Rajoy Names Aide’s Brother in Move Signaling Fresh Infighting

Spanish Prime Minister Mariano Rajoy appointed the twin brother of his top economic adviser to the No. 2 slot in the industry ministry, threatening to deepen Cabinet infighting.

Rajoy named Alberto Nadal, previously a leader of the Spanish business lobby, as one of three deputy ministers under Energy and Industry Minister Jose Manuel Soria, who has seen electricity reforms shot down three times in the past year. Nadal, 42, was sworn in today in Madrid.

The appointment raised the ante in the struggle that has seen Budget Minister Cristobal Montoro, charged with meeting European Union deficit demands, wrest control of regional aid from Economy Minister Luis de Guindos. The power system, where Montoro blocked Soria’s reforms, has racked up more than 20 billion euros ($26 billion) of losses guaranteed by the state.

“There will be a fresh round of fighting, that’s what Nadal is there for,” Cesar Molinas, former head of European fixed income at Merrill Lynch now a partner at CRB Inverbio private-equity fund in Madrid, said in a telephone interview. “Soria has protected himself from interference from other ministers like Montoro and gained political weight.”

Nadal’s twin Alvaro is director of the prime minister’s economic-advisory office. Alberto’s wife Eva Valles is Alvaro’s deputy and accompanied him at the swearing-in ceremony.

Nadal’s appointment may mean Soria is aiming to curb profits at Spanish energy utilities Iberdrola SA and Enel SpA’s Endesa SA unit, since in his last job he represented manufacturers hit by rising energy costs, Molinas said.

In remarks at the ceremony today, Nadal cited the need to establish “an appropriate balance between the different elements of the power system.”

Spain’s government-controlled electricity system has raised less revenue from consumers than it pays to power companies for most of the past decade.

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