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SPAIN: PSOE-Podemos coalition unlikely to break up

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The infighting between the ruling center-left Socialist Workers' Party (PSOE) and far-left Unidas Podemos has intensified in the last few days. While the most recent rift is allegedly due to differences over policy issues, the divisions result from PSOE's attempts at preventing Podemos from influencing economic policy and the decline of the far-left party in opinion polls. However, a break-up of the ruling coalition before the last quarter of this year remains unlikely (25% probability), as Podemos would face a bleak outlook outside of government.

The in-house opposition

Parliament has become the main battleground between the two ruling parties, with Podemos deciding last week not to back a government draft bill on equal social rights. More recently, Vice Prime Minister and Podemos leader Pablo Iglesias has criticized the Minister of Development Jose Luis Abalos's decision not to push for the introduction of caps on rent prices. The measure is included in the coalition deal signed by both PSOE and Podemos in late 2019.

While the differences over policy are material, Podemos' discontent is mostly connected to the actual functioning of the government. The composition of the current government cabinet reflects Prime Minister Pedro Sanchez's efforts to dilute Unidas Podemos's weight on economic policy matters. This setting makes it difficult for the far-left party to claim credit for some of the government's policy initiatives.

Coupled with Podemos' decline in the opinion polls, Iglesias has an incentive to develop a discourse that sets it apart from PSOE as much as possible. As a result, he has been making statements that openly contradict the views of Sanchez and the wider PSOE, for instance, on issues such as Catalonia. The socialists are also currently negotiating with the opposition People's Party (PP) new appointments to the judiciary's governing body, which might create additional tensions with Podemos.

It's cold outside of government

Despite all the disagreements, a break-up of the coalition before Q4 remains unlikely (25% probability). On PSOE's side, Sanchez has no intention of getting rid of Podemos, given that the socialists only have 120 MPs in the 350-seat Congress of Deputies. While Sanchez could rely on ad-hoc deals with other parties to pass legislation in such a situation, the risk of the government losing key votes would still be high. Therefore, in the unlikely scenario of a coalition split, the country would most probably go to early elections.

The fear of a snap poll might be enough for Podemos to stay in the coalition, as it would probably face a bleak outlook outside of government. Not only could PSOE accuse Iglesias of generating instability in the middle of the pandemic, but Podemos would not have many issues on which to campaign given their limited impact on the most important economic policy decisions of the government. The next real moment of truth for the coalition is likely to be the parliamentary approval of the budget for 2022, which will take place in Q4.

A signpost to watch is a significant toughening of Podemos' rhetoric against established state institutions such as the monarchy. Such a trend would suggest the party wants to rebuild its anti-establishment credentials ahead of a potential snap poll and signal its readiness to break up the coalition.

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SPAIN: PSOE-Podemos coalition unlikely to break up

The infighting between the ruling center-left Socialist Workers’ Party (PSOE) and far-left Unidas Podemos has intensified in the last few days. While the most