While you were out enjoying the sun, the commies in government just blew up the coalition.
OK, this is difficult to explain but I’ll try to explain why Sanchez just went down the toilet today.
Both the PSOE and Podemos have said they want to undo the “labour reform” laws enacted by the previous PP government, which made it (very slightly) easier for companies to hire and fire. PSOE want to “evolve” the laws, Podemos want to get rid of the laws immediately and return to the 2012 laws. And then iron-plate “employee rights”. Which for them means the right to sit around all day scratching yourself in exchange for a paycheque.
Anyway, in order to get the last extension to the state of alarm passed through parliament, the PSOE and Podemos signed a secret memorandum of understanding with the EH Bildu party. These are extreme-left Basque independence politicians who are commonly held across Spain to be the political continuation of ETA. Anyway.
(It turned out that Sanchez didn’t need the Bildu backing in any case, so the memorandum was a waste of time. He also promised to allow Basque regions more lee-way than others to spend cash without central government oversight. Anyway).
Bildu went public with the memorandum today. One of its clauses was a commitment to get rid of the PP employment reforms before the end of the state of alarm. Possibly in as little as 15 days.
PSOE quickly sent out a spokesman to deny the claims and say that no, they were committed to employment reform but in an “evolving” manner and no rush.
Iglesias from Podemos then came out in a big huff and said no, quicker the better and let’s nuke all companies and stop anyone from being fired in any circumstance, and that’s why the Bildu agreement was signed, because that’s the intention.
That’s when the whotsit hit the ventilator.
Turns out a lot of people in the PSOE party knew nothing about the Bildu thing and are coming out to deny all knowledge of this. Second VP of the government and economy minister Calviño said it was “absurd and counterproductive” to think of getting rid of the employment reform at the moment, for example, in essence torpedoing her PM and the Podemos agreement.
The business sector has, for the first time ever, suspended social dialogue and walked out of all meetings with the government, saying it’s pointless to have meetings when decisions are being made in this way.
(Government employment policy is agreed, under the Constitution, by “social dialogue”, between the politicians, business sector and unions. If the business sector, for example, refuses to meet it nukes this process and is a very serious thing indeed).
So in essence:
For some votes he didn’t actually need, Sanchez has shown everyone in all the little parties that he’s willing to say one thing but promise the opposite to someone else. So he can’t be trusted.
He’s given the pro-business opposition a vast amount of fire-power to attack him with.
He’s completely destroyed what little business confidence was left. How can businesses plan to reopen if they expect the government to iron-plate employment contracts, making it far more difficult and expensive to get rid of staff, and making it more difficult and expensive to hire?
He’s paralysed government development of social and employment policy.
He’s given his enemies within his own party a massive stick to hit him with.
The ratings agencies have come out and warned that reversing the employment reforms will hit Spain’s rating on the international markets.
Even El País, traditionally the main PSOE party newspaper backer, has gone overboard in its warnings to him. In an evening editorial it said that unless he immediately carries out a massive cabinet reform and makes a public apology he’s done for.
He’s certainly sunk any chance of cobbling together a coalition to extend the state of alarm again.
Basically, the smart money now is on him trying to get through the summer and trying to get together enough support to pass a budget in exchange for elections before the end of the year.
All in all, quite an afternoon.