Saturday

24th Jun 2017

Anti-corruption pact holds key to Spain deadlock

  • Madrid metro station. Companies holding back on investments that could create jobs due to political uncertainty (Photo: Calvin Smith)

Spain’s prime minister Mariano Rajoy could secure a second mandate, ending months of political deadlock, if his party agrees, on Wednesday (17 August), to anti-corruption conditions set by the liberal newcomers in parliament.

Ciudadanos (meaning “citizens”), the fourth-largest force in parliament, said last week it would negotiate on making Rajoy prime minister if his People’s Party (PP) - which lost its absolute majority largely because of corruption allegations – agrees to six measures to clean up Spanish politics.

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.

  • Rajoy emerging as compromise candidate (Photo: Partido Popular de Cantabria)

The proposals include creating a commission to investigate allegations that two former treasurers ran a slush-fund, and scrapping parliamentary privileges that prevent the ordinary criminal justice authorities from launching corruption investigations against MPs.

The PP’s executive committee will decide on Wednesday whether to agree the conditions. It has 90 members, including Rita Barbera, a senator accused of money laundering in Valencia.

The PP must also let the parliamentary speaker, who would be a PP member, set a date for the investiture vote.

Rajoy had earlier accepted the king’s mandate to form a government, but he has yet to say when or if he will seek the confidence of parliament.

The offer by Ciudadanos’ leader, Albert Rivera, whose party has 32 MPs in the 350-seat chamber, could help end the deadlock that arose after an inconclusive general election last December.

It would give Rajoy 169 votes in an investiture vote - seven shy of a majority - and make it more palatable for other parties to agree to facilitate a PP government.

“Rivera’s demands seem very acceptable and, in general right for the country’s necessary democratic renewal,” the right-leaning El Mundo newspaper said in an editorial. “Everything suggests the PP will accept them.”

A PP-Ciudadanos deal would be welcomed by many investors since it would reduce the uncertainty of yet another election in the eurozone’s fourth-largest economy, and would increase the likelihood of a business-friendly PP budget and reforms.

Until now, the entrenched positions of the four largest parties made it look as if the PP could at best build a minority, short-term government.

Ciudadanos had previously offered to abstain at a second investiture vote, but now the party leader, Rivera, is not ruling out entering a PP coalition if conditions are met.

The most urgent task for the next government is to draw up a spending limit and budget to present to the European Commission by 15 October.

Slowing growth predicted

So far, the markets have been relatively sanguine about the political impasse. The economy is growing faster than the eurozone average, boosted by consumer demand, tourism and low interest rates.

The PP government approved the 2016 budget last year when it had a majority.

However, economists have sharpened their warnings in recent weeks.

“Spain might remain without a functioning government for longer than expected,” warned risk management service Moody’s Analytics in a report released earlier this month.

“As confidence sours, investment growth will decelerate to 3.9 percent in 2016 and further to 2.5 percent in 2017.”

Companies are delaying the sort of investment decisions that could help cut Spain's unemployment, which is currently at 20 percent.

They want to see what measures the next government will implement. Above all, it needs to make cuts worth 0.5 percent of GDP in 2017 and 2018 to bring its deficit down to a commission target of 2.2 percent, said a research note by Spanish bank BBVA.

“The increase in the uncertainty of the economic measures that will be adopted over the next few years could take seven percentage points off the growth of private consumption in 2017,” said the note.

The PP and Ciudadanos, a centrist party, may be able to find common ground on economic policy.

However, if the two parties agree a pact, they will still need the Socialist Party to lend a few votes to reach a majority, since support from regional parties looks unlikely.

Former Socialist prime minister Felipe Gonzalez has urged the Socialists to stand aside in order to let Rajoy govern. He said the Ciudadanos’ offer was “the first act of political responsibility since the elections”.

The left-wing newspaper El Pais has also called for the Socialists to abstain from voting in a Rajoy investiture in order to allow him to form a government, writing in an editorial that the focus should be on making Spain governable again.

In a sign of the public mood, even one of the Socialists’ media friends, actor Antonio Banderas, urged the party to abstain for the sake of the national interest.

"I don't think that by abstaining at a certain moment, that means you support the other [party’s] policies”, he said.

Spain braces for Christmas election

Acting PM Rajoy's failure to form a government last week makes another general election ever more likely. But a Basque regional party might offer support that would push him closer to a national majority.

Row between EU ministers halts e-book tax rate

A bill to reduce VAT rates on e-books and e-publications has become the latest victim of a row between the Czech Republic and its partners over its own plan to collect VAT.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

News in Brief

  1. Merkel and Macron hold symbolic joint press conference
  2. Juncker has 'no' clear idea of kind of Brexit UK wants
  3. Belgian PM calls May's proposal on EU citizens 'vague'
  4. UK lacks support of EU countries in UN vote
  5. Spain to command anti-smuggler Mediterranean force
  6. Estonia confirms opposition to Nord Stream 2 pipeline
  7. Ireland and Denmark outside EU military plan
  8. EU leaders renew vows to uphold Paris climate deal

Stakeholders' Highlights

  1. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  2. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  3. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  4. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  5. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  6. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  7. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  8. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million
  9. EUSEW17Bringing Buildings Into the Circular Economy. Discuss at EU Sustainable Energy Week
  10. European Healthy Lifestyle AllianceCan an Ideal Body Weight Lead to Premature Death?
  11. Malta EU 2017End of Roaming Charges: What Does It Entail?
  12. World VisionWorld Refugee Day, a Dark Reminder of the Reality of Children on the Move

Latest News

  1. Macron’s investment screening idea watered down by leaders
  2. Leaders unimpressed by May’s offer to EU citizens
  3. New Irish PM praises unscripted nature of EU summits
  4. EU extends sanctions on Russia
  5. UK's universities set 'Brexit wish list'
  6. Decision on post-Brexit home for EU agencies postponed
  7. May's offer on citizens’ rights dismissed as ‘pathetic’
  8. 'Historic' defence plan gets launch date at EU summit

Stakeholders' Highlights

  1. European Social Services ConferenceDriving Innovation in the Social Sector I 26-28 June
  2. Dialogue PlatformMuslims Have Unique Responsibility to Fight Terror: Opinon From Fethullah Gülen
  3. EUSEW17Check out This Useful Infographic on How to Stay Sustainable and Energy Efficient.
  4. Counter BalanceEuropean Parliament Criticises the Juncker Plan's Implementation
  5. The Idealist QuarterlyDoes Europe Really Still Need Feminism? After-Work Chat on 22 June
  6. EUSEW17Create an Energy Day Event Before the End of June. Join the Call for Clean Energy
  7. UNICEF1 in 5 Children in Rich Countries Lives in Relative Income Poverty, 1 in 8 Faces Food Insecurity
  8. International Partnership for Human Rights26 NGOs Call on Interpol Not to Intervene Versus Azerbaijani Human Rights Defenders
  9. Malta EU 2017Significant Boost in Financing for SMEs and Entrepreneurs Under New Agreement
  10. World VisionYoung People Rise up as EU Signs Consensus for Development at EU Development Days
  11. ILGA-EuropeLGBTI Activists and Businesses Fighting Inequality Together
  12. Nordic Council of MinistersNordic Prime Ministers Respond to Trump on Paris Agreement