Spanish Elections: Punishment for Rajoy

The mood ahead of the elections was morose, in some quarters tending towards the rebellious. It shows in the results. The Spanish political system, for years dominated by two political parties, is now in splinters. Since 1996 the country has had alternating governments by conservative PP (Partido Popular) and socialist PSOE (Partido Socialista Obrero Español), most recently four years in majority led by PP's Mariano Rajoy, following an eight year stint (one period in majority, one in minority) by the socialist party under José Luis Zapatero, and eight years before that under PP with José Maria Aznar.

The latest poll by Sigma Dos for El Mundo (December 14) indicated only 27% for PP (they got 28%, a severe loss since 2011 when they won 45% and an absolute majority of seats). The socialist PSOE garnered 22%, also a significant loss, down from 29% in 2011. The real winners were the two new challenger parties offering themselves as alternatives to the two old majors: Podemos (“We can”, socialist-left) now nearly as big as the old PSOE, and Ciudadanos ("Citizens") eating into the support for the old PP. Both will now be key partners in the coalition talks ahead.


Rajoy’s tumble from an absolute majority to less than a third reflects the trouble he has had, though many would say he put himself into it. On the one hand, his great victory in November 2011 was more due to the severity of the economic crisis and the apparent inability of the Socialists to do anything about it than to any overwhelming charm or political skill on the part of the winner. On the other hand, the challenge of the Catalonian independence movement came like a hurricane with little warning, along with the Spanish banking crisis in 2012.


The banking crisis followed on the collapse of the real estate market, beginning in 2008, which then PM Zapatero refused to call a crisis. That opened the way for PP to demand a true austerity program, including reform of the labor market, which ultimately led to PP’s victory in 2011. The banking crisis started as a bad loans crisis as in many other countries, but the tight relations between the banking and political sectors in Spain made everything worse. It tied into the extraordinary public debt level in the country that qualified it for inclusion in the PIGS acronym.


One of the first things Rajoy actually pushed for after coming to power was the public debt issue. In particular the debt of the autonomous regions had been ballooning without any clear regime to contain it, partly due to the absence of any constitutional division of powers in this regard. Economics Minister Montoro put his hand to institutionalizing an improvised, concerted co-management of the regional debt and gradually brought it under control. Hence Rajoy felt he had it in line, and was clearly annoyed when European and US players began demanding more external aid for Spain. In August 2012 the Wall Street Journal made waves by noting that American investors and the New York stock exchange were getting nervous because Rajoy refused to accept an EU bailout for Spain. He preferred to maintain the austerity programs already in place. Ultimately a bailout came forth, but Rajoy insisted it was not a bailout like those for Greece, Portugal and Ireland, since it was merely for the private banking sector.


The labor market reform was perhaps less noted among Rajoy’s controversies, probably because even the socialists knew that something had to be done to rein in the over-generous severance pay system, though they hated it. PP’s labor reform has led to a system where most jobs are temporary, which is the main complaint against it. Other industrialized countries’ labor markets function well with this kind of system. Permanent employment is a thing of the past. As with the debt problem, the labor market is among Rajoy’s successes, in my view.


On the downside of the austerity success, Rajoy has been blamed for the fact that 110,000 patients have died while waiting for an operation in his term of office, many more than in the preceding period. A tough charge, not lightly dismissed, but at the same time a tragic systemic effect, not a personal decision.


Rajoy has also been severely criticized for his handling of the Catalonian challenge. Especially his anti-catalonian rhetoric has been questioned. Opposition party leader Pedro Sanchez of PSOE charges Catalonian president Artur Más as the one responsible for this fracas (as he certainly is), while he simultaneously points to Rajoy as the one “guilty”, that is, of being too passive in the case. But when he has to tell the truth, Sanchez is as critical of the Catalonian independence project as nearly everyone else in the Madrid political universe. That is as it should be. My view is that as compared to the rabid antics of Artur Más, Rajoy is an example of patience and reasonableness. (See my several blogs on the Catalonian independence demands since 2011.)


Finally, there is the revelation by PP party treasurer Bárcenas of the secret funds in Swiss bank accounts he had been managing for his party, sensationally published by the two leading newspapers El Mundo and El Pais in January 2013. Secret payments had been made for decades as (extra) PP salaries and to cover expenses for party officials, including Rajoy. Resisting insistent calls for his demission, the Prime Minister explained to the Parliament that he himself had done nothing illegal and that without knowing what was going on he had trusted Bárcenas - as he would have trusted anyone he did not have reason to disbelieve or suspect of wrongdoing. Clearly this implied declaration of distance from the secret funding is less than convincing, even more so considering that Rajoy is famous for his micromanagement of both the government and his party. (See my blog in the summer of 2013, comparing Rajoy and Helmuth Kohl.)

A more straightforward political failure is the disastrous PP loss in the Andalucian elections spring 2015 in which Rajoy and the PP national leadership involved themselves deeply, in support of a weak candidate. This was a case of severe prestige loss more than anything. It was the worst result for PP in Andalucia in 25 years, down ⅓, after recently gaining the prize of becoming the biggest party in the 2012 elections. Andalucia, the most populous region in Spain, is a socialist stronghold and losing in 2015 the top position gained in 2012 was a major setback.

Ultimately, despite the loss for Rajoy, he will remain a leading player in the post-election game of constructing a workable government. It will not be easy. The outcome is deeply fragmented.