expect both weakening growth and continued fiscal under-performance heading into 2017.”

Regional Ballots

Spain is struggling to end an eight-month political impasse that started when a first round of elections in December stripped Rajoy of his outright majority in parliament. Political parties have until the end of October to reach a deal before a third ballot is called, but little progress is expected before the regional elections in the Basque Country and Galicia on Sept. 25. The regional votes could serve as a test on what’s to come.

In the Basque region, polls suggest the ruling Basque Nationalist Party may need the support of other groups such as Rajoy’s PP or the Socialists to stay in power. An agreement at the regional level could translate into a nationwide deal that could hand the PP an additional five seats from the Basque nationalists, putting them just one seat short of an outright majority. Meanwhile the ballot in Galicia, Rajoy’s home region, could serve as a show of force for the PP against the Socialists.

If parties fail to reach an agreement by the end of October, the calendar set out by the Spanish electoral vote means a third election would most likely fall on Christmas Day. While a Dec. 25 ballot could help the PP because their voters have historically shown more discipline when it comes to showing up to the polls, the caretaker government said it is willing to explore options to move the election.

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