September 29, 2016
The PSOE is in an open internal conflict after 17 members of its federal executive commission resigned yesterday to force the ouster of party leader Pedro Sánchez, which together with three earlier vacancies brings the executive down to 18 members out of its original 38. That the move was expected since Monday does not lessen the shock of it. At the moment opinions range from calling the move a coup by the party machine to those seeing it as a necessary measure to save the party from Sánchez. El País, which carries a lot of weight with the PSOE base but probably much less than thirty or even ten years ago, writes in an editorial that any level-headed party leader would have resigned after the poor results in the regional elections held in Galicia and the Basque country last weekend, but that Sánchez is "a fool without scruples."
The rebellion against Sánchez was precipitated by his decision to call a party congress in six weeks' with a leadership contest in mid-october. His internal opponents would have preferred him to resign, allowing them to set up a steering committee that would have diluted the responsibility of abstaining to enable Mariano Rajoy to renew his PM mandate. Sánchez instead doubled down on his intention to seek an alternative majority to Rajoy, with Podemos and the centre-right Basque and Catalan nationalists if necessary - given that Ciudadanos excludes a deal with Podemos and insists the responsible thing is for the PSOE to allow the PP to govern. Much of the manoeuvering within the Socialist party since the elections last December has been about preventing Sánchez from making a deal with Podemos and the Catalan separatists. Former PSOE leader Felipe González is widely seen as having triggered the rebellion with a radio interview yesterday, in which he said he felt deceived by Sánchez - who according to González had told him after the June elections that he would allow a Rajoy minority government. Sánchez responded that the decision to vote no to Rajoy had been taken by the party's federal committee.
What will happen now? El País' editorial articulates the argument of the rebels: that the resignations should give way to a steering committee which should call a party congress after Spain has a government, and that Sánchez' refusal to step down even now sets the PSOE on a course to self-destruction. The interpretation of the loyalists is that the PSOE bylaws require the now decimated executive commission to call a meeting of the nearly 300-strong federal committee which must then call a party congress to appoint a new executive. In the meantime, the critics claim that the current executive is effectively dissolved and cannot continue to function. The executive commission, which meets this morning, had already convened a federal committee this coming Saturday, to vote on Sánchez' proposed congress and leadership contest. The most likely outcome is that the Saturday meeting will go ahead as planned, and will decide whether to hold the congress immediately according to Sánchez' plan, or to appoint a steering committee.
What does this mean for Spain's government? There are three scenarios under which Mariano Rajoy can be voted as PM before November 1st, when the parliament would be dissolved for new elections. Either a PSOE steering committee gets appointed this weekend and decides the party will abstain to wave Rajoy through; or Sánchez will get his congress but lose it - presumably to Andalusian regional premier Susana Díaz; or after Sánchez wins the congress a small group of PSOE MPs break ranks and abstain on Rajoy anyway. Rajoy needs eleven abstentions to become PM, or only one if he can convince the Basque nationalist PNV to vote for him in exchange for PP support for the PNV in the Basque country. Even if Sánchez wins the PSOE congress and keeps control of his parliamentary group, the odds that he can successfully negotiate an alternative majority to Rajoy are slim. In the best scenario he would have a week after the leadership contest to get appointed PM.
Repeat elections would probably not take place on Christmas day, but a week earlier, on December 18. The political parties have struck a deal that will allow them to reform the election law to shorten by one week the time between when elections are called and election day. This is expected to make it through parliament by the end of October.
We also have stories on whether a rescue of Deutsche Bank is likely; on doubts over the French budget; on doubts over the Italian budget; on legal obstacles to Brexit; on Greek debt relief; and on whether debt matters.