Sanchez's Spanish Cabinet Sends Signal on Catalonia, Economy

(Bloomberg) -- Pedro Sanchez’s first cabinet appointments show Spain’s new prime minister seeking to assert his government’s identity and authority by naming Catalans and women with heavyweight credentials to key posts.

He named European Commission Director General Nadia Calvino as economy minister and Carmen Calvo, a constitutional lawyer, as deputy prime minister. Meritxell Batet, a Catalan, will be in charge of the regional administrations ministry and Josep Borrell, a Catalan-born former President of the European Parliament, will be foreign minister.

The appointments show Sanchez laying out his credentials to be credible on the economy -- a strong suit for his predecessor Mariano Rajoy -- and enforcing the rule of law in Catalonia. His choice of cabinet, which will contain at least seven women, also signals he aims to claim ownership of other key issues such as gender and social policy, said Antonio Barroso, a London-based analyst at Teneo Intelligence.

“Sanchez is doing a balancing act between technocratic expertise and strategic political considerations,” said Barroso. “He is aware that the economy is the main theme and he needs to get it right.”

Sanchez faces a battle to establish the legitimacy of his government from the start with the outgoing People’s Party and Ciudadanos accusing him of an unscrupulous power grab last week. They were angered by his decision to line up with separatist parties from Catalonia and the Basque Country to eject Rajoy from office.

Guarantee on Reforms

His budget minister will be Maria Jesus Montero, who is currently head of finances for the Socialist-led regional government of Andalusia, one of the biggest beneficiaries of the current system of distributing funds from state coffers. Her job will include overseeing any reforms to Spain’s regional financing system -- a key battleground in Catalonia’s dispute with the central government.

Sanchez’s choice of Calvino as economy minister won praise from Ana Botin, chairman of Banco Santander SA, the country’s biggest lender with a balance sheet as big as the Spanish economy. She will guarantee that Spain will increase its influence in European institutions, Botin said on twitter.

Borrell was one of the most high-profile defenders of Spanish unity during last year’s independence crisis and as a Catalan has particular authority to tackle the separatists’ arguments.

The 71-year-old will also be in charge of explaining the Spanish government’s position to the rest of the European Union, a world he knows from his time as president of the European Parliament. He’s published two books in the past three years poking holes in the Catalan government’s claims.

“Borrell raised his voice against the separatists when few in the Socialist party in Catalonia dared,” said Veronica Fumanal, a political marketing expert and former adviser to Sanchez. “Montero is a guarantee that there won’t be unfair concessions to anyone.”

Sanchez’s ability to handle the aftermath of Catalonia’s push for independence will be one of the key factors in determining whether he can consolidate his leadership in Spain. With only 84 deputies in the 350-strong Parliament, he seized power by ambushing his predecessor Mariano Rajoy with a no-confidence vote last week, stitching together an alliance that included both left-wing radicals and nationalists.

Catalan Challenge

“Borrell’s appointment makes the government’s stance on Catalonia very clear,” the Socialist Party’s head of organization Jose Luis Abalos said in an interview with state broadcaster Television Espanola. “We aren’t negotiating or committing to anything.”

The Socialists supported Rajoy’s decision to impose direct rule in Catalonia in October after the regional government attempted to declare independence from Spain. Calvo, his choice of deputy in his new government, led negotiations with Rajoy on how to suspend Catalonia’s self-government.

To be sure, Spain’s recent governments have given women prominent roles. Rajoy’s own administration included women in key posts such as that of deputy prime minister, defense agriculture and health. His predecessor, the Socialist Jose Luis Rodriguez Zapatero, named women to nine out of 17 ministerial posts after winning re-election in 2008.

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