MADRID – Spain’s king signed a decree Tuesday setting a historic new election for June 26 after politicians chosen in an inconclusive December ballot failed to agree on which of them should form a government, despite months of negotiations.
That means Spain will hold its first repeat election since it emerged from dictatorship in the 1970s and be in the hands of a caretaker government with limited powers — a kind of political limbo — for at least most of this year.
HOW DID IT COME TO THIS?
No political party won enough seats in the Dec. 20 election to form a government alone, and none was able to reach a sufficiently strong coalition deal with others in four months of talks.
The Popular Party came in first in the December vote with 123 seats but lost the majority it held since 2011. Party leader Mariano Rajoy told King Felipe VI he wasn’t in a position to be a candidate for premier because he lacked sufficient support.
The king then called on Pedro Sánchez of the second-placed Socialists, with 90 seats, to try. Sánchez struck a deal with centrist Ciudadanos, which had 40 seats, but was unable to convince the far-left Podemos party, which controlled 69 seats, to join him or allow him to govern by abstaining from a confidence vote.
The absence of a government won’t affect Spaniards in the short term, says Antonio Barroso, a London-based analyst with the Teneo Intelligence political risk consultancy. But he warned that deeper trouble could appear further down the line if the next election fails to end Spain’s political paralysis.
IN UNCHARTED TERRAIN
After decades of governments alternating between the Popular Party and Socialists, Spaniards in December woke up to a new reality: a four-party system.
Four years of chafing austerity measures imposed by Rajoy, the country’s center-of-right prime minister, helped give rise to two brash newcomer parties that splintered the political landscape. Voters were also angered with high unemployment and seemingly endless corruption cases.
The far-left Podemos party, led by pony-tailed political science professor Pablo Iglesias, and business-friendly Ciudadanos party have both become political players, upending expectations.
Spain has never had to repeat elections since democracy was restored in 1978. It has never had a coalition government, either.
WHO’S HURTING?
The Spanish economy is in pretty good shape. The European Commission said Tuesday it expects Spain’s economy to grow by 2.6 percent this year and 2.5 percent in 2017. That’s a faster rate than the eurozone average.
But Barroso, the Teneo Intelligence analyst, noted that it is impossible to say how many investors have put their plans on hold until there is some clarity about the government and its future policies and regulations.
Agricultural engineer Montserrat Vilchez said, for example, that the absence of a government affected her sector because it meant no new public projects were being signed. Voters generally are fed up and disoriented, the 39-year-old said in Madrid, adding that she expected “voters will punish the parties one way or another.”
TROUBLE ON THE HORIZON?
The economic context is “relatively benign” at the moment, says Barroso. The eurozone as a whole is improving after its recent financial crisis, lower oil prices and a weaker euro are helping exports, and Spain is likely to see a record tourism year. But if any of those factors change, problems will start to appear.
“If the tailwinds become headwinds, then we’re in trouble,” Barroso said, explaining that unanticipated hurdles would require government policy action.
The European Commission warned Tuesday that a government is needed to keep a firm hand on the rudder. The threat of overspending comes “mainly from the uncertainty surrounding the formation of the new government,” the EU’s executive arm said. It said planned savings “are subject to implementation risks, as they require active involvement by different tiers of government and strict enforcement.”
WHAT NEXT?
Campaigning restarts on June 10 and will wrap up June 24, with one day of reflection before the vote. The king has called on the parties to be moderate in their campaigns, sensing public frustration with the situation.
Polls suggest a repeat election is unlikely to break the deadlock and could mean a political impasse stretching over the summer and possibly ending with yet another election. Power vacuums are not unknown in Europe, with Belgium setting a continental record with a massive 541 days needed to form a government following a 2010 election.
Analysts say an expected increase in voter abstention will likely favor the conservative Popular Party, giving them some more seats than in December. Meanwhile, if Podemos manages to strike a deal with the smaller United Left coalition, it might eventually oust the Socialists from second place.
Parliamentary Speaker Patxi López said he hoped political parties “had learned a lesson and that the next parliament will reach an agreement as soon as possible.”
CIARAN GILES and BARRY HATTON
