- Regional elections in Catalonia in September and general elections before the end of the year will change Spain's political landscape.
- At the national level, the next Spanish government will be under pressure to increase spending and reduce taxes, and political fragmentation will create a coalition government that could struggle to agree on policy. Both factors could hurt Spain's incipient economic recovery.
- In Catalonia, pro-independence parties will perform well, but independence will remain elusive. Madrid will continue to block independence through legal means, but the evolution of the relationship between the central government and the rebellious region will depend on who is in charge in each government.
One of the most notable features of the European crisis is that economic and political processes often move at different speeds in different areas. Several economies in the European periphery are growing again, but the political consequences of the crisis are only beginning to be fully felt.
Spain is the clearest example of the trend. After re-emerging from dire economic circumstances, the Mediterranean nation is expected to grow by more than 3 percent this year. But that will not be enough to stop the country's political fragmentation because support for the two main parties (the conservative Popular Party and the Socialist Party) has declined, and new parties have surfaced. As a result, Spain's traditional two-party system has evolved into a multiparty system where political alliances are needed to form governments.
The autonomous region of Catalonia is also going through a complex political situation. Early in the crisis, the economic downturn reignited the region's secessionist claims. But more recently, political fragmentation led to the rise of new forces that criticize the status quo yet oppose independence. As a result, pro-independence forces will perform strongly in the region's next elections, but they may not receive the massive support they hoped for when they called for early elections.
The Catalan Question
The first key date for the future of Spain is Sept. 27, when Catalonia will hold regional elections. The ruling Democratic Convergence of Catalonia party reached a deal with the left-wing Republican Left and other political forces to link the vote to the promise of independence from Spain. The alliance promises that, if it wins the election, Catalonia will become an independent country within 18 months, with or without an agreement with the central government in Madrid.
The first problem with this promise is that Catalonia's political landscape is becoming as fragmented as the rest of Spain's, and pro-independence forces probably will not receive the landslide victory they hope for. Opinion polls show that secessionist parties will get about as many seats in the Catalan parliament as they did in the last regional elections, held in 2012. Some polls suggest they will get even fewer seats.
In addition, some voters feel that the Catalan government has spent too much time fighting with Madrid and too little solving the region's problems. A coalition of left-wing forces that criticizes austerity measures but is ambiguous about independence recently won municipal elections in Barcelona, and the centrist Ciudadanos party, which openly rejects independence, has become one of the most popular parties in the region. One thing is certain, however: Spain's national parties will perform poorly. The Popular Party is expected to receive less than 10 percent of the vote.
The second problem is pro-independence forces believe that a victory in the regional elections will give them democratic legitimacy to start the secession process, but the Spanish Constitution does not allow secession. There are no rules for determining what percentage of popular support in the elections is enough or how many seats in the regional parliament are sufficient to start the independence process.
Separatist leaders have said a simple majority of seats in the Catalan parliament (68 of the 135 seats available) will be enough to begin the secession process. If current opinion polls are confirmed, however, it appears unlikely that a government that has support from only half the electorate would feel confident enough to make any drastic decisions. Should the pro-independence parties achieve only a narrow victory, Catalan leaders are likely to wait for the result of the general elections to try to negotiate with the new central government.
The third and most important problem is the Spanish Constitution. The Spanish Constitutional Court will probably block any Catalan government actions that violate Spain's fundamental law. In November, the Catalan government decided to suspend an independence referendum and replace it with a non-binding consultation after the Constitutional Court declared it illegal. Madrid's first reaction to any secessionist moves from Catalonia will be to turn to the Constitutional Court.
This would put the Catalan government in a bind. It could decide to ignore the Spanish Constitutional Court, but the decision would have serious legal consequences. First, Catalan officials could be arrested. Second, the central government could suspend Catalonia's autonomy and temporarily take control of the regional government. That course of action would probably be a last resort for Madrid because it would generate a political crisis unprecedented since the end of Spain's dictatorship in the mid-1970s.
The possibility of suspending Catalonia's autonomy is still remote, but Madrid is arming itself with legal tools. In September, the Spanish parliament will pass a law that gives the central government powers to take over regional human and material resources during "exceptional circumstances." For example, the law would allow the central government to take control of regional police forces during emergency situations. While Madrid argues that the law is meant to streamline decision-making during terrorist attacks or natural disasters, Catalan separatists say the law could be used to suspend the region's autonomy.
These complex obstacles mean that Catalonia will probably not become independent anytime soon, but the relationship with Madrid will remain discordant, especially if conservative forces are re-elected during Spain's general elections.
The National Question
Spain will hold general elections before the end of the year. This is when the political impact of the European crisis will fully manifest, because the elections will lead to a coalition government that will include one of the two mainstream parties and at least one of the main anti-establishment contenders.
In May, regional and municipal elections offered a preview of what could happen in the general election. Left-wing Podemos helped the Socialist Party to form governments in several regions and municipalities, and the centrist Ciudadanos sided with the conservative Popular Party in some districts and with the Socialists in others. The most likely outcome of the general election will be either a center-right alliance between the Popular Party and Ciudadanos or a center-left alliance between the Socialist Party and Podemos.
Regardless of what government is formed, the new administration in Madrid will be forced to lower taxes and increase spending. After May's elections, center-left forces ruled most Spanish autonomous communities. They will advocate for softer deficit targets for the regions. At the national level, the incumbent conservative government announced a reduction of the income tax, promised more tax cuts if re-elected and increased financing for the autonomous regions. A progressive government would probably go further because both the Socialist Party and Podemos criticize the austerity measures introduced by the administration of Prime Minister Mariano Rajoy.
Spain's initial economic growth will give the central government some room to relax the pace of spending cuts, but considering that the Spanish recovery is still fragile, markets could react negatively if Madrid is seen as abandoning the path of reform. With high levels of public debt and dangerously high levels of private debt, Spain is not completely out of the woods.
The coming political alliances could also be fragile. Since the end of dictatorship, the Popular Party and Socialist Party have dominated Spanish politics. Both parties are accustomed to governing alone or with support from small parties. Spain does not have a tradition of coalitions between parties of relatively similar size, so the post-electoral alliances could be hard to sustain, potentially hurting the country's recovery if the next government struggles to find consensus on political and economic decisions.
Finally, the composition of the next Spanish government will also affect the relationship between Madrid and Catalonia. The four largest parties at the national level more or less oppose independence. But a conservative government is more likely to pursue a hard line on the rebel region than a progressive one.
A New Phase of Spanish Politics
As Stratfor forecast, the European crisis is diminishing support for mainstream parties, forcing them to share power with emerging political forces. Most new parties are still not strong enough to form governments alone, but the Continent's politics have reached a point where these parties are ready to enter governments as a part of coalitions.
In Spain's case, the likely alliance between one of the mainstream parties and one of the new contenders means that the country will not radically change in the near future. However, Spain's citizens will demand that the next administration in Madrid slow down or even reverse reforms that have been introduced since the beginning of the crisis. Spain's key challenge will be to form a government that is coherent enough to address the country's multiple domestic issues while reassuring EU officials and financial markets that reforms will continue.