Is there a mañana for Zapatero?

By Antonio Barroso

Spain’s ruling Socialist Party (PSOE) suffered a major defeat in Sunday’s regional and local elections, shifting the political focus firmly to the national parliament. Prime Minister Jose Luis Rodriguez Zapatero remains unlikely to resign, despite calls from the opposition Popular Party (PP). The results do, however, complicate the government’s efforts to introduce further reforms, which however remain likely to be approved.

The PP trounced the PSOE, leading in the overall vote count by more than ten percentage points. The PP retained control of regions and cities, such as Madrid, but also scored wins in former PSOE bastions such as Castile-La Mancha and Extremadura. The vote reflects the historical volatility of leftist support for the PSOE compared to the well understood stability of support for the PP.

The defeat puts the socialists on the defensive, but Zapatero has no intention of either calling an early legislative election or holding a confidence vote for now. The PSOE will stick to its strategy: wait for the economy to recover and give the party enough time to select a new prime ministerial candidate. The government will likely continue to push for reforms such as a review of collective bargaining agreements or the restructuring of the Spanish financial sector in order to avoid an external intervention. But those reforms will be tougher to push through parliament now.

The PSOE will try to rely on its legislative deal with the Nationalist Basque Party (PNV) and the Canary Coalition (CC) to implement economic measures. Although PNV leader Inigo Urkullu recently threatened to withdraw from the agreement if extreme-left wing nationalist party Bildu was not authorized to run in the elections, the PNV is likely to stick to the agreement. Urkullu wants to use the PNV’s leverage at the national level to control the debate about the end of violence in the Basque Country and to ensure that the national government follows through on its promise to grant more policy autonomy to the regions. Urkullu also knows that a PP government with an absolute majority, as some polls currently suggest is a possibility, would be less sensitive to demands from the autonomous regions.

This scenario could change, however, if Zapatero is forced into implementing further austerity measures in order to comply with deficit targets. Additional spending cuts would almost certainly increase social discontent and the nationalist parties could decide to withdraw their support in order to avoid sharing the political penalties implicit in additional austerity.

Antonio Barroso is an analyst with Eurasia Group’s Europe practice.