Spain’s Abrupt Left Turn Rajoy finally falls, but his reforms helped the Spanish recovery.
https://www.wsj.com/articles/spains-abrupt-left-turn-1528054426?cx_testId=16&cx_testVariant=cx&cx_artPos=6&cx_tag=collabctx&cx_navSource=newsReel#cxrecs_s
His many opponents finally caught up with Mariano Rajoy on Friday when a leftist coalition ousted the Spanish Prime Minister’s center-right government with a no-confidence vote in parliament. The risk now is that Madrid will unwind the reforms that have helped the country grow faster than its neighbors.
Mr. Rajoy’s Popular Party (PP) has itself to blame for Friday’s 180-169 defeat. Last month Spain’s National Court convicted 29 people, including the party’s former treasurer, of a kickback scheme. Mr. Rajoy denied knowledge of the operation, but the scandal has alienated PP voters and the party’s liberal-centrist Citizens coalition partner, whose leader, Albert Rivera, called for snap elections.
Mr. Rajoy ignored Mr. Rivera’s good advice and tried to hang onto power, giving an opening to Socialist Party leader Pedro Sánchez to cobble together a so-called Frankenstein coalition that few Madrid insiders thought possible. The crew includes far-left Podemos, Catalan pro-independence parties and the right-leaning Basque Nationalist Party, which had negotiated pension benefit increases for the region in Mr. Rajoy’s last budget.
Mr. Sánchez has promised to honor that budget, as well as keep Spain’s fiscal commitments to the European Union. But to do that he’ll have to keep Spain’s economic engine purring. That will be hard to do with Podemos in the coalition. The Spanish left wants to roll back the Rajoy Administration’s supply-side reforms, including tax cuts and the 2012 Derecho Laboral reform, which made it easier to hire and fire workers, as well as implement a new wealth and inheritance tax.
Mr. Sánchez will also face pressure to change the penal code to facilitate the release of Catalan separatists and negotiate with the region’s new chief, Quim Torra, who demanded talks Saturday. Mr. Rajoy navigated a fractious Catalan bid for independence last year by upholding Spain’s rule of law, and most Spaniards don’t want a rerun of that debate.
Mr. Rajoy, Prime Minister since 2011, said Friday “it has been an honor to leave Spain better than I found it,” and he has. Spain’s GDP growth clocked in at 3.1% last year, far above that of Italy (1.5%) or Portugal (2.7%), and the country’s fiscal deficit is trending downward. Investors are expecting trouble as Spanish bond yields are rising, and the burden will be on Mr. Sánchez to show the left can govern better than it has in the past.
Comments are closed.
