(Bloomberg) -- Spain’s opposition parties are struggling to reconcile their differences as they try to converge on a plan for dislodging Prime Minister Mariano Rajoy.
The Socialists, the largest opposition group, will present their no-confidence motion to the cross-party parliamentary party board on Monday. But that initiative needs broad support to prosper and each party has its own agenda.
The centrist Ciudadanos, an occasional ally of the Rajoy government, favors fresh elections. The Basque nationalists, meanwhile, are seeking a promise that a Socialist administration would grant their demand for self-government, and the Catalan nationalist group PdCat said they wouldn’t be caught on the same side as Ciudadanos, which has been the most vehement opponent of their push for independence.
Although a long drawn out political drama could unsettle markets and disrupt the economy, the divisions among opposition parties offer Rajoy hope of survival.
Rajoy Digs In
Despite the obstacles, the Socialists are plowing on. Jose Luis Abalos, a Socialist official, on Sunday called on all lawmakers to support the motion, and said his party isn’t interested in negotiating with other groups.
“We are acting as we have to act, we don’t have another way or possibility than the one we are exercising," Abalos said in a speech at a party event in the region of Valencia, Spain. “We hadn’t had such a categorical ruling as the one we’ve seen this week."
While Rajoy was not on trial in the case that led to a 33-year jail term for a former official, the Socialists say he can’t govern as the malfeasance occurred under his watch. Rajoy signaled he has no intention of stepping down or calling elections.
Spanish stocks and bonds rebounded Monday with the benchmark Ibex-35 gaining 0.7 percent at 9:08 a.m. in Madrid. Investors may have overreacted, according to Gonzalo Sanchez, an asset manager at Gesconsult.
“Many times, investors shoot first and asks questions afterwards but the situation is not that bad,” Sanchez, who helps manage 750 million euros at Madrid-based Gesconsult said. “If a snap election takes place, whatever coalition is formed by PP, PSOE and Ciudadanos would be good. This is not like Italy.”
The government estimates that the political blockade could slash more than 4.8 billion euros ($5.6 billion) from Spain’s gross domestic product, according to a report seen by Bloomberg News.
Recent opinion polls, which showed that many opposition parties stood little to gain in a fresh election, could deter opposition parties from throwing out the current government. Ciudadanos is the only party that is seen increasing its seat count significantly.
Support for the PP has fallen to 16.8 percent, pushing the party into fourth place, according to an opinion poll by SocioMetrica published by website El Espanol, the first conducted since the corruption verdict last week. That would give the PP 63 seats, Ciudadanos would more than triple its number of seats to become the biggest party with 108 lawmakers. The Socialists, at 20.3 percent, and Podemos, at 19.3 percent would be little changed.
The prospect of new elections also looks like bad news for nationalist and separatist parties in Catalonia and the Basque Country that fear the advance of Ciudadanos could erode their support in parliament and their ability to extract concessions in return for their votes. Spaniards are scheduled to hold city hall and European Parliament elections a year from now so national elections may distort their campaign plans.
“Mr. Rajoy should be the one calling elections,” said Albert Rivera, the leader of Ciudadanos in an interview with El Mundo newspaper. “We need stability to move beyond the obsolete two-party system and win the intellectual battle against populists and nationalists.”
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