New battles loom as Spain’s Prime Minister Mariano Rajoy sworn in

Spain’s newly re-elected Prime Minister Mariano Rajoy swears an oath during a royal decree ceremony at the Zarzuela Palace in Madrid on October 31, 2016 after Rajoy won a confidence vote in parliament over the weekend.
He is expected to name his new cabinet This week after which he will need to submit a budget to parliament for approval after a delay of several months — a difficult task given that he commands the votes of just 137 of Spain’s 350 lawmakers in the lower house.
/ AFP PHOTO / POOL / Chema Moya

Spain’s conservative leader Mariano Rajoy was sworn in Monday for a second term as prime minister, bringing a close to 10 months of political limbo.

“I swear to faithfully fulfil the obligations of prime minister and to show loyalty to the king,” Rajoy said with his hand on the Spanish constitution, at a ceremony attended by King Felipe VI and broadcast live on national television.

Rajoy, leader of the conservative Popular Party (PP), is set to spend the next three days forming a new cabinet for his hard-won minority government.

A senior party source said he was staying tight-lipped about his cabinet picks, planning to notify ministers of their new jobs “a half-hour before”.

The comeback follows a victorious confidence vote in parliament on Saturday — only possible because Spain’s Socialists (PSOE) decided to abstain and not vote against him.

Still it is clear that Rajoy faces unprecedented opposition as Spain grapples with painful economic reforms and resurgent Catalan separatism.

When the PP ruled from 2011 to 2015, it enjoyed an absolute majority in parliament.

Now, it must govern with 137 of 350 MPs, meaning that it will have to negotiate with the upstart centrist Ciudadanos, Basque and Catalan nationalists, and the main opposition Socialists on every bill it seeks to pass.

Rajoy, 61, has been at the helm of a provisional government without full powers for nearly a year following inconclusive elections in December 2015 in which the PP lost its absolute majority, despite coming first.

New elections in June once again failed to produce a clear winner.

– Budget headache –
Rajoy is expected to name his new cabinet Thursday, with several ministers approaching retirement age set to depart, including Interior Minister Jorge Fernandez Diaz, a controversial figure for his efforts to tighten the legal noose on Catalan separatists.

Defence Minister Pedro Morenes and Foreign Minister Jose Manuel Garcia Margallo could also lose their jobs.

Rajoy’s first daunting task after that will be to submit a budget to parliament for approval after a delay of several months — certain to be a headache given his lack of a parliamentary majority.

If Rajoy persuades enough MPs to back — or not oppose — his taxation and spending plans, he will still face scrutiny from the European Union which will want to know how Spain will reduce its structural deficit to below three percent of GDP for 2017.

But it may prove impossible for Rajoy to secure enough parliamentary support while meeting the terms laid down by Brussels.

To slash the deficit Rajoy will either have to cut spending by 5.5 billion euros ($6 billion) — angering the left on whose support he may depend to get the budget passed — or hike taxes, which could in term anger businesses and jeopardise investment.

Spain has the second highest unemployment rate in the EU — second only to Greece — at 18.9 percent, which coupled with a pensions crisis threatens fragile growth.

Alongside the economy, Rajoy will be forced to grasp the thorny issue of Catalonia, Spain’s wealthy northeastern region where an independence movement has gathered pace since he first came to power in 2011.

Catalan regional president Carles Puigdemont has vowed to press ahead with an independence referendum next year if Madrid refuses to negotiate.

Mariano Rajoy took the oath of office as Spain’s Prime Ministerto to begin forming a new minority government.

Rajoy was sworn in at the royal palace in Madrid on Monday, returning to office after 10 months of political limbo which had caused Spain to grapple with increasing economic uncertainty. The deadlock ended when Rajoy won a confidence vote from lawmakers at the weekend.

The swearing-in ceremony was presided by King Felipe VI. Last week, the monarch asked Rajoy to form a new cabinet after Spain’s Socialists, who had opposed the 61-year-old and his Popular Party(PP)’s return to power, accepted to abstain in the final vote of confidence in parliament and therefore enable Rajoy to form a government with cross-party support.  

However, Rajoy, who will name his conservative cabinet on Thursday, is expected to face an array of challenges, including a weak mandate which would make it hard for him to pass laws in parliament. The most daunting of all tasks would be to find some 5.5 billion euros (USD 6 billion) in cuts or tax hikes to meet targets set by the European creditors.

Observers in the banking sector said Monday that Rajoy would fail to carry out expected reforms in the economy given the massive opposition from the Socialists and other parties. They said Rajoy would be needed to strike deals with a fragmented opposition to pass legislation in the future, something they said could become increasingly difficult.

Rajoy’s sole advantage in the new government would be the widening split among the opposition, which would give him some chance of clinching deals at the expense of keeping Spain away from another political deadlock.

Rajoy and the center-left PP lost their majority in parliament in 2015 after many in Spain began to suspect the party’s ability to weather the country’s economic crisis. Two successive elections then failed to produce a majority government, further dipping Spain into political uncertainty.

The PP has been hit with several corruption scandals while elements inside the party have also vowed to oppose Rajoy’s bid for carrying out reforms. That raises more questions about whether the new government would be able to operate effectively.

After Rajoy won the vote of confidence in the Spanish legislature, thousands staged a protest in Madrid on Saturday to voice anger at his return to power.

The seasoned politician also has to deal with a resurgent Catalan separatism, a thorny issue which he has been grappling with since first coming to power in 2011. Regional leaders have vowed that they would press ahead with a planned independence referendum in 2017 if the central government continues to refuse to hold talks about their demands.