Spanish leader weakened as house passes austerity package by one vote

 

No other Spanish party was prepared to support the drastic cuts forced upon Zapatero by the dire economic situation, writes JANE WALKERin Madrid

SPAIN’S AUSTERITY package secured approval in the lower house of the Spanish parliament yesterday by just one vote.

The €15 billion measures, which aim to reduce the country’s deficit of 11 per cent of GDP to 6 per cent by next year, were passed by 169 votes to 168.

The result of the vote was balanced on a knife edge until the last minute, and needed the abstention of 13 regional deputies before getting through.

However, it has left prime minister Jose Luis Rodriguez Zapatero in a seriously weakened position, with several parties blaming him for the financial crisis and calling for his resignation and a dissolution of parliament.

The Socialist Party (PSOE) has governed with a minority since 2008 in the 350-seat lower house of the Cortes (parliament). Mr Zapatero has been forced to depend on the support of regional and smaller parties to pass laws.

However, no other party was prepared to support the unpopular drastic cuts forced on him by the dire economic situation and by international financial pressure.

PSOE has only 169 deputies in the chamber. And if the conservative Popular Party (PP), with its 153 members, had combined with left wing and regional parties they could have brought down the government.

Eventually the centre-right Catalan CiU with 10 seats and two smaller regional deputies, decided to abstain.

CiU leader Josep Antoni Duran Lleida said his party was abstaining not because it approved of the plan but because bringing down the government at this moment would sink the country into an even deeper hole.

“We don’t want Spain to be another Greece because the price paid by the public sector would be even greater. The problem is not the pensioners or public sector employees. You, Mr Zapatero, are the problem. Your time as head of government is over,” he declared.

PP leader Mariano Rajoy tried to convince the Socialists to vote against their government. “We are in favour of budget cuts, but not these ones. These measures put the pressure on the shoulders of the weakest sectors of our society. Pensioners can’t come out on strike.”

Among the unpopular measures presented a fortnight ago by economy minister Elena Salgado were a freeze on pensions at 2010 levels without the annual inflation-linked adjustments, pay cuts of between 5 per cent and 15 per cent for public sector workers, major cutbacks on public works projects and a reduction of €1.2 billion to the regions.

Mrs Salgado devoted her 30-minute address to defending her plan, trying to convince the deputies to support her. “We realise these measures are painful, but they are necessary,” she said.

But whether they are sufficient and whether the unions will accept them remains to be seen. They have already called a public sector strike for June 8th, and are threatening further action.

The situation could become uglier if the government introduces labour reforms making it easier to hire and fire workers. Earlier this week the International Monetary Fund described Spain’s labour legislation as “dysfunctional” and told the government it must reform its labour laws.

Spanish workers have always enjoyed generous employment benefits and any change would be bitterly opposed by the unions. Following a meeting yesterday, when they approved the June 8th strike, they also threatened a nationwide general strike if they lost any of their perks through labour reforms.

Spain’s pain: austerity measures

PRIME MINISTER José Luis Rodríguez Zapatero on May 12th announced fresh spending cuts totalling €15 billion in 2010 and 2011.

Civil service salaries will be cut by 5 per cent in 2010 and frozen in 2011, while more than €6 billion will be cut from public investment.

The cuts are aimed at speeding up fiscal consolidation and meeting Spain’s revised deficit targets of 9.3 per cent of GDP in 2010 and 6 per cent in 2011, compared with 11.2 per cent in 2009.

Public debt as a percentage of GDP is seen at 65.9 per cent in 2010, rising to 71.9 per cent in 2011.