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Spain’s Grand Compromise Emerging With Just One Sticking Point

  • Socialists, Ciudadanos may be ready to back PP-led government
  • Rajoy’s role would be main hurdle due to graft allegations

The outline of the next Spanish government is starting to take shape even before this Sunday’s election. The question is who’s going to be running it.

After an unprecedented six-month impasse following December’s inconclusive vote, the pressure has increased this time around for the four main parties to find ways to compromise. Both the Socialists and Ciudadanos, who placed second and fourth last time, may be ready to let the incumbent People’s Party govern if that’s what’s needed, according to people familiar with the thinking of both parties’ leaders. Their problem is with caretaker Prime Minister Mariano Rajoy.

As Spain’s political class tries to navigate the shift from an old regime that generated mass unemployment and widespread corruption, the 61-year-old premier is increasingly seen as an obstacle. Officials from Ciudadanos have floated a list of alternative candidates from the PP they could support, while party chief Albert Rivera, 36, and his Socialist counterpart Pedro Sanchez both say that Rajoy’s failure to clear up allegations about personal corruption disqualify him from leading the renewal Spain needs.

“They will have to give up Rajoy,” Fernando Vallespin, a political science professor who ran the state pollster under the Socialists a decade ago, said in a telephone interview. “The pressure on the PP is going to be scary.”

With upcoming court proceedings promising a steady drip of revelations about Rajoy’s generation of PP officials, senior figures within the party are already discussing in private the possibility that the prime minister might decide to step aside, according to two people with knowledge of the conversations who asked not to be named. Rajoy denies any wrongdoing and insists he’ll stay on.

Click here for an account of the party leaders’ televised clash

If the caretaker prime minister decides to hang on and can’t force his opponents to back down, an unprecedented third election could be on the cards.

The Obstacle

“Some say that a pact has to happen this time, but let’s see,” Eduardo Serra, who served in both PP and Socialist governments in the 1980s and 1990s, said in a telephone interview. “A third election is still possible despite the generalized damage it would do to the political class.”

Rajoy has consistently posted the lowest approval ratings of the four main candidates, but he’s shown no intention of quitting. He says 44-year-old Sanchez is to blame for the gridlock and the Socialists should have let him govern after the PP won the most seats in December.

“I’m not the obstacle,” Rajoy said in an interview with Television Espanola Monday. “They are the obstacle.”

Three-Way Consensus

With no clear mechanism for the PP to push him out, Rajoy could cling on, betting that the Socialists will eventually abstain in a confidence vote to let him stay in office. Some Socialist officials argue that option would be less damaging for their party in the long-run than an alliance with anti-establishment Podemos, according to the people close to the party leadership.

Opinion polls suggest Rajoy may add a single seat to the 123 he claimed in December while the Socialist could drop to 81 from 90. Podemos could jump to 85 seats from 71 while Ciudadanos is set to slip to 38 from 40.

The advance of Podemos is the major shift since December and that’s pushing the other three parties together.

Whatever the differences of emphasis between the mainstream parties’ proposals, they are outweighed by their concerns about Podemos’s plans to hike taxes on those earning over 60,000 euros ($68,000), unleash a wave of public investment to put Spaniards back to work and hand Catalans a vote on independence.

‘The Podemos Bubble’

The other three parties share similar views on how to clean up the political system, fix the flaws in the economy and hold the line against Catalan separatists. Indeed, the Socialists and Ciudadanos signed a joint policy program in February as they tried to form a majority after the last election.

Another potential lifeline for Rajoy could come from Socialist party heavyweights concerned about Catalan separatism and Sanchez’s flirtations with Podemos. If the Socialists do as badly a polls project, party insiders may move to oust Sanchez immediately after the vote, according to one person familiar with the thinking of senior Socialists. Such a move may be necessary for a second Rajoy term, given the personal animosity between the two men.

“The smartest option for the Socialist Party would be to back a government of regeneration and reform that in two or three years could eliminate the causes of hopelessness that have appeared in Spain,” PP Deputy General Secretary Javier Maroto said in an interview. “Together we can burst the Podemos bubble.”