Power & Market

Spain Faces Parliamentary Paralysis

The Kingdom of Spain held elections on July 23 and the resulting configuration of the lower house of Congress presents several challenges for governability. In Spain, the executive branch of government is not directly elected but is rather designated by the vote of elected representatives in a fashion comparable to the American Electoral College or the British Parliament. For a party or coalition to form a government they require at least 176 votes out of the 350 members. If none achieve the 176 votes, then it is possible to form a government by receiving more votes in favor than votes against. If, after two months from the first vote, no government is successfully formed, then the King must dissolve Congress and call for new elections.

The current challenge stems from the composition of Spain’s government. The incumbent left-wing coalition obtained 171 seats. The right-wing opposition obtained 172 seats. The remaining seven seats are held by Catalan secessionists, whose leader, Carles Puigdemont, has stated is only willing to support the formation of a government if they agree to a full amnesty for those prosecuted for the events of the 2017 failed secession attempt and to a binding independence referendum.

Puigdemont has also stated that he does not trust the incumbent left-wing President, Pedro Sanchez, to deliver on promises, which appears to outright preclude any support from the former for a government under the latter. On the other hand, a constituent party of the right-wing coalition, Vox, characterized by being conservative and unionist, is strictly opposed to any independence referendums.

There is a possible yet unlikely scenario in which the two largest parties from each coalition, which also happen to be the more moderate ones, form a centrist grand coalition. Such a coalition would be 258 seats strong. In such a case, it is probable that neither of the party leaders would become President, but rather a technocrat be selected in the Italian fashion. The main factors making this scenario unlikely are that the relevant parties clearly campaigned against each other, and a poor performance could result in a significant leakage towards the extremes for both parties in the next election.

The most likely outcome is a new election, as was the case in 2019. Government paralysis is not likely to have a significant impact on day-to-day life further than the perpetuation of issues that are yet to be addressed. Among the most pressing issues, the general housing situation can be highlighted, including the matters of high costs, low availability, and squatting. It is interesting to note that there are those who defend the squatters. Perhaps they overlook the fact that an institutional arrangement that is favorable to squatters is also necessarily prejudicial to renters. The increased costs from the increased squatter risk lowers the profitability of housing provision, which lowers housing provision itself, resulting in lower availability and higher costs to renters.

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