Zapatero’s budget proposal could seal his party’s fate

By Antonio Barroso

A surprise proposal from Spanish Prime Minister Jose Luis Rodriguez Zapatero to amend the constitution to ensure that future budgets both satisfy EU mandates and are balanced has increased the opposition’s Popular Party (PP) chances of victory in upcoming elections. There is a chance that a break down in discipline from the Socialist Party (PSOE) could trigger a referendum and jeopardize the approval process, but that looks unlikely. The amendment will, however, further alienate PSOE voters, who are already deeply unhappy with Zapatero’s austerity policies, and looks like sealing its fate in the upcoming Nov. 20 elections.

The PP’s leader Mariano Rajoy quickly stated that his party would support the amendment, but it did not take long before several senior members of the ruling PSOE and other smaller leftist parties expressed their unhappiness. The dissent is driven by the feeling that the amendment’s timing and content represent an intrusion by markets and the European Union (especially Germany) in Spanish politics. Trade unions are also expected to mobilize against the proposal for the same reasons.

The final amendment needs the support of three-fifths of the deputies in each legislative chamber (210 lower house deputies and 156 senators) to be adopted. But it can be sent to a referendum if one-tenth of any of the two chambers (35 deputies or 26 senators) request it. At this stage, the reform has the support of the PSOE and PP, which together have 321 deputies and 246 senators. But there is a chance that some PSOE members of parliament (MPs) may join with smaller parties to force a national referendum. In that case, the amendment would probably fail.

That possibility seems unlikely at this stage. The PSOE’s candidate for prime minister Alfredo Perez Rubalcaba has worked hard to convince the party that the reform is necessary and appears to have secured the support of most socialist MPs. Some MPs (especially the Catalan contingent) might vote against the reform, but it is unlikely that they will join the calls for a referendum from minority parties. A national referendum would likely be portrayed as a plebiscite on Zapatero and his policies, which is the last that the PSOE wants before the elections.

The constitutional amendment could nonetheless be the kiss of death for the PSOE’s chances in the elections, despite earlier hopes of limiting the damage after the introduction of austerity measures. Rubalcaba is focusing his campaign on getting the party "back to the left" by proposing measures such as increasing the wealth tax or imposing a tax on bank profits that resonate with the party rank and file. The constitutional amendment undermines that strategy. Also, Spanish voters tend to punish internally divided parties. Given that a number of senior PSOE figures are openly rejecting the proposal, voters who would otherwise have likely voted for the PSOE are now probably going to consider other parties or abstain altogether. As a result, it looks likely that the economic crisis in Europe will claim another victim.

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