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Spain poised to undergo Europe's next leadership shake-up

An unemployment rate above 20%, shaky banking system and debt worries are the backdrop for Sunday's elections, in which the center-right Popular Party is expected to crush the Socialists.

November 18, 2011|By Henry Chu, Los Angeles Times
  • Juan Ignacio Zoido, left, the mayor of Seville, embraces Mariano Rajoy, head of Spain's Popular Party and the man expected to succeed Prime Minister Jose Luis Rodriguez Zapatero after Sunday's general elections.
Juan Ignacio Zoido, left, the mayor of Seville, embraces Mariano Rajoy,… (Jorge Guerrero, AFP/Getty…)

Reporting from Seville, Spain — The tsunami of political shake-ups sweeping across debt-ridden Europe is about to crash on Spanish shores, and a visit to Antonino Parilla Villar's ice cream shop offers a clue to why.

"Working harder to earn the same amount is tough," said Villar, 58, who puts in 16 to 17 hours a day behind the counter of his brightly lighted store in downtown Seville, whipping up new flavors for the customers who sometimes saunter in well after midnight. "The question is, do the politicians do the same as we do?"

With half of all young people out of work, public spending cuts taking their toll and recovery from recession stalled, all signs point to overwhelming victory in Sunday's elections for the center-right Popular Party over the Socialists, who have ruled this country for nearly eight years.

Throwing the bums out would make Spain the sixth European country within a year to opt either for wholesale government change or a new leader in the wake of the continent's escalating financial and economic crises. Neither the right nor the left has been spared, as Italy's Silvio Berlusconi and Greece's George Papandreou both discovered this month.

In Spain, dissatisfaction with the state of affairs runs so deep that the Socialists are poised to lose even here in the southern region of Andalusia, where the party has enjoyed a stranglehold on politics since democracy was restored in Spain in 1975.

But a win for the Popular Party, or PP, could prove a poisoned chalice. It would inherit a nation beset by an unemployment rate of more than 20%, a shaky banking system and growing doubt by global investors about Madrid's ability to pay its debts and make the painful reforms required to get the economy back on track.

Along with Italy, Spain is considered too big a country to bail out the same way that the European Union and the International Monetary Fund have propped up Greece, Portugal and Ireland. The government's cost of borrowing has crept up dangerously, heaping pressure not just on Spain but the entire Eurozone, the 17 nations that share the euro currency.

Mariano Rajoy, the man expected to succeed Prime Minister Jose Luis Rodriguez Zapatero, says his country will do its part to help beat back the debt crisis that threatens to sink the Eurozone.

"I believe in Europe. I believe in the euro project," Rajoy, the leader of the PP, said recently. "I want to fulfill the tasks that we all need to do as members of the euro."

For Madrid so far, that has meant the same recipe of harsh austerity measures that the markets and more fiscally disciplined neighbors such as Germany have prescribed for other peripheral Eurozone members to bring down their high government budget deficits.

Spain has pledged to cut its deficit this year from about 9% to 6% of gross domestic product, a goal it is increasingly likely to miss because of public opposition and overspending by regional authorities.

At the same time, many experts say even more fundamental reforms are imperative to make the country competitive again, especially the need to revise labor laws that often protect older workers with cushy contracts while shutting out younger ones from the job market. Spanish entrepreneurs also frequently find themselves drowning in too much red tape.

Despite maintaining a low-key persona that verges on boring and failing to lead his party to victory in two previous general elections, the bearded and bespectacled Rajoy, 56, has capitalized on economic discontent with the Socialists while keeping his own promises vague.

Spaniards appear willing to give him a chance this time, even though the conservative PP is almost certain to pursue the same unpopular austerity policies instituted by the current government.

"There's a memory that's still very strong in Spain that the Popular Party is better at managing the economy," said Ramon Pacheco Pardo, an expert on Spanish politics at King's College London. "If you look at Spanish economic growth between 1996 and 2004, that's when the Popular Party was in power. There was basically an economic boom."

The Socialists, who took power in 2004, also presided over some good times, but those turned out to be unsustainable. Spain's giant real estate bubble burst badly and the 2008 global credit crunch hit, sending the economy reeling. The euro debt crisis has added to the misery.

The economic woes of Andalusia, home to about 8 million people, are particularly pronounced.

Unemployment is higher here than the already-worrisome national average, especially in the region's rural areas, where picturesque villages and towns sit amid remnants of southern Spain's splendid ancient Roman and Muslim past. Even bustling cities such as Seville, capital of Andalusia and cradle of flamenco, are struggling.

"The small shops are all dead," said Cecilia Losilla Vargas, the wife of Villar, the ice cream maker. "The neighborhood shops don't exist."

Andalusia has been a longtime stronghold for the Socialists, never more so than when Felipe Gonzalez, who was born in Seville, served as prime minister for nearly 14 years, from 1982 to 1996. But that ascendancy looks set to end Sunday.

"Three years ago, before the crisis, if someone had said the Popular Party would win [here] in the near future, you would've said it was impossible," Pacheco Pardo said. "But this shows the extent of the anger with the Socialist Party, that they can't even win Andalusia."

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