Spain's Split Vote Leaves Compromise as the Only Option

(Bloomberg Opinion) -- If you are searching for an example of political hubris, look no further than what has happened in the last six months in Spain.

At a general election last April, the left-wing Socialist Party and the centrist Ciudadanos registered strong electoral gains, which put them in a comfortable position to form a government together. Instead, party leaders Pedro Sanchez and Albert Rivera failed to get past an acrimonious campaign and each bet that they’d do better in a repeat election. The Socialist leader had his eyes on winning an absolute majority, while the head of Ciudadanos thought they could become the dominant force in the center-right, replacing the People’s Party.

A new vote on Sunday saw these two gambles backfire spectacularly. Ciudadanos imploded, halving its share of the votes from almost 16% to less than 7% and forcing Rivera to resign. The Socialists lost nearly a percentage point to 28% and three seats to 120. Meanwhile, right-wing parties surged: the People’s Party to 88 seats, and the hard-right Vox to 52 seats, making it by far the biggest winner of the night.

Sanchez now faces the daunting task of cobbling together a coalition in a deeply fragmented parliament. The most comfortable option would be to look left, and seek an alliance with the hard-left Unidas Podemos and a number of regional parties. This coalition would require, at the very least, the abstention of the Republican Left of Catalonia, a Catalan separatist party, whose support would prove highly controversial.

Meanwhile, Pablo Casado, the leader of the People’s Party, may be tempted to stand his ground, wait for a possible collapse in the talks, and hope to gain more traction in a new election. The People’s Party has already struck some local deals with Vox – in the southern region of Andalusia, for example — and may be thinking about a future partnership nationally.

Instead of pandering to the extremes, the People’s Party and the Socialists would do much better to consider the option of a grand coalition. Spain faces significant challenges, from a slowing economy to the never-ending crisis in Catalonia. After two inconclusive elections, it is time for the largest political parties to set aside their differences and seek much-needed compromise.

This will be easier said than done, of course. The People’s Party takes a much tougher line on Catalonia, while Sanchez has been more open to compromise with the separatists. The Socialists want to tax big businesses to fund redistributive policies including greater social spending. Casado has promised an annual 16 billion euros in tax cuts.

But if a grand coalition has been possible elsewhere — most notably in Germany — there is no reason why it cannot happen in Spain.

As the past six months have shown, the alternatives could be much worse. The two major parties risk losing ground, especially to Vox, which is capitalizing on political instability and the failures of mainstream parties to come together. The resurgence of the far right, which had been absent from Spain’s political life since the death of former dictator Francisco Franco, is disturbing and should force political leaders to take a very hard look at themselves.

For decades, Spain has been a stable two-party system, which offered voters a clear choice between left and right. The rise of political fragmentation obliges politicians to consider options once seen as unimaginable. Despite all the difficulties involved, a grand coalition is now the best option for Spain.

To contact the editor responsible for this story: Sarah Green Carmichael at sgreencarmic@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Ferdinando Giugliano writes columns on European economics for Bloomberg Opinion. He is also an economics columnist for La Repubblica and was a member of the editorial board of the Financial Times.

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