democraciaAbierta

New elections in Spain: towards a “Portuguese pact”?

After six months of a caretaker government, Spain is holding new elections on June, 26. The campaign starts with only one new element at play: the coalition of Podemos with the former Communists. Español Português

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Manuel Nunes Ramires Serrano Francesc Badia i Dalmases
8 June 2016
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Spain's acting Prime Minister Mariano Rajoy looks on as Podemos Party leader Pablo Iglesias walks past during the second of a two-day investiture debate at the Spanish parliament in Madrid, Wednesday, March 2, 2016. AP Photo/Francisco Seco.

Political uncertainty has hovered over Spain since last December inconclusive elections, which delivered a fragmented parliament without a workable majority. The governing Conservative People’s Party (PP) secured 123 seats in Congress out of a total of 350; Ciudadanos (Cs - Liberals), 40; the Spanish Socialist Workers Party (PSOE), 90; Podemos and its regional allies in Catalonia, Valencia, and Galicia (radical left), 69; “others” (including Basque Conservative nationalists and Catalan pro-independence parties), 28 seats. With the main parties unable to reach an agreement – a pact between at least three of them was needed for a stable majority to be established –, the country is heading to the polls for the second time in six months.

During the negotiations period, several formulas were explored: a technocratic government led by independents; a Conservative coalition (PP + Cs) with the abstention of the Socialists, a PP + PSOE  Grosse Koalition; a centre-left coalition (PSOE + Cs) with the abstention of the PP or Podemos (the only formula that was really discussed); or a leftist coalition (PSOE + Podemos) with the abstention of Cs or with the support of the Basque and Catalan nationalists.

The latter formula was reminiscent of what happened in neighbouring Portugal six months ago, where the current Prime Minister, Antonio Costa, managed to put together a leftist coalition that wrestled the power away from the Conservatives who, despite coming first at the elections, fell short of an absolute majority in parliament (107 seats out of 230). Albeit they managed to form a minority government at first, a no-confidence vote made it the shortest-lived government  in Portuguese history (it lasted only 12 days).

This outcome did not go by unnoticed in Spain. The Spanish Socialist party leader, Pedro Sánchez, seized the opportunity and set sail to Lisbon for an interview with Prime Minister Costa. Overnight, the so-called “Portuguese Pact” became a possibility to remove Mariano Rajoy, the PP leader, from office. It turned out to be little more than wishful thinking: basically because the Socialists (90) and the radical left (69) did not add up to a majority, the possibility of a Pact à la portugaise was ruled out. Today, as Spain´s electoral campaign starts again, the possibility of a Portuguese-like leftist coalition is however back on the table.

Adding the numbers

Spain´s political situation shares several features with Portugal´s. The Conservatives in both countries (a coalition in the case of Portugal) came first at the elections, but fell short of an overall majority. Even so, unexpectedly for some and predictably for others, both the PSD/CDS coalition in Portugal and its Spanish counterpart, the PP, failed to capitalize the fact that it won the highest number of votes.

The second most-voted force in both countries was the Socialists. In Portugal, the Partido Socialista (PS)  obtained 32.4% of the vote, while in Spain the PSOE obtained 22%, its worst results in recent history, but still enough to secure its position as the second group in parliament. The PS won 86 seats (out of 230), while the PSOE won only 90 seats (out of 350).

Neither the PS nor the PSOE, of course, could form a government on their own. But in Portugal, a leftist coalition needed only three parties: the Socialist party (86 seats), the radical left (Left Block, 19 seats) and the Communists (PCP, 17 seats) - a clear senior party and two junior ones. By contrast, in Spain, for a leftist coalition to be set up, an alliance between at least five political forces was needed: two senior partners, the Socialist party (90 seats), the radical left (Podemos, 69 seats), plus at least three junior ones: the former Communists (IU, 2 seats), and two Catalan pro-independence nationalist parties (the Conservative Democrats of Catalonia, 8 seats, and the Radical Republican Left of Catalonia, 9 seats), to which the Conservative Basque Nationalist Party (PNV, 6 seats) could be added, if needed be. Reaching an agreement between five different political parties is something of a nightmare already, but if two of them are disputing the hegemony of the Left and two of them are adding a pro-independence agenda to the equation, the mission becomes impossible. 

Overoptimism

Although Portugal avoided the political deadlock that Spain has experienced since December, the scenario there is far from being idyllic. No formal global pact is in place in Lisbon, and there is no coalition between leftist forces to speak of. In its stead, a number of bilateral agreements have been reached between the PS and its junior partners - which have not been invited to enter the cabinet. This means a fragile alliance, mainly due to very substantial programmatic differences between the Socialists and the Communists, who have been demanding - rather unrealistically - to leave the Euro and NATO, and between the Socialists and the Left Block, who are defending a rather quixotic restructuring of the country’s debt.  

The Communists will keep on supporting Costa’s government as long as they can obtain concrete measures which they think will strengthen their electoral base and their ties with the trade unions. The Left Block’s objectives are somewhat more diffuse, but it needs to come up to its constituency with some pragmatic results and show that it is indeed the new left, which is able to make the Socialists accountable for their social policies and transparency commitments.

In fact, the Portuguese coalition swings from moderation to radicalism. Divergences and contradictions exist in almost all issues, including even human rights. Angola’s human rights record is a particularly telling issue, as the Communists joined the Conservatives in blocking a statement put forward by the Left Block to condemn human rights violations in the former Portuguese colony.

Despite successfully uniting the Left for the first time in 40 years, and after six months in office, Prime Minister Costa is facing permanent instability. An agreement between him and his partners was reached on an anti-austerity program, but results remain unsatisfactory. On the one hand, increasing the minimum wage, pledging to reverse pension cuts, and freezing cutbacks in public services are certainly victories against austerity. On the other, the cycle of austerity is far from over. And divergence remains regarding everything else. Although the path towards the restoration of civil rights and social services may have started, the fragile economic situation, and threats from Brussels concerning the rising deficit, may force the government to implement fiscal cuts which, added to an unemployment rate which stubbornly stays above 10%, could put an end to this government. Costa has been particularly good at negotiating parliamentary support, but surprisingly overoptimistic regarding the economic outcome of his policies.

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Portuguese Prime Minister, Antonio Costa, center right, chats with Finance Minister Mario Centeno. AP Photo/Armando Franca

An (im) plausible formula?

The possibility of replicating a “Portuguese pact” in Spain after the elections in June is certainly a long shot. In Spain, Podemos and the Socialists are waging a battle to become the primary alternative to the Conservatives. Podemos might win the contest, especially after its smart move to agree on an electoral coalition with the Spanish former Communists (United Left - IU), which has been branded with the appealing name of Unidos Podemos (United We Can - UP). The coalition is expected to add IU’s 923.000 votes to Podemos’s 5.19 million votes, thus reaching a potential total of 6.11 million votes, well above the 5.53 million obtained by the PSOE in December.

According to all the available opinion polls at the time of writing, the calculation is right and most probably UP will end up ahead of the PSOE. But far from being good news for the prospect of a left-wing coalition, such a scenario actually increases the difficulties for a negotiation: the PSOE will resist the loss of its historic position as the hegemonic centre-left party in Spain, and will hardly accept becoming Podemos’s sidekick. Only in the unlikely event that the Socialists end up ahead of UP, and that the two parties could add up to an overall majority in Congress without needing support from any of the Catalan pro-independence parties, would a left-wing coalition be possible.

Current opinion polls confirm that Unidos Podemos will accomplish its strategic goal and achieve the sorpasso (overtaking) of the PSOE, but will definitely fall short of an overall majority on its own. In such a scenario, it is hard to imagine the PSOE playing a junior party role in a coalition with them, for at least three major reasons: ideology, the economy, and the country’s territorial model.

As governing means, inevitably, an exercise of realism and moderation, an Executive led by UP would probably shift to the centre and occupy the centrality of the Left, which is considered the Socialists’ “natural” political space. The social-democratic language recently being used by the leaders of Podemos stems from the fact, so their argument goes, that the Socialists have abandoned these social-democratic policies by conceding defeat before the neoliberal approach of the austerity policies dictated as a way out of the crisis by both the Spanish economic establishment and Brussels. The new left, they argue, is truly, (almost virginally, we could say) social-democratic, as opposed to the old PSOE social-democrats, who have so obviously betrayed their values in the recent past. Losing the battle of the credibility of their social-democratic credentials would be lethal to the PSOE’s aim to keep the hegemony of the centre-left in Spain.   

Another key factor is the economy. Undoubtedly, UP and PSOE could agree on the necessity of increased investment in education, healthcare, social protection and technological innovation. But this inevitably means an increase in public expenditure, and, according to EU rules, the deficit limit stands at 3%. UP calculations are based on extra incomes coming from the “fight against fiscal fraud” and tax increases for the top earners. They predict that the public deficit would increase to 4.3% in 2016 if, as they propose, public expenditure increases by 60.000 million  between now and 2019, and it would come down to 3% only by the end of 2019. Now, as we have seen in the case of Greece, renegotiating the deficit limits with the EU authorities requires not only very sound arguments backed by a very strong political majority, but the best of British luck.

UP assumes that the expansive effects of its policies (disregarding deficit control as a priority for the sake of improved social policies and a surge in public investment) would imply an annual 3.5% GDP growth until 2019 (the current 2.5% plus 1% , thanks to the expansive effects of its policies).

But to assume that Spain will be growing at a rate of 3.5% when the IMF’s calculations forecast a 2.6% growth in 2016, and 2.3% in 2017 (the European Commission predicts, more optimistically, 2.6% in 2016 and 2.5% in 2017, as so does the OECD) may be wishful thinking. Particularly if we keep in mind that the European Commission is currently asking Spain to reduce its public deficit below 3% of its GDP through new budget cuts and extra adjustments totalling 8.000 million € over the next couple of years. How would UP combine the 8 billion budget cuts imposed by the EU with a surge of 60 billion in public expenditure does not have a straight-away answer. Responsible Socialists would have a fundamental difficulty in buying anything like that.

If an agreement between UP and PSOE is difficult enough regarding the economic program, the situation gets even worse when it comes to how to deal with the current territorial tensions, particularly with a Catalan government on its way to a foolish express independence. Podemos’s decision to make a non-binding independence referendum in Catalonia a sine qua non condition to agree on a coalition with the Socialists was one of the major obstacles in the past fruitless negotiations, and sharply decreases the chances of reaching any sort of “Portuguese pact” in a new negotiating round after June, 26. The PSOE favours an amendment of the Spanish Constitution in a federal sense, and sees as suicidal the possibility of a breakdown of Spain through conceding secession referenda (euphemistically called “right to decide”) to any autonomous community that demands it, as proposed in Podemos’s program.

All in all, losing the centrality of the centre-left space, confronting Brussels with a deficit surge, and conceding a potential breakdown of the Spanish state may be a too heavy price to pay for the PSOE. It may well be the case that a “Portuguese pact” will only be possible if the junior party of the coalition is UP, orthodox economic policies are agreed on, and no pro-independence votes are needed to form the majority - a very unlikely scenario as of today. The preasure to avoid a third election, though, could make strange bedfellows, including an arrangement à la portugaise.

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