20150318-NATIXIS-Spain__Podemos,_or_how_to_square_a_circle_13页_833kb

Summary of "FLASH ECONOMICS: Spain: Podemos, or how to square a circle"

Core Content

This document analyzes the political and economic changes in Spain, particularly focusing on the emergence of new political forces and the potential for a shift in the traditional two-party system. It compares Spain's situation to that of Greece, where a radical left party, SYRIZA, gained power following a significant political swing. The report suggests that while Spain is experiencing similar challenges, the likelihood of a "Greek-style" political upheaval is lower.

Main Trends and Similarities with Greece

• Deterioration in living conditions: Spain and Greece have both seen a decline in median income, an increase in unemployment, and a rise in the population at risk of poverty. However, the scale of decline is less severe in Spain, likely due to more effective social safety nets.
• Loss of trust in institutions: Both countries have experienced a loss of trust in government and political parties, alongside rising perceptions of corruption and misuse of corporate assets.
• Emergence of new political actors: Spain has seen the rise of Podemos, a left-wing party, and Ciudadanos (C's), a centrist party, similar to Greece's SYRIZA and Golden Dawn.

Key Factors Preventing a "Greek-style" Development

1. Time Until Elections Favors Stability

• The macroeconomic indicators are expected to remain positive until the December 2015 elections.
• Spain's recovery is supported by strong growth, improving labor markets, and better public finances.
• These factors provide the government with a positive scorecard and reduce the likelihood of a radical shift.

2. Political Center Preference

• A significant portion of Spanish voters (60%) position themselves at the political center.
• There is a strong desire for the end of the dominance of PP and PSOE, but this does not necessarily translate into support for radical left parties.
• The rise of Podemos may reflect a rejection of the traditional parties rather than a genuine shift toward radicalism.
• The presence of a centrist party, Ciudadanos, may temper the political swing.

3. Proportional Representation and Regional Dynamics

• The D'Hondt method of seat allocation favors larger parties, even if they do not receive the majority of votes.
• Regional parties, especially in Catalonia and the Basque Country, have a significant influence on the national political landscape.
• Podemos struggles to gain traction in regions where regionalist parties dominate.

Expected Outcomes

• Scenario 1: A relative victory for one of the two historical parties (PP or PSOE), leading to a government with a majority.
• Scenario 2: A potential victory for Podemos, but this is unlikely due to the difficulty in forming a stable government without alliances.
• The most likely outcome is a coalition government involving PP or PSOE with either Ciudadanos or Podemos, rather than a radical left government.

Upcoming Challenges

• The next government will face the challenge of consolidating recent reforms and maintaining public trust.
• Key issues include fighting corruption, restoring institutional trust, and addressing the sense of impunity among the political elite.
• Economic reforms have already been implemented under pressure from Brussels and financial markets, giving the new government more flexibility.

Conclusion

Spain is undergoing a significant political transformation, but the emergence of a radical left government is not expected to mirror Greece's experience. The political landscape is shifting toward a multi-party system, with the potential for more stable coalitions that could better reflect voter expectations.

Appendix Summary

• The Spanish electoral system is based on a single-ballot list system with the D'Hondt method, which results in a non-proportional allocation of seats.
• This system gives an advantage to larger parties, even if they do not win the most votes.
• The report highlights the implications of this system for the composition of the Congress of Deputies, particularly in regions with strong regionalist parties.

Key Parties and Their Positions

Party	Creation	Positioning	Current Leader	Head of Government
PSOE	1879	Left, Social Democrat	Pedro Sánchez	1982-1996, 2004-2011
PP	1989	Right, Conservative	Mariano Rajoy	1996-2004, 2011-2018
C's	2006	Centre	Albert Rivera	-
Podemos	2014	Left	Pablo Iglesias	-

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