Will Greek anti-austerity affect Spain’s many elections in 2015?

Will Greek anti-austerity affect Spain’s many elections in 2015?

Spain faces a year fraught with political uncertainty and potential institutional upheaval. A spate of elections are scheduled to take place throughout the year and will test the country’s ability to maintain institutional stability to underpin incipient economic growth.

Impoverished living standards, the exposure of countless corruption cases, and the prospects of a jobless recovery have embittered political conflict in Spain, resulting in rising popular support for far-left political preferences that could eventually derail policy cohesiveness and jeopardize gains from recent reform.

A choice between austerity and rupture

In 2015, Spain is looking to hold two major nationwide elections: the local elections in May (which also include elections in 13 out 17 regions) and the general parliament elections in November.

Both will be key events to ascertain whether the reform agenda of the ruling Popular Party (PP; Spain’s traditional conservative party) will prevail into 2016 or the emerging new leftist party Podemos (“We can”) will reach an electoral tipping point to form an successful coalition to overturn current policies and potentially seek institutional rupture.

PP obtained a landslide victory in 2011, sweeping the incumbent Spanish Socialist Workers’ Party (PSOE), which was ousted because of a popular accusation of poor economic management following the global financial crisis of 2008-09. PP’s winning platform in 2011 rested on economic and political reform but also embracing austerity.

A great number of regulatory overhauls and spending cuts have since been implemented. Nevertheless, while most macroeconomic conditions have improved, employment remains at unsettling levels, with the unemployment rate still hovering around 25%.

As Spaniards have not yet witnessed any social gain from economic reform, mounting anger has prompted many to reject PP and look elsewhere for political options offering a drastic policy reversal and deep social and political transformations.

The recent and steadfast rise of Podemos, a new-born party founded by left-minded political scientists in 2014, has been the main response to this frustration. Podemos’ platform primarily seeks to scrap austerity, tighten progressive taxes, boost welfare benefits, and clean up politics from corruption. The latter has been the most successful to rally popular support, especially as it particularly targets traditional parties, such as PP and PSOE, many members of which are under investigation.

The split of the left and the Catalan maverick

While the electoral horizon in 2015 seemed to be a matter of two polls a few months ago, Spain will actually go through the ordeal of four elections over the next 12 months: the leaders of the regional governments of Catalonia and Andalusia have called for early elections in September and March, respectively. These two new elections complicate national political outcomes.

Catalan President Artur Mas i Gavarró, who recently challenged Spanish laws with his a public consultation on independence in November 2014, seeks another mandate on expectedly more fragile terms as he requires the support of more radical pro-independence political forces.

However, popular exhaustion on the question of independence and the emergence of Podemos has severely undermined the chances for Mas-led coalition to win since Catalans now look for the public debate to shift back to more pressing left-vs-right issues instead of the perennial conundrum of independence.

At any rate, the result of Catalan elections is likely to be a disjointed regional parliament with unworkable majorities, adding further uncertainty into Spain’s broader picture, especially with regards to economic reform and fiscal discipline: Catalonia is the country’s largest regional economy and negotiations between Madrid and Barcelona are critical to settle a sustainable Spain’s budgetary arrangement balancing national fiscal goals and policy decentralisation.

Meanwhile in Andalusia, Susana Díaz Pacheco also looks to extend her term but with her mind placed on national politics. Andalusia is Spain’s most populated region and PSOE’s last electoral stronghold.

Díaz wants to use her leverage in the Southern region to contest her party’s current leader Pedro Sánchez in Madrid. Sánchez took over the reins of the party in July, pledging to stem its gradual decline but he is internally viewed as insufficiently forceful and creative to revive PSOE’s expectations (PSOE trails behind rising Podemos and falling PP according to most polls).

A reassuring victory for Díaz in March could work out as her definitive springboard to the national arena and an opportunity for the party to win back voters that have been lost to Podemos. If PSOE regains some strength at the expenses of Podemos, the left may face the general elections with a fragmented electoral support, benefiting PP’s prospects to obtain a simple majority of seats in parliament.

However, if Sanchez’s replacement becomes a turbid party infighting to the eyes of voters, PSOE’s reputation would be further stained, accelerating its gradual downfall and precipitating the coalescence of left voters around Podemos.

Greek shadow looms large

Last and not least in order of importance are last Sunday’s elections in Greece. Even though it occurred outside Spain’s boundaries, the election’s outcome will play a major role in shaping Spanish voting preferences in 2015.

Winning party Syriza will form government and is expected to implement an anti-austerity and populist agenda which largely resembles Podemos’ platform for Spain. In fact, both parties have supported each other publicly and present similarities in their goals and discourse, thereby benefiting from each other’s popular success among disappointing voters in Europe.

Syriza’s performance in office this year will undoubtedly be under great scrutiny. Inability to deliver electoral promises or to alleviate the strained finances of household effectively in the short term could damage its reputation and, by extension, that of Podemos in Spain. A disastrous economic policy, combined with massive capital flight, unprecedented tax repression, and public-sector financial collapse, would spark fear among Spanish voters, who may walk away from Syriza’s Spanish avatar.

Eventually domestic events in Spain will also determine the extent to which Podemos can attain an ample electoral majority to win the general elections at the end of the year.

Podemos has scheduled its first major rally for January 31 in Madrid. A successful demonstration, which could mobilise hundreds of thousands of Spaniards coming to the capital from around the country, will boost the party’s image as the real alternative to the ruling government, demoting PSOE to a secondary role with the risk of sharing the same fate of Greece’s PASOK.

Podemos’ electoral performance in the local elections in May will also weigh on its momentum, not least because the seizure of power in some regions or major cities would offer the first real test of its ability to govern responsibly.

The Spanish government, meanwhile, will cling to the hopes of an eventual economic recovery following years of painful reform and international negotiations. Certainly, recovery may gain speed throughout 2015 but it is far from being socially inclusive at present.

Senior government officials have already suggested that the general elections may be delayed from November 2015 to February 2016, the latest possible date according to legal requirements, giving three extra months to the government in the bumpy race to convince Spanish voters to choose a PP’s disappointing evolution instead Podemos’ unknown revolution.

Categories: Europe, Politics

About Author

Antonio Timoner

Antonio works as a senior economist at IHS Banking Risk Service in London. Prior to joining IHS, Antonio worked as an associate analyst at Taylor-DeJongh, an investment banking firm based in Washington ,DC, and as senior engineer at ACS, an infrastructure group in Spain. Antonio holds an MA in International Economics from the Paul H. Nitze School of Advanced International Studies and a BSc in Civil Engineering from the Technical University of Catalonia in Barcelona.