So how is Pedro Sanchez recovering from his bad day?

The pact that PSOE and Podemos signed with EH Bildu to gain five abstentions in the vote to extend the last State of Alarm is surely one of the biggest errors in Spanish politics.

Read my write-up on what happened here. In summary: PSOE agreed to get rid of all the PP’s labour reforms before the end of the state of alarm (and gave the Basque’s a wad of cash) in exchange for five abstentions it didn’t need to get the State of Alarm extension through Parliament. Podemos campaigned on a radical anti-business far left socialist manifesto; PSOE have also been captured by the anti-business left, mainly to try to stop the Podemos avalanche (which, it turns out, wasn’t so much of an avalanche as an opportunistic snowfall).

EH Bildu promptly went public with the agreement, causing a nuclear melt-down in Spanish politics, blowing Sanchez’s credibility out of the water and causing international concern.

On the international front, things seem to have moved quickly. The EU bail-out agreed by Germany and France is being blocked by the “prudent” northern countries, who are insisting that any money be repaid and be accompanied by structural reforms (and the roll-back of employer’s rights by a communist government in Spain is heavily hinted at as a Bad Thing). It also went against an EU report published earlier last week which said that Spain needed to free up its labour market.

On the domestic front, social dialogue on the matter continues to be stalemated as the CEOE and CEYPME associations refuse to talk to the government after their “betrayal”. Which in essence means legislation on the matter cannot be tabled as it does not properly involve all interested parties. Interestingly enough, it emerged on Friday that Sanchez had placed a personal phone call to the head of the CEOE. What they talked about is unknown (one can imagine) but it doesn’t seem to have softened any stances. The head of the CEOE later praised minister Calviño in a pointed statement.

The PSOE have also put out a “clarification”, in which the work “completely” makes a conspicuous failure to appear, despite it being a key word in the Bildu agreement. The “clarification” says that the reform will be limited to:

  • Recovering lost essential rights of workers and recovering the lost importance of collective bargaining agreements (convenio colectivos)
  • Recovering the right to not be fired for missing work through illness; limiting temporal cover covered by convenio colectivos, and applying per company CC’s over sectorial CC’s

Which isn’t what Podemos and EH Bildu claimed the agreement would be. Podemos wants to roll-back all the changes to employment law introduced by the PP over the last eight years, to return labour legislation to 2012; and then start afresh, article by article, striking out anything not deemed to be in favour of the little worker.

It’s also worth pointing out that one of the points (the missing work through illness thing) has already been removed back in Feb; article 52.d was removed from the Estatuto de los Trabajadores. The claimed reason is to protect people with long term illness who tend to miss work more often, although in reality this means that a small business with a worker who starts to bring in loads of leaves of absences signed by their doctor has no economical way of getting rid of them without paying loads of money in severance.

Going back to the original problematic “secret agreement”, PSOE / Podemos agreed to give EH Bildu “greater flexibility” in setting their own regional and municipal budgets, and ability to borrow more money. Given that the Basque country is a couple of months away from regional elections, this can be seen as an unforgivable intrusion into regional politics by the central government, as EH Bildu (radical left republicans who are commonly seen as the political continuation of the armed fight for independence in the Basque Country) can now go into the elections boasting of being able to bring loads of money, sinking their political rivals. Get it?

This is something that has caused consternation in all of Spanish regions where there are several different regional parties (Galicia, Catalunya, Canaries, etc). If the central government is going to play this very dangerous game of backing one regional party against the other, who to trust? The whole balance of power is upset and nobody can trust anyone.

Which means that for a coalition minority government that is reliant upon small regional parties to trust them and back them in parliament – well, they’ve just shot themselves in their own foot.

Interestingly enough, third VP and minister of the economy Nadia Calviño (PSOE) appears to have emerged as the leader of a moderate, pro-Brussels and pro-business face of the PSOE that has been missing in this current government. When she came out against her own party last week and abruptly said that it was absurd to be thinking of rolling back employment laws at the moment and that there were more important things to be thinking of, she seems to have tapped into a seam of the party that was desperate for a voice. It’s far too early to be talking of a successor to Sanchez but…….

What is certain is that the radical left element of this government has been torpedoed, although they remain in charge and will be back. They have managed to unite vast forces against them across the whole range of the political spectrum, both nationally and internationally. With Spain needing a massive bail-out from the EU, they’ve managed to give opponents to this (the nordic countries, Holland, etc) ammunition to include strong conditions to the bail-out, and may well have shot down the French-German agreement. Which they won’t be forgiven for.

Sanchez, who hasn’t taken a lead on all this, appears weakened and in thrall to his communist buddies in Podemos. He used last night’s appearance on TV to make his first public statement on the issue, where he promised he would be a full term government and that he had no intention of reshuffling his cabinet. The appearance has gone down like a lead balloon, as he appears inflexible and arrogant.

They’ve made it far more difficult for themselves to arrange the alliances in Parliament they need to get their own agendas through, and proven that they can’t be trusted. If they give this much away in exchange for five abstentions they didn’t even need, what on earth will they promise in exchange for something they really want? is the question every political party in Spain is now asking themselves.

They’ve really pissed off the PNV, the main regional party in the Basque Country. The PNV had been pressing the central government to allow elections in July. Sanchez had made his position public, he didn’t want them so soon. In the end Madrid had to buckle and allow the election to go ahead, on the same date as the Galician ones. Shortly afterwards, he’s caught giving the biggest rivals of the PNV unfair electoral advantages. It’s not a good look, especially when the PNV had been one of his biggest backers in the coalition government, and the PNV have been vocal about their displeasure.

And they’ve managed to strengthen their own enemies, both inside and outside of the parties. Calviño has emerged as a strong politician, capable of cracking heads together. The PSOE “clarification” is generally put down to her, and her alone. And Inés Arrimiada, the leader of the Cuidadano’s party, is managing to use the crisis to direct her party back to the centre-right of Spain, slowly taking the PP’s position and gaining a national reputation as a pragmatic politician who is putting national interest ahead of her own. (And congratulations to her, she just had a baby on top of all this).

It’s difficult to say just how many waves have been made by this EH Bildu stone. But the ripples are going to be felt well past the end of this government’s term.

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