European stock markets reacted negatively to the Socialists’ debacle, dropping to a one-month low, and the euro fell sharply to its lowest level in two months vis-à-vis the U.S. dollar. Other news weighing on the euro included Standard & Poor’s outlook downgrade on Italian government debt and Fitch’s outlook downgrade on Belgian debt and Fitch’s downgrade of Greek debt by three notches.
Spain’s May 22 vote was preceded by a week of mass non-violent protests in Madrid and 150 other cities. Young demonstrators fed up with the high unemployment rate said rallies would continue until at least May 29. Almost half of Spaniards aged 18-25 are out of work, more than double the European Union average.
The resounding victory for the Popular Party means its leader, Mariano Rajoy, is on track to replace Zapatero as prime minister. Nevertheless, Rajoy has failed to generate much confidence in his leadership abilities. After eight years in the opposition and many months on the campaign trail, Rajoy has yet to specify how he plans to reverse Spain’s economic fortunes if he finally becomes prime minister in 2012. A recent opinion poll shows that as a leader, Rajoy is not any more popular than is Zapatero.
Having lost two general elections to Zapatero (in 2004 and in 2008), many conservatives had expected the uninspiring Rajoy to retire and quietly fade away. But Rajoy has tenaciously held onto his job, thanks to help from party “barons” known for their secretive backroom wheeling and dealing, and to the notoriously undemocratic nominating processes within Spanish political parties which has prevented the emergence of a rival candidate.
A two-page analysis produced by the American embassy in Madrid and published by Wikileaks says:
Rajoy does not posses great charisma, and many were surprised when former President [José María] Aznar hand-picked him as his successor in 2003. Many more were surprised when Rajoy did not bow out five years later after a second straight electoral loss. We believe Rajoy owes his longevity as much as anything to the lack of a credible successor within his own party.
The ideological cost to the Popular Party has been very high. Following his electoral defeat in 2008, Rajoy concluded that he could become prime minister in 2012 only by steering the Popular Party to the radical center in an effort to woo new voters. In the process, Rajoy has subjected the conservative party to a political facelift so audacious that his critics say there is now not much difference between the Popular Party and the Socialist Party.
In an interview with the left-wing Cadena Ser radio station, Rajoy told his listeners that his new political philosophy consists of four words: “centrism, women, dialogue and future.” Observers of Spanish politics immediately recognized these politically correct buzzwords as coming straight out of Zapatero’s postmodern Socialist playbook.
If Rajoy becomes Spain’s next prime minister, it will not be because he has de-ideologized Spanish conservatism, but rather because the Socialists have self-destructed. In any case, how Spain will emerge from its economic crisis is anyone’s guess.