Europe

SPAIN: Budget almost approved; Catalan elections next

Antonio Barroso

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( 3 mins)

The draft budget for 2021 is set to be approved by parliament following the multiple deals reached with several parties by the ruling coalition of the Socialist Workers’ Party (PSOE) and Unidas Podemos. The key piece in Prime Minister Pedro Sanchez’s budget puzzle has been the backing of the Republican Left of Catalonia (ERC). Whether Sanchez can continue relying on the secessionists for key decisions going forward will likely be contingent on the result of the 14 February Catalan regional elections, however.

Sanchez has managed to secure small regionalist parties’ support for this week’s key budget votes in parliament. The government will likely get the support of around 185 MPs, well above the necessary 176 votes to get the accounts passed. Therefore, the accounts will receive first reading support in the Congress of Deputies tomorrow. They will then go to the Senate before returning to the lower chamber for a final second reading vote, most likely on 29 December.

Providing both material and (sometimes controversial) symbolic concessions to these parties has allowed Sanchez to mount a broad coalition in favor of the budget despite the government’s parliamentary weakness. He has exploited the opposition’s divisions and used the windfall provided by EU funds to negotiate transactional amendments with smaller parties. Ironically, one of the biggest challenges for the budget’s approval has not come from other parties but from within the ruling coalition. Podemos has tried to leave its imprint on the budget by presenting a controversial last-minute amendment on foreclosures, which Sanchez has defused by promising to adopt measures on the issue soon.

With the budget out of the way and an opposition incapable of dislodging Sanchez from power, the government’s medium-term survival prospects have improved substantially. The question is whether Sanchez will have enough latitude going forward to make the necessary policy changes as the economic scars from the pandemic become even more evident. Moreover, the prime minister remains set on finding a way forward for the Catalonia issue next year. The two signposts to watch in terms of the government’s ability to make progress on both fronts are potential intra-coalition squabbles and the upcoming 14 February Catalan regional election.

What to watch for

Regarding intra-coalition politics, the recent budget episode is potentially a harbinger of further tensions to come. With Podemos failing to benefit electorally from its presence in the government, party leader Pablo Iglesias might become even more aggressive in his efforts to differentiate his party from the socialists. This is unlikely to lead to a potential break-up of the coalition, however, as Podemos has nowhere to go. But Iglesias’ activism could make it harder for the government to deliver a coherent set of measures to deal with the pandemic’s economic fallout.

In Catalonia, meanwhile, the regional elections expected to take place on 14 February will be crucial to determine whether ERC can continue supporting the PSOE-Podemos coalition in the national parliament. Sanchez hopes that ERC will defeat former Catalan regional prime minister Carles Puigdemont, which would provide ERC’s ‘moderate’ strategy of cooperating with Madrid with electoral cover. In contrast, a victory by Puigdemont would make it more difficult for ERC to sustain such a relationship.