FOR THE second time in eight years, a new and untested Spanish prime minister has been elected at a time of menacing crisis. In 2004, José Luis Rodríguez Zapatero was the surprise victor for the Socialist Party (PSOE), just after Islamist bombers caused carnage in Madrid. Zapatero weathered that storm rather well, but his failure to cope with rampant economic woes led voters to desert the PSOE in millions last Sunday. Mariano Rajoy and the right-wing Partido Popular (PP) were the beneficiaries of Zapatero’s financial ineptitude, and romped home as expected with a comfortable absolute majority.
Even though Rajoy’s election was already a virtual certainty last week, and he and Zapatero had stitched unprecedented debt stabilisation measures into the Spanish constitution last September, the bond markets still pushed Spain to the brink of the unthinkable – a bailout – in the very days leading up to the poll. Nor was there any let-up after Sunday’s results. As the Spanish stock market fell in line with others in Europe yesterday, Spain’s bond market performance was worse than Italy’s.
In some respects, this situation is a bigger threat to Spain, and to Europe, than the Islamist terrorist campaign proved to be. So it seems to defy all logic that protocol dictates that the new Spanish administration cannot be put in place for another month. Suggestions yesterday that this process could be accelerated should surely be implemented at once. Rajoy might have helped matters if he had broken with a non-binding tradition, and put a name on the economics “superminister” he promised before the election. He should do so without further hesitation now. He has a formidable bank of talent to choose from, and it just might give a shot of confidence to the markets if as much as possible of the cabinet were identified at once.
It will require political skills of the very first order to face down the sea of troubles confronting Rajoy. Alongside the euro crisis, he must attempt to reduce massive unemployment, and to stem the rapid drift of Spain’s young people away from conventional politics, and towards the street protests represented by the 15-M movement. He must also engage with a resurgent but peaceful shift to pro-independence options in the Basque Country, a most delicate task for anyone on the Spanish right. All of Europe must wish the new prime minister well.