Spanish Regional Elections Put Podemus in Position to Force Eurozone Change

Spain's ruling People's Party (PP) suffered big losses in regional elections on Sunday as Spaniards delivered a message to Prime Minister Mariano Rajoy for four years of severe austerity and spending cuts and several high profile corruption scandals. The PP (at 27%) and its traditional opposition Socialist party (at 25%) garnered a combined vote of 52%, giving the PP its worst election result in more than 20 years. Early Sunday evening, exit polls showed that the PP economic recovery after the 2008 recession was too weak for it to hold an absolute majority in the regions. The new market-friendly center-right Ciudadanos ('Citizens') party and the left-wing anti-austerity Podemos ('We Can') party made strong headway in overturning the two-party system that has kept the PP and its rival Socialists in power since the end of the Franco dictatorship 40 years ago. With national elections expected in November, Spain's two main parties will now have to form coalitions in all of the 13 of Spain's 17 regions that voted on Sunday, as well as in more than 8,000 towns and cities. ~~~~~ The PP lost its absolute majority in regional bastions Madrid and Valencia, where left-wing coalitions will send the party into opposition for the first time since the mid-1990s. The success of anti-establishment candidates, who represented small local parties, in two of the largest Spanish regions underlined the fragmentation of Spain’s politics, as the governing PP of Prime Minister Mariano Rajoy lost its longstanding relationship with voters ahead of general elections later this year. The PP also lost its key stronghold of Madrid city for the first time since 1991 in a leftist attack backed by Podemos. In Barcelona city, another left-wing coalition headed by former community activist Ada Colau and backed by Podemos beat pro-independence parties Convergencia i Unio (CiU) and Esquerra Republicana de Catalunya (ERC), sendng a warning message to the Catalan separatist movement. Colau, 41, a former activist who fought housing evictions and was herself evicted, defeated Barcelona’s mayor, Xavier Trias, in what she described as a “David against Goliath” victory. Meanwhile, Manuela Carmena, a retired judge, did not win outright in Madrid, but her strong showing made it very likely that she will become mayor of Spain’s capital next month, at the helm of a coalition with the Socialists. Carmena, 71, joined Spain’s underground Communist party and started her legal career by attacking labor restrictions imposed by Francisco Franco, the Spanish dictator. She was encouraged to run for mayor because of her record of integrity as a judge, and she vowed to end corruption in Madrid. In Valencia, Spain’s third-largest city, Rita Barberá, the conservative mayor, is also expected to resign after 24 years in office. Barberá’s PP won, but with an insufficient margin to stop left-leaning parties from forming a coalition and removing her from office. ~~~~~ In 2011, the PP took power as voters punished the Socialists for leading Spain into an economic crisis. Now, four years later, Rajoy urged voters not to risk derailing Spain’s recent return to growth by entrusting economic management to left-leaning or untested political parties. And Spain seems to be creeping toward recovery. The New York Times reports that the government forecasts growth of 2.9% this year, which prime minister Rajoy expects to be the strongest among major European nations. However, “there is a broader change in the political mood in Spain that the Popular Party doesn’t seem to be able to grasp,” Manuel Arias- Maldonado, a politics professor at the University of Málaga, told the NYT. Sunday’s results, he added, show that the Popular Party had “false confidence that economic recovery would suffice" to keep his PP in power. ~~~~~ The motor for change in Spanish politics has been Podemus. Pablo Iglesias, the national Podemus leader, told supporters on Sunday night that the PP losses in Spain’s largest cities marked the end of the two- party system. “The big cities are the big engine of change in Spain,” Iglesias said, predicting that the change in the country’s political landscape would be confirmed in general elections to be held later this year. Podemus, a party that has existed for about one year, has taken on the PP both for its EU-imposed austerity programs and for its insistence that Spain has turned the recovery corner. Podemus says that as long as unemployment is over 25% and people are still losing their homes through bank foreclosures, it is not meaningful that Spain had a full-year economic growth in 2014 -- the first growth year in Spain since 2008, when a huge property bubble burst, putting millions of people out of work and pushing the country to the brink of a bail-out. The government's labor reforms have reduced the cost of hiring and firing and made part-time jobs a new norm. Despite this, unemployment remains high. ~~~~~ Dear readers, the PP and Socialists lost support to new upstart parties. The centre-right market-friendly Ciudadanos party went national in 2013. The anti-austerity Podemos, an ally of Greece's Syriza, was organized last year. The two parties were born out of the "Indignado" ("Outraged") protests that swamped Spain's streets during the economic crisis, in much the same way that Syriza came to power in Greece. It's easy to understand their appeal in countries hit hard by the 2008 recession and then hit again by Eurozone austerity programs that hurt the poor disproportionately. As an example, official data show that more than 22% of people in Spain were living in poverty in 2013, the year the country's recession officially ended. Even after the end of the economic crisis, Spain's unemployment rate remains extremely high and the government has acknowledged that the recovery has yet to reach the poorest. While it is far too soon to predict a Podemus -Ciudadanos victory in November's nationwide elections, important economic changes must be made for the PP and Socialists to be competitive -- and it may be too late to see any meaningful improvement before November. It is tempting to say that Spain will follow Greece into rebellion against Eurozone austerity, but it is important to remember that Spain's problem was a housing bubble that forced banks into liquidity crises, while Greece's problem was a basic failure of the economy caused by corruption, lax tax collection and very expensive public programs and subsidies. Spain is coming out of its bubble crisis, while Greece shows very little progress. The two countries are at different crossroads on very different highways. However, a quarter of the Spanish population is unemployed with many having run out of unemployment benefits, and home foreclosures continue without the government providing shelter for the displaced. Both the Greek and Spanish crises, although different, have become powerful engines for political change. One thing is sure -- being a Spanish PP or Socialist political candidate cannot be a comfortable place to be in mid-2015.