July 29, 2016
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Our main story today is last night's acceptance by Mariano Rajoy of King Felipe's designation as PM candidate. However, in his later press conference Rajoy refused to commit to submitting to an investiture vote in the parliament. The speaker of the parliament, Ana Pastor, also refused to commit to a definite time frame for calling an investiture debate and vote. This has kicked up a controversy over whether Rajoy intends to delay indefinitely in case he fails to assemble a majority, and whether this would be unconstitutional. Spain is clearly in the silly season.
One thing Rajoy did say is that Spain needs to have a government well before October 15 in order to present to the European Commission next year's budget and a plan to meet the fiscal path set out yesterday as part of the excessive deficit procedure. Rajoy's last resort is to appeal to the "responsibility" of the opposition parties to shame them into allowing at least a minority PP government that can address the challenges facing the country, among which he highlighted reducing unemployment and confronting the newly assertive Catalan separatists.
If Rajoy does not get an absolute majority in a first investiture vote, there would be a second one in which he would need only more votes for than against. Ciudadanos has indicated that they might vote against in the first vote but abstain in the second. However, this would not be enough if the PSOE voted against, and the liberal party has been encouraging PP and PSOE to negotiate the socialists' abstention. But Albert Rivera, leader of Ciudadanos, also said yesterday that Mariano Rajoy should submit to a parliament vote as early as next week. He also proposed to King Felipe a government supported by PP, PSOE and Ciudadanos, but led by someone other than Mariano Rajoy.
The PSOE insists that Rajoy must submit to the investiture vote as soon as possible, while at the same time saying that they will vote against. This can really only be explained by Pedro Sánchez, the PSOE leader, not wanting to be alone in failing to win the parliament's backing as PM candidate in an investiture vote. Could it be that once Mariano Rajoy has a black eye just like Sánchez the PSOE might consider abstaining to allow a PP minority government? They might do so if Ciudadanos voted for Rajoy. At his press conference yesterday, Pedro Sánchez also refused to rule out trying to form a government again in case Mariano Rajoy fails in his own investiture vote. But the PSOE's regional leaders are known to be divided on the issue and nearly half of them prefer that the PSOE abstain to allow a PP government than that Sánchez form a government with the support of Podemos and the Basque and Catalan nationalists.
What will happen in the next two weeks is anybody's guess. Mariano Rajoy could pile some more spurious pressure on the opposition by agreeing with Ana Pastor to set up a first investitute vote for August 23. If the parliament then failed to appoint a PM by October 23, it would be dissolved for elections on Christmas day. Trying to avoid such an outcome just might be a strong enough inducement for the parties to form a government.
In our last briefing before the summer holidays, we also have stories on the defiant Catalan parliament; on the MPS recapitalisation; on the IMF and Europe; on how Brexit might happen; and on the economics profession doubling down after Brexit.