Sanchez Hammers Rajoy on Graft as Spanish Campaign Ignites

  • Socialist leader says Rajoy should have resigned on corruption
  • Prime Minister Rajoy says `I am a clean, decent politician'

Mariano Rajoy and Pedro Sanchez ahead of a TV debate on Monday.

Photographer: Javier Soriano/AFP/Getty Images

Spanish Prime Minister Mariano Rajoy sustained the most intense attack of his career as opposition leader Pedro Sanchez hammered him over corruption allegations during almost two hours of live debate on prime-time television on Monday night.

Again and again, Sanchez, 43, attacked over budget cuts, the bank bailout and 2013 reports of a secret slush fund for the 60-year-old prime minister and his party colleagues as he sought a knockout blow to reverse a seven-point deficit in the final polls released earlier in the day.

“You have cut everything except corruption,” Sanchez, a Socialist, said. “You should have resigned two years ago.”

“I am a clean, decent politician,” Rajoy replied. “Your rhetoric is mean, deceitful and pathetic.”

Rajoy’s People’s Party is heading for its worst result in more than two decades in Sunday’s election. And yet it could still be enough to win him a second term in what promises to be the most divided parliament since the return to democracy in the 1970s.

“I’m totally sure that the outcome of the election will be a positive one. Spanish society will take into account the situation that we were in four years ago, and where we are now,” Economy Minister Luis de Guindos said in an interview as his boss prepared for the head-to-head. “We’ll have a stable government that will continue with the policies that we have implemented.”

Markets have so far been reassured by the campaign. The extra yield investors demand to hold Spain’s 10-year debt instead of Italy’s fell to 8 basis points on Tuesday from 20 basis points a month ago. The spread over German bunds has narrowed to 111 basis points from 125.

New Forces

The tectonic plates of Spanish politics have been wrenched apart by six years of economic crisis, with two new parties emerging from nowhere to challenge the traditional powers.

While Rajoy’s PP led the Socialists by an average of 27.6 percent to 20.7 percent in the seven polls released Monday, pro-market Ciudadanos was on 19.1 percent and anti-austerity Podemos had 17.3 percent.

The leaders of those new parties were excluded from Monday night’s contest because Rajoy refused to debate them. He said the demands of his job meant he was too busy.

Rajoy pledged to reduce income tax, corporate tax and social security contributions as well as creating another 2 million jobs over the next four-year parliament as he sought to capitalize on his economic record. Spain’s economy is growing at the fastest pace in eight years after emerging from the financial crisis under Rajoy.

Historic Losses

Sanchez responded by grilling the prime minister over the 41 billion-euro ($45 billion) bank bailout and the collapse of Bankia SA under Rodrigo Rato, the PP’s “economic guru.” Rajoy insisted that Spain had never requested a bailout as Sanchez held up newspaper headlines reporting the appeal for aid.

A poll by Antena 3 television station showed 34 percent of respondents thought Sanchez had won the contest compared with 29 percent for Rajoy. Thirty-five percent said neither candidate came out on top.

Rajoy is vulnerable to corruption-related attacks from rivals after a special investigative court found evidence that his party ran a secret slush fund from at least 1990 to 2008. Rajoy has been head of his group since 2004.

The PP is set to win between 114 and 124 seats in the Spanish parliament compared with 186 seats it currently holds, according to polls published by newspapers ABC, El Mundo and news wire Europa Press.

That would be its lowest share in the main national assembly since 1989, according to government data. Should the polls prove accurate, Rajoy will need the support of at least 52 non-PP lawmakers to hold on to his job, giving Ciudadanos the power to decide on his future. The pro-market group is set to claim at least 59 seats, polls show.

The outlook for the Socialists is even worse.

Sanchez’s group is heading for its weakest showing of the democratic era, with polls signaling it will win between 76 and 85 seats. Even so, Sanchez also has a chance of becoming prime minister as Ciudadanos and Podemos have already backed Socialist-led regional governments this year in places like Valencia and Aragon. Podemos is set for 50 to 60 seats.

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