Inconclusive elections in Spain threaten Europe’s political establishment
A divided election in Spain has left the main parties exploring coalition options. Instability and a return to the polls in the Spring are the most likely outcomes, unless tough compromises can be agreed.
Spain’s general election on Sunday produced an inconclusive result. The ruling conservative Partido Popular (PP) achieved the most seats, but was well short of a majority. Support for insurgent new parties Podemos (“We Can”) and Ciudadanos (“Citizens”) proved crucial, and the electoral calculations are now complex.
In the final phase of the campaign support for Podemos surged, while Ciudadanos faded. Coalition talks could drag on for weeks, and, if indecisive, will lead to fresh elections.
Coalition options
Most of the obvious governing options fall short of the 176 seats required for a majority in the lower house of the Spanish parliament. Prime Minister Mariano Rajoy will be given first chance as the leader of the party with most votes but his choices are limited.
The PP could try to partner the liberal Ciudadanos in a minority administration, which would have to lurch from one parliamentary vote to another. A grand coalition of the PP and second placed Socialist Party (PSOE) is Rajoy’s other possibility, and Ciudadanos leader Albert Rivera has also indicated some interest in this to stymie Podemos, due to the two new parties opposing views on a Catalan independence referendum.
A grand coalition would have a majority, but has been ruled out for the moment by the PSOE. The only leaders’ debate between Rajoy and PSOE leader Pedro Sánchez demonstrated the enmity between the two men. That Spaniards voted so emphatically against the ruling class and business-as-usual politics also makes this an unlikely fudge.
That leaves Spain with a – currently more conceivable – coalition of leftist parties led by the PSOE. Podemos is the wildcard – it considers Greece’s Syriza ideological cousins – in the pact and the most anti-establishment of the parties. Apart from railing against corruption, austerity, and institutional inertia (as Ciudadanos does), Podemos backs a referendum on independence in Catalonia.
A PSOE-Ciudadanos government would require some painful compromise from the former and would still not have a majority. It would, therefore, need support from the nationalist parties. This potentially outsized influence could hasten the Catalan independence campaign.
Policy implications
Any deal involving Podemos or Ciudadanos would likely increase pressure for institutional reform and an anti-corruption drive. This would be a threat to established politicians in the PP and PSOE, and even Catalan nationalist parties, as unsavoury revelations become known. A corruption scandal involving the PP is already moving dangerously close to Rajoy himself.
Ciudadanos would back liberal economic reforms, but these only seem likely if they aligned themselves with a PP-led administration. A PSOE-led government, however, would try and repeal labour market reforms and relax deficit rules. The IBEX-35 stock market in Madrid fell this week as the days of Spain’s austerity agenda appeared numbered.
Insights and outcomes
What does the election result mean for Spain? Any government formed as a result of this election is likely to be fragile and the chances of it serving a full term are slim. There is also the possibility that an agreement may be elusive, meaning a fresh poll.
The result will also make the Catalonia question more acute. Nationalist parties could hold sway in a left of centre coalition, while the general climate of instability presents an opportunity for separatists, who will push a referendum further up the agenda. This all means a period of uncertainty for Spain, and could jeopardise its economic recovery.
For Europe as a whole, the Catalonia issue will induce anxiety while new fiscal policies will apply further pressure on the Germany-led model of austerity and a Eurozone governed by one-size-fits-all rules.
This year it seemed, at times, that Germany was able to impose its will on other EU members, for instance over Greece’s bail out or the refugee crisis. The results of Spain’s elections will challenge this narrative and – as with an increasing number of movements in Europe – demonstrate a growing discontent with the status quo.
