Spain Budget Becomes Battlefield as Party Graft Haunts Rajoy

  • Spanish Parliament holds first vote on budget bill Thursday
  • Graft claims afflicting PP wound Rajoy’s minority government

A vote on Spain’s budget is becoming a new battleground for the People’s Party of Mariano Rajoy as he bids to prevent a fresh rash of corruption scandals from tainting the authority of his government.

A two-day debate on the budget will end Thursday with a vote on the government’s revenue and expenditure plan for 2017. The session is taking place against the backdrop of the arrest of Ignacio Gonzalez, the former PP head of Madrid’s regional government, and other officials in a widening probe into the finances of its publicly-owned water company.

The latest financial scandal to blight the PP offers a new rallying point for Rajoy’s rivals in parliament as they seek to undermine his ability to lead a minority government and perhaps hasten a fresh round of elections. The rash of negative headlines comes at a sensitive time for Rajoy because he needs support from opposition deputies for legislation that he says he must pass to extend a recovery that will spur the economy to 2.7 percent growth this year.

“The economic and budgetary policy of a government is founded on its credibility and this government comes to this debate today with its credibility at minimum levels,” said Antonio Hernando, the head of Socialist party group in the parliament.

One consequence of the latest scandal is the impact it could have on the PP’s traditional rivals the Socialists.

Party Grandees

Pedro Sanchez is trying to reclaim the leadership of the main opposition Socialists after he was ousted by party grandees anxious over his blockade of Rajoy’s attempts to form a minority government last year after two inconclusive elections. As his campaign for a leadership election on May 21 gets a boost from the fresh graft claims afflicting the PP, the anti-austerity platform Podemos is also pushing for a censure motion against Rajoy.

“The corruption cases are making Sanchez’s candidacy stronger, which in turn could make the governance of the country harder if he eventually wins,” said Narciso Michavila, chairman of pollster GAD3 in a telephone interview. “Support for the PP is now probably below the levels seen in the last elections in June.”

All the same, Rajoy has spent most of his time in office with his party under the cloud of corruption allegations and he still managed to win re-election last year, albeit after losing his majority. While the latest spate of allegations may distract him from his agenda, his core supporters are unlikely to be troubled. 

“It’s really hard to overthrow a government once it’s installed,” said Lluis Orriols, a political scientist at Madrid’s Carlos III University. “There isn’t an alternative majority for a censure motion to succeed.”

Rajoy said last week in response to the Madrid corruption allegations that those responsible would pay for anything they have done wrong and that legal institutions are operating free from any political interference.

To be sure, the budget bill is likely to pass its initial vote because the liberals of Ciudadanos, the Basque PNV party and a party from the Canary Islands have already signaled their willingness to support it. The chances of a censure motion in Rajoy actually going ahead also look slim because the Socialists and Ciudadanos refuse to support it.

“Evidently it isn’t pleasant to negotiate under such circumstances,” said PNV congressman Aitor Esteban, answering a question about whether the scandals involving the PP make the talks harder. Esteban confirmed his party’s support for the budget after the government agreed a smaller contribution from the Basque region to central coffers.

Attack Rajoy

Even so, Podemos and the Socialists are using the budget debate to attack the government over the graft revelations and question the PP’s fitness to govern.

Rajoy is already due to testify as a witness in a court probe into alleged illegal financing of the party involving a former treasurer. Justice Minister Rafael Catala and the Spain’s top prosecutor Jose Maza are also due to testify in parliament into media allegations of politically-inspired efforts to obstruct the arrest of Gonzalez as part of the probe into the alleged fraud at the Madrid regional water company. Catala and Maza deny any wrongdoing.

“The constitutional parties should make credible efforts to clean up the corruption allegations to avoid ending up aiding the spread of leftist populism," said Javier Ruperez, a former Spanish ambassador to the U.S., who was also a PP member of parliament. “Corruption generates a mood that leads voters to tend to link it to the whole system."

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