June 27, 2016
Brexit dominated discussions during the weekend (more on this below), but last night's Spanish elections produced another surprise - though far less extreme. The establishment won against the challengers, a rather rare result in European politics these days.
Mariano Rajoy emerged as the uncontested winner. Although he will have a hard time assembling a parliamentary majority, having improved the PP's previous result by 14 seats means it will be next to impossible to get him to step down. At his victory speech to his supporters last night he said that the PP deserved "respect". Thus he put behind him a very difficult four years in which the PP had to labour under the weight of one corruption scandal after another. That is water under the bridge now. Rajoy's style of waiting things out has served him well also over the past six months, during which he twice refused King Felipe's mandate to form a government for lack of support.
Given the still devilish coalition arithmetic Rajoy's optimal strategy now would be to wait things out as caretaker PM indefinitely (for up to 4 years, when the parliament would be automatically dissolved). Eventually either the PSOE will break down and accept to abstain, enabling a proper PP minority government; or Rajoy may decide it is in his interest to have early elections, ask King Felipe to give him the mandate to form a government, and when that fails in the parliament there would be elections four months later. As long as Rajoy remains as caretaker, however, he cannot pass a budget. This would frustrate any attempts to meet the deficit targets except by the crude method of having the ministry of finance and public administration order a spending freeze as they did already this past Spring.
The official election results are as follows:
A grand coalition of PP + PSOE would have a comfortable majority of 222 seats. Moreover, the PP only needs the PSOE's abstention as all the other parties together have just 128 seats to the PP's 137. However, every Socialist that spoke in public last night reiterated that the PSOE would not support the PP "actively or passively".
PSOE + UP + Ciudadanos (C's) would have 188 seats, but at their press conferences last night both Podemos' Pablo Iglesias and Ciudadanos' Albert Rivera reiterated their mutual incompatibility. PSOE leader Pedro Sánchez last night blamed Podemos for not supporting a PSOE + C's government in the spring. Let us recall, however, that a Podemos abstention would not have been enough for a minority government if the separatist parties had voted against. Active support was needed, and Podemos was not included in the programmatic negotiations on a equal basis with the much smaller Ciudadanos.
There is a theoretic right-wing majority of 183 seats. However, the national question complicates things. As long as CDC is embarked in the Catalan independence project, it will oppose a PP + C's majority. And this means the centre-right would be tied at 175 seats with the left and separatists.
PSOE + C's have 117 seats together, 20 fewer than the PP; whereas in the previous parliament they had 130, 7 more than the PP. This takes care of the campaign gambit by PSOE economic spokesman Jordi Sevilla that those "with the most parliamentary support" should form the government. Thus PSOE and Ciudadanos have no incentive to renew their February agreement, which in any case seems to have been roundly rejected by the voters.
A note about the polls is in order. The pre-election polls failed miserably, though they allowed about a 9% chance of this outcome according to Kiko Llaneras (KikoLlan). But the exit polls on election night failed catastrophically. Both the poll for the national broadcaster RTVE and the one for radio station COPE projected UP to beat PSOE for second place, and UP + PSOE + PNV to exceed 176 seats. The mirage of a left government lasted little more than one hour as with just 10% of the precincts reporting the PP was shown above 130 seats and UP impossibly far from overtaking the PSOE. There are two things that the polls did not capture. One is that Podemos an the United left together got a lower vote percentage than Podemos alone in December. The other is the surge of the PP. It is possible that the exit polls were confounded by 'shy' PP voters. Also, that voter swung to the PP and PSOE since Friday, scared by the result of the Brexit referendum into voting for the known - hence, safer - options.
The failure of opinion polls is becoming a systemic issue in European politics everywhere. One reason, we think, is that they cannot capture the wild mood swings of the electorate. We will be requiring much larger samples which is very expensive or requires polls to be released less often which is bad for ad revenue. It is therefore important for outsiders to look at other information in addition to the polls.
There is only one other giant story today - our take on Brexit.