SPANISH ELECTIONS

PSOE remains the biggest party, but without anoverall majority

The Socialists have retained power following Spain’s generalelection on 9 March, and increased their number of seats inparliament.

The ruling PSOE party of José Luis Rodriguez Zapatero won169 seats in the lower house, the Congress of Deputies, anincrease of five seats on its performance at the last generalelection in 2004. However, the result leaves Mr Zapatero sevenseats short of an absolute majority in the 350-member chamber.

Conservatives increase share of the vote; smallerparties lose out

The opposition conservative People’s Party (PP), led by MarianoRajoy, won 154 seats – also an increase of six seats – and sawits share of the vote rise.

The increases for the two main parties came at the expenseof regionalists and nationalists. Convergence and Union (CiU),a centrist Catalan party, won ten seats, as it did in 2004.The Basque Nationalist Party (PNV) won six, losing one seatcompared to the previous election, and the remaining elevenseats were split between regional parties (from Catalonia,Galicia, Navarre and the Canary Islands), the United Left (IU)party, and the Union, Progress and Democracy (UPyD) party,which won its first parliamentary seat. UPyD was formed onlylast September, as a centrist alternative to PSOE and the PP.

Turnout at the election was 75.3 per cent – only slightly lowerthan the record turnout in 2004.

As in 2004, when the elections took place in the shadow of theMadrid train bombings, the end to this election campaign wasalso marred by violence – this time by the shooting of a formerPSOE councillor, Isaias Carrasco, in the Basque country on7 March. It is believed that ETA, a Basque terrorist-separatistgroup, was responsible.

Analysis: Zapatero to rely on regional parties

The results of the election have little changed the politicalbalance in Spain: PSOE remains in power, and Mr Zapatero asprime minister, but without an overall majority. Mr Zapatero islikely once again to lead a minority government, but relying onan alliance with regionalists and nationalists. This time, PSOE islikely to work with CiU following the disastrous showing by theRepublican Left of Catalonia (ERC), Mr Zapatero’s previouspartner, which now holds just three seats, a loss of five.

Alliances with regional parties saw the Socialists in parliamentapprove measures to reform regional institutions and powers,especially in Catalonia in 2006. However, opponents (led by the PP)are challenging these reforms in the constitutional court.Such alliances also brought promises of improved infrastructureand investment in Catalonia.

In addition, Mr Zapatero tried – unsuccessfully – to resolve theBasque question. ETA declared a ceasefire in March 2006,opening negotiations that continued until the end of the sameyear when the group group brutally ended the truce by explodinga bomb at Madrid airport.

Analysis: the economy and immigration to the fore

In spite of criticism of Mr Zapatero’s policies in this area, the mainfocus of the election was the economy, against the background ofa slowdown in the housing market (with prices falling in someareas), a rise in the cost of living, inflation at a ten-year high, andincreasing unemployment. With the economic environmentworsening, PSOE will have a difficult four years ahead – and somehave suggested that this may have been a good election to lose.

The other principal issue – mainly espoused by the PP – wasimmigration. Five million people have moved to Spain in the lastdecade, and the PP called for better border controls, morerespect for Spanish culture, and repatriation of criminals.

However, on both the economy and immigration, voters seemedto express confidence in Mr Zapatero’s record and his ability toresolve future problems.

Analysis: endorsement of social reforms

PSOE focused on its record of liberal social reforms – includingthe legalisation of gay marriage, a law on gender equality, andeasier divorce procedures. Despite criticism from conservativesand the Roman Catholic Church, Mr Zapatero’s party can takethe result as an endorsement of these measures.

SPANISH ELECTIONS

Robert Mack, CEO Brussels Jeremy Galbraith, CEO EMEA37 Square de Meeûs - 1000 Brussels - Tel: +32 2 743 66 11 - Fax: +32 2 733 66 11 - bmbrussels@bm.com www.bmbrussels.eu

Socialists retain power in Spain

BURSON-MARSTELLER INSIGHT

March 2008

A G E N C Y O F T H E Y E A R 2 0 0 7

EuropeAgency of the Year 2007

This Burson-Marsteller Insight has been produced in collaboration with Burson-Marsteller Madrid.

For more details on Burson-Marsteller Madrid, contact Cristóbal Fernández Muñoz at cristobal.fernandez@bm.com.

Outlook: tackling inequalities the priority

Mr Zapatero pledged a fresh start for Spanish politics followinga divisive electoral campaign. In an emollient victory speech,he said that the Spanish people “have spoken clearly andhave decided to open a new period without tension, withoutconfrontation”.

Mr Zapatero’s priorities are likely to remain similar to those inthe previous parliament, focusing on removing inequalities insociety, particularly those affecting women, young people andolder people.

No big changes are expected in the government’s structure ormembership.

Outlook: a new PP leader?

Mr Rajoy congratulated Mr Zapatero and wished him luck“for the good of Spain”. It seems possible that the PP leader willstand aside, having presided over two successive electiondefeats since taking over from José Maria Aznar in 2004.

Mr Rajoy’s performances in the two televised debates werelacklustre, and his campaign seemed to focus more on theright-wing vote than on reaching out to centrists. The PP mayturn to a new leader to revitalise the party and build on anincrease in seats in parliament and in share of the vote.

EU impact: Lisbon treaty and Immigration policy

The renewal of PSOE’s mandate means that any change to EUpolicy is unlikely. Spain remains a strongly pro-Europeancountry, and ratification of the Lisbon Treaty is almost certain inthe light of the first debate on the issue in Parliament in

ERCIU

PSOE

CiU

BNGPNVCC

UPyDNA-BAI

PP

350 seats

P E R S P E C T I V E

ERC (Catalan leftist): 3

IU (United Left): 2

NA-BAI (Navarre): 1

BNG (Galician Nationalist): 2

PSOE (Socialists): 169

PNV (Basque Nationalist): 6

CiU (Catalan): 10

CC (Canary Isles): 2

UPyD (Progress and Democracy): 1

PP (Popular Party): 154

RESULTS : Spanish Congress of Deputies

December 2007, when both the major parties expressed supportfor the Treaty. The likely date for ratification is October 2008 atthe latest.

Spain’s priority at EU level is likely to remain the establishmentof a common immigration policy.

Mr Zapatero’s win would also seem to take him out of therunning for the new role of President of the European Council –and re-establishes a hurdle in the path of the former Britishprime minister, Tony Blair, in his bid for the job.

EU impact: Europe's indecisive votersThe slender win by PSOE represents the continuation of a trendof national elections in Europe in recent years - the narrow splitbetween Left and Right. Indeed in Spain, the PP held itsmajority in the upper house of the Spanish parliament, theSenate, following partial elections held on 9 March.

In recent years Germany and Italy have seen tight electionresults transformed into a grand coalition and an unstablegovernment respectively. Socialists won a narrow victory inHungary in 2006; liberals and conservatives squeaked home inDenmark last year. Coalition governments abound, in countriessuch as Austria, the Netherlands and Bulgaria; elsewhereopinion polls are close (such as in the UK) or governing partieshave been subject to electoral reverses in local polls (mostrecently in France).

So despite a good win for PSOE, it is too soon to suggestwhether this result signals a leftward turn in Europe – especial-ly given that Italy’s centre-right seems likely to win the generalelection in April. For the moment, Europe’s voters remain quiteevenly split between Left and Right.