Spanish Elections 2011: Changing Of The Guard?

Spain has often been viewed as an ideal country to start a new life by many Latin Americans and North Africans. People usually felt they would have a second chance at building a family in an environment of prosperity and jobs, unlike their home country. Prospects for the future seem bleak at best as the economic crisis brings record levels of unemployment, especially among the youth population. The following article is brought to you by Pablo Simon Cosano, a young academic at Universitat Pompeu Fabra, in Barcelona, Spain and a veteran blogger. We are appreciative of his contribution. 

In the 2008 elections, the Spanish Socialist Workers’ Party (PSOE), led by presidential candidate Jose Luis Rodriguez Zapatero claimed victory with 43.9% of the popular vote, increasing parliamentary majority. Even though the People’s Party (PP), the centre-right opposition made some headway narrowing the gap, the PSOE still managed to take 4 points from them. Zapatero enjoyed the full support and confidence of his party to begin a new mandate, while the PP struggled with internal bickering, threatening the position of their leader, Mariano Rajoy. Following three years of conflict, the stage is now set for a completely different play. The government has pushed for early elections on November 20, Zapatero is not running for re-election and Mariano Rajoy is not only the undisputed leader of his party but, polls show a near sweep toward an absolute majority come next elections. What has actually happened to cause the most dramatic and unparalleled political turnaround in Spain since the transition to democracy?

During the 2008 elections, the world’s economy was entering a period of recession causing a dramatic domino-effect, sending the Lehman Brothers into the annals of history and the US economy into a vacuum. All of this had little effect on Spain at the time and the country barely registered a minimal tremor. Even though the PP tried to highlight this concern, the aftershock of the crisis had not yet shown its face on the Iberian Peninsula and the issues pertaining to the previous presidential mandate primarily regarding terrorism and territorial quarrels were the main topics. During Zapatero’s second term, the government’s reaction to the crisis was to deny its very existence. Nevertheless, the Spanish economy teetered on weak foundations; high private sector debt (both enterprises and families) and a speculative real estate bubble were the principal factors fueling the engine of Spanish growth. In 2009, there was a sudden dramatic slow-down bursting that imaginary protective bubble as a direct consequence of growing international credit limitations. Spain, with a labour market dependant on growth, adjusted through wide-scale downsizing. In less than one year, the unemployment rate catapulted from 8% to 14%. The economic surplus the government had accumulated during its previous mandate now dipped into the red as a sharp decline took the reins of economic activity.

Left: Zapatero, Right: Rajoy

When faced with these circumstances, President Zapatero publicly acknowledged his misjudgement of the crisis and its effects, committing himself to safeguard workers’ rights and entitlements. His government led efforts to undertake expansive (Keynesian) policies stimulating demand through his well-known Plan E. As a result of this measure, the government transferred resources to municipalities to provide stimulus strengthening public sectors and creating new jobs. Although these measures had been widely criticized, the fact is that it truly made a difference combined with other measures such as subsidizing the purchase of brand new vehicles. Altogether, including the rise in public deficit, the drop in unemployment was somewhat neutralized. In terms of the financial sector, government funds provided liquidity, hoping to trigger credit availability. Zapatero further pushed his legislative agenda on other fronts, such as amending the laws concerning abortion, birth control pills, both of these met with adamant opposition from extremists. The PSOE lost the Galician regional government and the European elections but won in the Basque Country due to an unspoken agreement between the PSOE and PP to dethrone the PNV, a moderate nationalist party, from the seat of regional government. The government was exhibiting some weakness and polls began to favour the PP by a margin of 3 points.

Nevertheless, there is a clear breaking point, showing a shift in the status quo of the legislature: May 2010. Greece is nearing the brink and there is increasing pressure from investors regarding European countries’ sovereign debts. The risk premium shot up and Spain is getting closer to IMF and EU intervention, just as has already occurred in Greece and Ireland and Portugal may follow suit. At this point, whether he wanted to or not, Zapatero shifts gear, this time announcing cutbacks on public servant wages and contributions to retirees’ pensions, freezing public investments, all approved in very tight votes in the legislature. Now the risk has been pushed away (only momentarily) from Spain but something is now damaged beyond repair. On one hand, the traditional support base for the PSOE has turned its backs on the party and there is a void opening up 10 points for grabs. On the other, Zapatero decides to undergo a political make-over and declares he will lead a process of reforms and any other measure necessary to get Spain out of the crisis: “at any cost.” The path of austerity begins at this moment. From then to the following summer, his government rushes to implement each and every reform. One of the laws increases the retirement age, another, impacts the labour market resulting in a (not entirely successful) general strike. Last but not least, Cajas de Ahorro, small autonomous public banks, are obliged to merge and readapt.

The PSOE suffered a critical blow to their support and the trend favours the PP, which has built a lead averaging almost 15 points in all polls. The CiU was able to regain the Catalan government in 2010 after a controversial sentence handed down by the Constitutional Tribunal, cutting back Catalonia’s capabilities of self-governance. This was just a sign of the things to come. Following several months of speculation, Zapatero decided not to run for re-election and announced this prior to the municipal and autonomous community elections on May 22. This in turn allowed the PP to power its way throughout the territories, winning in every region in Spain, marking an unprecedented victory. The voters had decided to punish the PSOE for its actions. Furthermore, this also coincided with the birth of the indignados or “15-m” as an assembly-based movement, plural and diverse, taking to the streets to reclaim their rights, seeking a change in the economic system and revamping the political system. They are protesting specifically against politicians’ privileges, corruption and the excessive power of banks and markets. While this social explosion spread to the rest of the world, the PSOE decided to regroup and name their Vice-President Rubalcaba as their presidential candidate. Shortly after this, Zapatero announced that he would be calling early elections to be held on November 20, 2011.

The indignados taking to the streets

During the summer of 2011, there is no sign of a truce as the Spanish prime risk skyrocketed once again, this time due to overwhelming concern tied to the growing lack of confidence in the Euro zone, Greece and Italy. Zapatero proposed extreme constitutional reforms with the PP at his side, without engaging the population through a referendum and renewed military agreements with the USA, causing a further rift with the left-wing of his PSOE. The new socialist candidate now has his hands full trying to distance himself from the outgoing president and his government, Zapatero has disappeared during the campaign, and Mariano Rajoy’s lead seems to grow and consolidate. Today, Spain’s unemployment rate sits near 22%, the same rate as Madagascar. In such a bleak world, it seems that the only good news has come from ETA, the armed separatist Basque wing, when it declared a ceasefire. This will be a key item in the next president’s agenda.

This background sheds some light on the situation that most Spaniards experience today. The country finds itself in a weak economic situation with a clear alternation in power in sight. This electoral campaign sets the stage for Rubalcaba to deny everything while promising everything that he will not do, as Rajoy promises he will not do a single thing that everyone thinks he will do (cut public spending and social services). The track is set for the People’s Party’s victory lap in perhaps the easiest electoral contest due to major political miscalculations by the outgoing government and the unforgiving wrath of this global economic crisis. The indignados sitting in their plazas demand an overhaul of the system. The smaller parties aspire to significant gains in representation although some know that this will be overshadowed by a People’s Party crushing victory. The Spanish people will make their way to the polling stations on November 20 - the day that marks the passing of General Francisco Franco – feeling pessimistic about their reality and convinced that things will not get much better. There is no light to be seen at the end of this tunnel.

For other articles written by Pablo Simon Cosano, please visit his blog at La Kancilleria. We thank him again for his contribution and putting his country's situation in perspective for us.


Image references:
Spanish flag: dsc00979.jpg by World Elections
Zapatero and Rajoy: zapatero-rajoy.jpg by Politics in Spain
Indignados: revolucion_de_los_indignados.jpeg by Better Nation