Socialists prepare for power as Spanish government set to collapse

Spain's Partido Popular government appeared doomed last night to lose a no-confidence vote in parliament, with the centre-left PSOE poised to take power.

A Basque nationalist party's decisive announcement that it would vote in favour of the motion spelled the almost certain end of Prime Minister Mariano Rajoy's mandate and foretold the stunning collapse of his minority government in a parliamentary vote today, when it will be short of support to survive.

If the vote goes though, Mr Rajoy will be the first Spanish prime minister to lose a no-confidence vote.

Last night Maria Dolores de Cospedal, the secretary general of the PP, denied persistent rumours that Mr Rajoy would resign ahead of the vote, speculation fuelled by the fact that he did not attend the afternoon session of the debate on Thursday.

If the vote goes ahead today and Mr Rajoy loses, PSOE leader Pedro Sanchez- who tabled the no-confidence motion - would immediately replace him.

The impending downfall of Mr Rajoy's government after ruling for nearly eight years came just days after the PP’s reputation was badly damaged by a court verdict that identified it as a beneficiary of a large kickbacks-for-contracts scheme.

The unexpected development injected a new element of tension into European Union politics and global financial markets, already unsettled by Italy's struggles to install a government since a March 4 election.

Under a Spanish law that prevents a power vacuum, Mr Sanchez would immediately become the new leader of the 19-country eurozone's fourth biggest economy and a prominent EU leader at a time when the bloc faces numerous challenges.

Unlike Italy's potential new leaders, Mr Sanchez has not expressed scepticism about the EU nor the continent's single currency, both of which are broadly popular in Spain.

For Gibraltar, a PSOE government in Spain, even if short-lived ahead of a general election, could open an opportunity to progress speedily with delicate ongoing discussions about the
Rock’s post-Brexit future relations with Spain and the EU.

While the Socialists share the core Spanish aspiration over the Rock, they also favour dialogue and good cross-border relations, as evidenced by their participation in the trilateral process when last in government.

But yesterday the political landscape in Spain was fractured and in turmoil, with passions running high.

In the no-confidence debate, Mr Sanchez, 46, called on Mr Rajoy to step down over the corruption scandal.

"Are you ready to step down here and now? Resign and everything will end," Mr Sanchez told the prime minister, who listened from his seat with an impassive face.

"Mr Rajoy, your time is up."

Spain's Socialist (PSOE) leader Pedro Sanchez listens to Spain's Prime Minister Mariano Rajoy during a motion of no confidence debate at Parliament in Madrid, Spain, May 31, 2018. REUTERS/Sergio Perez

Mr Rajoy was having none of it, accusing Mr Sanchez of a power grab.

"Everybody knows that Pedro Sanchez is never going to win the elections and this is the reason for his motion, his urgency," Mr Rajoy told MPs, reminding them that the Socialists lost two general elections under Mr Sanchez's leadership and warning that a Socialist government would endanger the country's financial stability.

Mr Sanchez promised to abide by a national budget that was recently negotiated by Mr Rajoy.

It includes substantial benefits for the Basque nationalists whose promised votes in the no-confidence debate opened the door for Mr Sanchez to oust Mr Rajoy.

Mr Sanchez also vowed to open talks with separatists in the Catalan regional government over their demands for independence.

That issue has dogged Spain for the past eight months.

Mr Rajoy has been in power since December 2011, successfully steering Spain out of its worst economic crisis in decades during the eurozone debt crisis and achieving some of the strongest economic growth in Europe.

Last year, gross domestic product growth reached 3.1%.

Mr Rajoy, cultivating a stern image, faced down opponents who complained that the recovery came at the expense of austerity measures, just as he has faced down Catalan secessionists.

But the strong economy was not enough to keep him in La Moncloa palace, the seat of government in Madrid, and he was undone by the corruption scandal that brought verdicts last week.

National Court judges delivered hefty prison sentences to 29 business people and PPmembers, including some elected officials, for fraud, money laundering and tax evasion, among other crimes.

The PP was fined 245,000 euro (£215,000) for benefiting from "an authentic and efficient system of institutional corruption".

More damagingly for Mr Rajoy, the judges questioned the prime minister's credibility when he said in court that the false accounting was unknown to him.

Mr Sanchez appeared to have the absolute majority in the Congress of Deputies - 176 of 350 seats - required to unseat Mr Rajoy.

But the coming months could be difficult for Mr Sanchez to navigate, with a minority Socialist government needing to please Basque regionalists, Catalan separatists and anti-austerity parties in order to pass legislation in parliament.

Mr Rajoy had labelled that prospect as a "Frankenstein government".