Tuesday

6th Dec 2016

Analysis

Spain’s new government in need of friends

  • Mariano Rajoy swore his oath on 31 October over a copy of the Spanish Constitution and a copy of the Bible. (Photo: moncloa.gob.es)

Spain’s conservative prime minister Mariano Rajoy has chosen his closest political allies for a government that will face the lowest level of parliamentary support since Spain returned to democracy four decades ago.

Rajoy announced his cabinet on Thursday evening (3 November) in a written statement after he informed king Felipe VI of the names of the new ministers, leaving journalists waiting at the government palace in Madrid for a potential press conference.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

He won a second term on Saturday (29 October) after the rival Socialist Party (PSOE) reluctantly abstained in a parliamentary vote of confidence to break the 10-month political stalemate.

With just 137 of 350-seats in parliament, Rajoy is 39 deputies short of the absolute majority, meaning his Popular Party (PP) will need support from other parties to pass next year’s budget and reforms.

Rajoy kept seven members of his previous cabinet, retaining his economic team which oversaw austerity measures, a bank bailout and a labour reform to make hiring and firing cheaper.

During his investiture speech on Saturday, Rajoy said he was prepared to negotiate each law but not “liquidate” reforms that had helped the Spanish economy out of a steep recession.

“Rajoy and his government will need to dialogue during this legislature and he doesn’t seem to realise that,” said PSOE spokesman Mario Jimenez. “Some of the ministers who’ve done the most damage are still in it.”

Rajoy reappointed economy minister Luis de Guindos, budget minister Cristobal Montoro and labour minister Fatima Bannez as well as deputy prime minister Soraya Saenz de Santamaria.

He brought in the PP's secretary-general, Maria Dolores de Cospedal, as defence minister.

“He should have brought in people with other political ideologies, people with different profiles and outlooks, independents, some younger people, something more innovative,” said Beatriz Becerra, a Spanish MEP form the liberal ALDE group.

“Rajoy’s new cabinet is a very political one,” agreed Antonio Barroso, analyst at political risk consultancy Teneo Intelligence.

The prime minister appointed six new ministers, including Alvaro Nadal, the head of his economic office, as minister for energy, tourism and the digital agenda. Nadal, 46, who speaks German, was Rajoy’s right-hand man for negotiations with EU partners over Spain’s 2012 bank bailout.

Need for support

Foreign minister Jose Manuel Garcia-Margallo, who has ruffled feathers in Britain and Gibraltar by saying the Brexit vote brings Spanish sovereignty of the British enclave closer, was replaced by Alfonso Dastis Quecedo, Spain’s EU ambassador since 2011.

Dastis is “a very capable negotiator, he will be the country’s voice in the upcoming Brexit discussions,” said Barroso.

In the Spanish parliament, Rajoy will need to build bridges with the opposition having governed for four years with an absolute majority in which he nevertheless regularly used decrees.

He has signed a 150-point pact with the small liberal party Ciudadanos (Citizens) to introduce measures like cleaning up politics, such as, an end to closed party lists which makes deputies less accountable to their electorate.

The PP lost its absolute majority in December largely because of allegations that party members took bribes from companies. Former treasurer Luis Barcenas, appointed by Rajoy, is currently on trial.

While the PP can turn to Ciudadanos for support, the party’s size means Rajoy will still likely need some Socialist support.

“It’s up to the Socialists to decide whether the government lasts four years or whether it’s a short one,” said Carlos Barrera, lecturer in political communication at the University of Navarra.

The new government’s most immediate task is to pass next year’s budget which will require about €5.5 billion of spending cuts or tax hikes to reduce the country’s 2017 budget deficit to the European Commission target of 3.1 percent.

“If they can’t pass the budget, they will have to roll over this year’s budget and there will be a substantial risk of another election next year,” said Angel Talavera, eurozone economist at Oxford Economics, a consultancy.

Opportunity for reforms

Barrera thinks eventually the Socialists will support the budget and other key laws out of a sense of statesmanship, but Talavera thinks the Socialists may find it difficult to support raising taxes after the “excruciating” process they went through to facilitate the government: their leader Pedro Sanchez was ousted and replaced by an interim caretaker committee, leaving the party deeply divided.

Business leaders urged the new government to build cross-party consensus to introduce long-term reforms to education and training and help to increase the average size of Spain’s small and medium-sized companies, following the example of countries like Germany.

It was time to cut duplications in the public administration and tackle the black economy, estimated to be 20 percent, said Javier Vega de Seoane, chairman of the Madrid-based Circle of Businessmen.

“This situation is an opportunity to tackle pending reforms which haven’t been tackled by absolute majorities,” said Anton Costas, chairman of the Barcelona-based think-tank Economy Circle.

Countdown to Italy's future

The long-running campaign for Sunday's referendum has wrapped up, but market jitters and the rise of euroscepticism risks Italy's shaky post-recession growth.

Interview

Polish government in bid to defund NGOs

Ruling Law and Justice has promised to overhaul the NGO sector. The move could strain relations with Norway, a major donor to Polish civic life.

Stakeholders' Highlights

  1. European Jewish CongressEJC President Breathes Sigh of Relief Over Result of Austrian Presidential Election
  2. CESICESI Congress Focuses on Future of Work, Public Services and Digitalisation
  3. European Gaming & Betting AssociationAustrian Association for Betting and Gambling Joins EGBA
  4. ACCAWomen of Europe Awards: Celebrating the Women who are Building Europe
  5. European Heart NetworkWhat About our Kids? Protect Children From Unhealthy Food and Drink Marketing
  6. ECR GroupRestoring Trust and Confidence in the European Parliament
  7. UNICEFChild Rights Agencies Call on EU to put Refugee and Migrant Children First
  8. MIRAIA New Vision on Clean Tech: Balancing Energy Efficiency, Climate Change and Costs
  9. World VisionChildren Cannot Wait! 7 Priority Actions to Protect all Refugee and Migrant Children
  10. ANCI LazioRegio-Mob Project Delivers Analysis of Transport and Mobility in Rome
  11. SDG Watch EuropeCivil Society Disappointed by the Commission's Plans for Sustainable Development Goals
  12. PLATO15 Fully-Funded PhD Positions Open – The Post-Crisis Legitimacy of the EU (PLATO)

Stakeholders' Highlights

  1. Access NowTell the EU Council: Protect our Rights to Privacy and Security
  2. ACCAThe Future of Audit Means Adaption to Today’s Global and Digital World
  3. Swedish EnterprisesNew Rules for EU Anti-dumping Measures
  4. European Jewish CongressTakes Part in Building Resilient Communities
  5. UNICEFUniversal Children’s Day: UNICEF Calls for Global Action on Child Rights Violations
  6. Counter BalanceThe EU Bank Cannot be a Key Player in Europe's Response to the Plight of Refugees
  7. International Partnership for Human RightsEvidence of Human Rights Violations and International Crimes in Crimea
  8. Dialogue PlatformThe Failed Military Coup in Turkey & The Mass Purges
  9. Nordic Council of MinistersNew Nordic Climate Solutions at COP22 in Marrakech
  10. Counter BalanceNGOs Call on Development Finance Institutions to Act Against Tax Avoidance
  11. European Free AllianceTrump Victory and Brexit Show Urgent Need of Improving Democracy
  12. Martens CentreOur Transatlantic 9-11: Europe After Trump