Spain election dominated by its economic woes

By Harold Heckle

Associated Press

Published: Sunday, Nov. 20 2011 10:06 a.m. MST

MADRID — Spaniards braving 21.5 percent unemployment and bleak prospects for economic growth voted Sunday in a general election expected to yield a landslide win for opposition conservatives.

Spain would thus become the third eurozone country in as many weeks, after Greece and Italy, to throw out its governing party in an attempt to dig itself out of an economic crisis. The governments of Ireland and Portugal, both of which received huge bailouts when their borrowing costs got out of control, also have changed hands in elections as part Europe's worst financial crisis in decades.

Spanish opposition leader Mariano Rajoy and his conservative Popular Party were expected to win control of Parliament and oust the ruling Socialists, although Rajoy has said little about what his party would do to fight Spain's sky-high unemployment and piled of debt or where he might exact more painful austerity measures.

A win for Rajoy, 56, would bring the conservatives back to power after nearly eight years of rule by Socialist Prime Minister Jose Luis Rodriguez Zapatero.

On social policy, Zapatero put a patently liberal stamp on traditionally Catholic Spain by legalizing gay marriage and ushering in other northern European-style reforms. But on economic matters he has been widely criticized as first denying, then reacting late and erratically, to Spain's slice of the global financial crisis and the implosion of a real estate bubble that had fueled Spanish GDP growth robustly for nearly a decade.

Zapatero slumped so badly in popularity that he decided not to run for a new term, and former Interior Minister Alfredo Perez Rubalcaba — a veteran figure and powerful force within the party — emerged as the candidate to succeed him.

Unlike Italy and Greece, which recently replaced their elected governments with bureaucrats in an attempt to better cope with the euro crisis, Spain will stick with the winner of a general election.

"I am ready for whatever Spaniards may want," said Rajoy after casting his vote Sunday.

Rubalcaba, 60, urged his supporters not to let a low turnout reduce his Socialist party's chances. "The next four years are going to be very important for our future," he said. "The big decisions that have to be taken must be made by citizens, so it's important to vote," he said.

But poor weather caused some polling stations to open late, and a station in the country's south had to be relocated because of flooding, said election office spokesman Felix Monteira. He also said voter turnout was running lower than during Spain's 2008 election.

Voters are casting ballots to elect 350 members of the lower house of Parliament and 208 senators.

In Barcelona, Spaniard Juan Sanchez said he had voted for Rajoy's party because when it was last in power from 1996 to 2004 unemployment had fallen, whereas under the Socialists that figure had risen to five million.

"Hundreds of small and big businesses have closed down," Sanchez said.

In Madrid, civil servant Diana Bachiller said: "I voted for the Socialists because I am sure that if the Popular Party comes to power it is going to begin to cut everything."

Almost two years of recession have left Spain with a euro-zone high 21.5 percent unemployment rate and a bloated budget deficit. The country's key borrowing rate rose above 6 percent for five consecutive days last week, just one percent below a rate considered unsustainable.

The winner of Sunday's election will have little room for maneuver and will almost certainly need to continue implementing austerity measures begun by the outgoing government.

Maria Angeles Redondo, a doctor in Madrid, said she had voted for the Popular Party but doubted an incoming government would be able to improve matters in the short term. "I am not sure if a change of government is really going to usher in the improvements we want and need," she said.

The increasing severity of the recession forced Zapatero to cut civil servants' wages, freeze pensions and, with a hard-bargained agreement of the trade unions, pass legislation making it easier for companies to hire and fire workers.

Rajoy faces the dilemma of trying to lower Spain's budget deficit — and thus boost investor confidence to reduce Spain's borrowing costs — without cutting spending or raising taxes so much that it puts a brake on the already listless economy and drag it into another recession.

During the campaign, Rajoy was vague about his plans, but his platform included plans for business tax cuts to encourage hiring and lower the country's staggering unemployment rate. Rajoy also said he would meet Spain's commitments to the European Union on deficit reduction, although with economic growth at a standstill hardly anybody thinks the current government's goal of cutting it to 6.0 percent of GDP this year from 9.2 in 2010 is achievable.

"What we need is work and to maintain our health care," said Raquel Melgar of Madrid, who said she voted for Rubalcaba.

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