Post-election Spain faces long uncertainty over who will govern

MADRID -- Spain entered a governing void Monday, facing weeks or months of uncertainty over what political party or parties will lead the country following a national election that fragmented the status quo.

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The result was so blurred that a German government spokeswoman said it was impossible to determine who deserved congratulations.

Although the ruling right-of-centre Popular Party won the most votes, it failed to retain its parliamentary majority and will try to cobble together a coalition or minority government.

But that's unlikely, analysts say, because the party wouldn't get enough seats in the lower house of parliament even by allying itself with the new business-friendly Ciudadanos party that came in fourth place and is seen as the most likely ideological partner.

The ambiguous outcome helped push Spain's benchmark stock index down 3.1 per cent in Madrid as investors fretted over the possibility of a governing alliance between the Socialist Party and the country's new far-left Podemos party, led by pony-tailed political science professor Pablo Iglesias.

That sort of combination could lead to a government that would try to roll back highly unpopular austerity measures imposed over the last four years by Prime Minister Mariano Rajoy. He vowed after the vote to try to form a government, but gave no details on how he would do so after winning just 123 seats in the 350-member lower house of parliament.

Rajoy said he would try to "form a stable government in the general interest of all Spaniards."

German government spokeswoman Cristiane Wirtz told reporters Monday that Spaniards deserve congratulations for voter participation of 73.2 per cent, up from the 68.9 per cent turnout in 2011 that gave Rajoy a 189-seat parliamentary majority.

"But otherwise, I don't yet see so clearly who one can congratulate in this situation," Wirtz said, adding that no one from Germany's government had contacted Spanish officials about the formation of a new government.

If forced from power, Rajoy and the Popular Party would become the third European victims this year of a voter backlash against austerity -- following elections in Greece and Portugal seen as ballot box rebellions against unpopular tax hikes and spending cuts invoked during the eurozone's debt crisis.

In past Spanish elections, the Popular Party and the main opposition Socialists were the established powerhouses and only needed support from tiny parties to get a majority in parliament when they didn't win one from voters.

But Podemos came in a strong third place and Ciudadanos took fourth in their first election fielding national candidates.

The Socialists and Podemos on Monday ruled out voting in favour of Rajoy. Ciudadanos, which has repeatedly said it will never vote for Rajoy, said that at most it would abstain so the Popular Party could try to form a minority government -- given that it was the most voted.

"Even if a stable coalition partnership emerges, the negotiations are unlikely to be swift, which implies that both consumers and businesses face a prolonged period of uncertainty," RBC Capital Markets said in a note to clients.

That could hurt business investment "precisely at a time when the Spanish economy is becoming increasingly reliant on domestic demand to fuel the recovery," RBC added.

Spaniards who cast ballots for Podemos and Ciudadanos said they weren't worried at all about the uncertainty their country could go through -- or the prospect of another national election in the spring if no parties manage to cobble together a viable coalition or minority government that would rely on other parties to support it in passing legislation.

Instead, the voters who picked the upstart parties were elated at making history by upending the traditional two-party system. They blame the Socialists for plunging Spain into an extended economic crisis that began in 2008, and the Popular Party for an economic recovery accompanied by an unemployment rate of 21 per cent and more than double that for workers under age 25.

Diplomat Ainara Gomez said the new panorama with four political parties forced into negotiations to find a way that Spain can be governed "will open a new scenario that is expected in all real democracies."

"Now it's up to the agreements between them so they can form a new government," she said. "We have to wait. Nothing is clear."

Former bank employee Eugenio Garcia said the Popular Party and the Socialists are to blame for "disappointment among the people."

"I'm happy with the situation and it forces the parties to negotiate to make a pact and discuss their politics, and I think this is a good thing," he said.

But school teacher Maribel Martinez, who voted for the Popular Party, was petrified that Spain could descend into political chaos with no stable government for months or an administration run by left-of-centre and left-wing parties bent on reversing what Rajoy spent four years accomplishing.

"My worst fear is a union of all of the leftists," she said. "I don't think that these kind of alliances would be looked on well from abroad because they would be economically disastrous for the country."

For now, Rajoy stays on as the caretaker prime minister until parliament convenes on Jan. 13 and King Felipe VI proposes a candidate for prime minister, which could be Rajoy or the leader of another party.

Felipe must consider which party has a real possibility of winning a parliamentary confidence vote and forming a stable government, and will presumably find that out during talks with the parties.

It would be unprecedented but not be illegal or unconstitutional for an alliance of the second- and third-placed parties to get the nod. That has often happened in Spanish regional and local elections, but never following a general election.

In a first confidence vote, the candidate must get more than 50 per cent of the full 350 votes in order to form a government.

If he falls short, he must get more votes for him than against him in a second ballot 48 hours later. That's a lower bar which allows parties to abstain, letting a rival into power in return for concessions.

If there is still deadlock after two months, the monarch calls a new election -- probably in April or May.

Associated Press writers Ciaran Giles and Ana Martinez contributed to this report.



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