Podemos Raises Spanish Socialists’ Hopes of Pact to Oust Rajoy

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Socialist leader Pedro Sanchez’s plan for a progressive alliance to oust Mariano Rajoy in Spain is gaining credibility as the anti-austerity group Podemos tempers its demands.

Podemos is softening its call for Catalans to be allowed a vote on independence as the new parliament prepares to sit for the first time on Wednesday. Sanchez, meanwhile, is emphasizing Podemos-friendly policies such as a minimum income, a higher minimum wage, and rolling back Rajoy’s labor-market reforms.

“Our priority is to stop the cuts and that means above all that the People’s Party can’t continue in power,” Jorge Moruno, the head of political messaging at Podemos, said in an interview. OnCatalonia, “the only thing we are putting on the table is the possibility of seeking democratic solutions and dialogue.”

Spanish politicians are trying to resolve an unprecedented impasse in the national parliament as Catalonia, the country’s largest economic region, agitates for a breakaway and the economic recovery shows signs of losing momentum.

The spread between Spain’s 10-year bonds and similarly dated German paper widened for the fourth time in five sessions on Tuesday, rising to 130 basis points compared with 115 points at the beginning of last week.

Blocking Rajoy

Sanchez, 43, has insisted that his group will vote against Rajoy’s bid for a second term. If he makes good on that pledge, it’s almost impossible for the 60-year-old acting prime minister to stay in office after losing a third of his lawmakers in December’s general election.

“Nowadays, we are the first political force of change,” Sanchez said in a televised speech to his party’s lawmakers at the parliament in Madrid Tuesday. “We’re the only ones that can extend bridges to the left and to the right.”

One of the first tasks for the 11th parliament since Spain returned to democracy in 1978 is to elect a president of the chamber.

That post may go to the Socialist candidate, Patxi Lopez, Rajoy said on Tuesday, an early sign of Sanchez’s ability to broker agreements with other parties. Lopez, 56, is a former president of the Basque region where he led a coalition between the Socialists and the PP to keep nationalists out of power.

Parliamentary Process

Once the parliament is installed, King Felipe VI can officially consider who to nominate as prime minister. The candidate needs the backing of a majority of the 350 lawmakers to take office. If he fails, he can make a second attempt within 48 hours when only a plurality of votes is required.

Sanchez says Rajoy should get the first crack at forming a majority because he won the most seats in December. If the current premier fails Sanchez will seek backing for a progressive alliance, like the one that ousted conservative leader Pedro Passos Coelho in Portugal in November. Parliament has two months from the first leadership vote to choose a prime minister before fresh elections are triggered.

A Socialist-led government would likely pose a challenge to the European Commission’s efforts to force Spain to bring its budget deficit under control. The Socialists, Podemos and Ciudadanos all pledged to seek more leeway from the European budget police during the election campaign.

Ciudadanos’s Position

Such a three-way alliance looked unlikely in the days following December’s election as Podemos’s leader, Pablo Iglesias, insisted on allowing Catalans a referendum on independence. That’s a red line for Ciudadanos, which emerged in Catalonia fighting the separatist movement.

Now Podemos leaders in Catalonia say they are open to a compromise with the Socialists, who are proposing constitutional changes to shift Spain to a more federal model and tame Catalonia’s push for independence. Between them, the Socialists and Podemos have 159 votes in the 350-seat chamber, enough to take power if other parties abstain. If Ciudadanos were to join, that total would rise to 199.

“Few things are impossible in politics but it seems very difficult to put together a governing program that could make Ciudadanos and Podemos happy at the same time,” Ciudadanos Secretary General Jose Manuel Villegas said in a telephone interview Tuesday. The Podemos line “depends who you talk to. In the end, what will matter is their formal commitments.”

 

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