Spain’s Political Instability: 5 Geopolitical Effects You Need to Know

1. Spain’s political deadlock

The last general election in Spain in April produced a political deadlock, as no party has a clear majority, with the socialist party edging a victory. Since then, Party leader Pedro Sanchez has been Prime Minister. Published on Tuesday, the Centre for Sociological Studies’ (CIS) July survey of voter intentions put the Socialists at 41.3%, up from 39.5% the previous month and a large jump from the 28.7% it garnered in April. Sanchez now has until mid-September to break the political deadlock or face a fresh election on Nov. 10. Furthermore, Political instability in Spain is hurting its global image, as according to a study by El Pais: “The country has fallen from 25th to 27th place on the Good Governance Index, compiled by the MESIAS project with support from España Global (or Global Spain), a state agency working to monitor and improve the country’s image abroad.” Spain’s political situation is far from ideal, and many are hoping the elections later this year will finally break the deadlock. 

2. Relations with the EU at a weak-point

In addition to domestic political problems, Spain’s relations with the EU are also at a low point, with the EU sending Spain to court for their failure to protect citizens from air pollution, as well as failing to enact data protection rules for police. Spain has failed to keep the concentration of nitrogen dioxide (NO2) in the air below the EU limits which have been legally binding since 2010. Greece and Spain are the only two nations who haven’t notified the Commission on whether this directive has been transposed through national laws. Along with their domestic instability, Spain have many issues to deal with, and the EU does not seem to be willing to wait until the political situation is resolved in September or possibly later, hence the incoming court hearing. 

3. Spain’s second-biggest bank charged with corruption

To add to Spain’s internal and external political issues, Spain’s second-biggest bank BBVA has been charged with corruption for alleged corporate spying involving a disgraced former police chief. Spain’s National Court, which handles major financial cases, charged the bank with “corruption and breach of confidence”, a spokeswoman for the court said. The announcement comes five days after prosecutors asked that the bank be charged. This taints another bad picture of Spain’s management and regulation of its large institutions. 

4. Economic issues prevail

Spain’s economy has also disappointed many this year, the Spanish economy recorded a weak end to the second quarter, the period April to June. IHS Markit’s Purchasing Managers’ Index (PMI) of manufacturing companies slumped to 47.9 in June, down from the 50.1 reached in May. This marks the second time the index has dropped below the 50 line separating growth from contraction since February. In order for a sector to slip into recession territory, it must have shrunk for record two consecutive quarters. Furthermore, Spain’s state railway company Renfe has canceled 1,152 train services (477 medium-distance, 230 high-speed AVE services and 445 freight trains) due to a four-day strike called by the CGT union for July 31, August 14, August 30 and September 1, according to the minimum services established by the Public Works Ministry. There is alot of work to be done to re-stabilize and save Spain’s economy from recession. 

5. Spain’s political stalemate is stalling economic reform

With no obvious coalition partners, left or right, Mr Sánchez has faced a difficult task. The decision by the liberal, pro-national unity Ciudadanos to rule out a coalition due to deep differences over Catalonia left Mr Sanchez no option but to enter talks with the far-left Podemos. Corruption scandals and the lasting scars from the financial crisis have both played a role. But Catalonia’s illegal independence referendum in 2017 has deepened the political gulf. This is significantly slowing down a continuation of Spain’s economic reform effort. Please use the sharing tools found via the share button at the top or side of articles. Reforms still have a long way to go. Public debt remains at almost 100 per cent of GDP, around three times that in 2007, constraining the government’s ability to respond to any future crisis. If Spain wants to inspire hope of re-accelerating its economic reform efforts, it needs to settle its political situation as soon as possible.