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Spaniards Set to Throw Out Ruling Socialists (Update: Spain Turns Blue)

PJ Media: Does the PP presidential candidate, Mariano Rajoy, have a viable plan for brining Spain out of the economic crisis?

Guardia: He does have some interesting ideas -- on taxation, support for entrepreneurship, and labor reform (which is sorely needed) -- though in my opinion these ideas don't go as far as they should, at least on paper. Rajoy has been calculatedly ambiguous, revealing only what really needs to be revealed and nothing more; the example of the UK's Cameron‚ who was riding high in the polls until he detailed his plans‚ scared Rajoy away from being too explicit. So it's difficult to know in advance.

And at the same time, it's important to realize that Rajoy won't have much leeway here. Some measures need to be taken ASAP, more or less; and some others will be “dictated” by the EU, which is just as good for Rajoy: he will be able to minimize the backlash using that fact as an alibi.

Kern: No one knows the answer to this question for sure, although it does seem unlikely that he has developed a comprehensive plan. Rajoy has been ahead in the polls for months and thus has not felt any need to present Spanish voters with an economic plan. Rajoy’s advisors almost certainly have identified some policy measures to be implemented almost immediately, such as providing tax breaks for Spanish industry. But Spain’s problems are truly vast in scale, and are also deeply structural in nature. There is simply no easy fix to Spain’s problems, and things are likely to get worse before they get better. Most economists forecast that it will take a decade or more for the country to recover the ground it has lost.

Senserrich: No one knows for sure. Rajoy has showed an admirable level of discipline this campaign by not telling anyone what he really intends to do. His party has been similarly tight-lipped, with very few hints on their future plans. A few months ago Rajoy did talk about some extensive reforms of Spain's disastrously inefficient labor market, but he has not provided any further details.

Reading the tea leaves a bit, I think that Rajoy will go big once he is in office. He seems to be getting ready for a fight once he arrives to Moncloa. What I am not sure about is if he has the right plan in mind, as the party seems to be more focused on austerity than on structural reforms

PJ Media: Are Spanish voters willing to hear hard truths about what it will take to turn things around? After all, there was widespread outrage over austerity measures that passed earlier this year.

Guardia: There was outrage, but certainly not as big as in other countries, namely Greece. The truth is that most Spaniards are coming to terms with the fact that it's going to be necessary to pass some painful measures if the economy is to be fixed. I sometimes joke that Zapatero has been the biggest “factory” of small-government supporters in Spain, a country where there were few. When you talk to people on the street, many now ask: Why have a government with so much power if that power can lead to such big failures? Or, why pay so much money for pensions and health care if at the end of the day these are going to be cut because there's not enough money? They might as well pay for private retirement and medical services.

The so-called “indignants,” the protesters that inspired the Occupy Wall Street movement, were indeed vocal, but other than in the media they haven't had much actual impact, or at least they didn't in March's local elections. I don't think they will have a bigger impact this time. And if they do, they’ll either stay home or, even though they lean left, vote for other parties on the left other than the Socialists. This means that they will likely help make the PP’s win larger: due to Spain's electoral system (halfway between proportional and majoritarian), the number of seats in parliament is bigger if the votes are concentrated in one party than if the same number of votes spreads among several.

Kern: Spain’s problems are deep-seated and above all structural. Spain’s economy is notoriously uncompetitive. Apart from olive oil and wine, Spain exports few products abroad, and even fewer that have much technological value.

One of the biggest problems facing Spain is the central government’s dysfunctional relations with the 17 autonomous communities (there are also two autonomous cities); Spain’s existing political model, which was established in the late 1970s after the death of General Francisco Franco, generates immense waste and duplication and is unsustainable over the long term.

Cultural factors also add to the mix: Spain has a huge problem with corruption, which affects all political parties (PJ Media article here). On top of that, Spain also has a big problem with tax evasion and the shadow economy represents around 20 percent of GDP.

In summary, Rajoy’s leadership abilities are completely untested and he has zero charisma to rally the general public around grand ideas. It remains to be seen whether he and his advisors will have the vision and the fortitude to implement the painful changes needed to get Spain back on track. Any changes to the status quo will be fiercely resisted by powerful interest groups on many levels of Spanish society. The odds would seem to be against Rajoy succeeding in any meaningful way, but if he assembles a team of competent technocrats and advisors to govern Spain, there certainly is hope.

Senserrich: It is hard to know. The Conservatives are likely to win a very large majority this Sunday, but it is hard to say if that will amount to a mandate. Voters will be voting against the Socialists, not endorsing the bold policies that Rajoy so far has refused to put forward, so any reform plan can prove a tough sell. In addition, the far-left parties are likely to increase their support at the expense of the Socialists, creating a loud, active opposition block against reform.

The current situation, however, is clearly unsustainable. Unemployment is sky high, economic growth is non-existent; most voters probably understand by now that this is not the time for playing it safe. My guess is that we will see some outrage and some protests, but that they are not likely to be widespread at least during the first few months.

If the euro-zone mess persists and the economy shows no signs of turning around by early 2014, however, all bets are off.