Spain Is Next to Test Europe’s Stability as Rajoy Faces No-Confidence Vote

After a bumpy week in Italian politics sent financial markets reeling, Spain is next up to test the stability of southern Europe, as its prime minister, Mariano Rajoy, may face a no-confidence vote by Friday.

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Unlike Italy, where the country’s economic stagnation under the euro has become a central issue, in Spain the issue is Mr. Rajoy himself and a long-building corruption scandal that has tainted his conservative Popular Party.

Last week, Spain’s national court sentenced more than two dozen business people and politicians — including the party’s former treasurer — on charges of operating a kickback scheme.

Spain’s main opposition Socialist Party is now asking lawmakers to vote Mr. Rajoy out of office and install a Socialist administration, ahead of another national election. The vote is expected to follow a two-day parliamentary debate starting Thursday. As of Wednesday evening, the outcome appeared too close to call.

Two years ago, Spain spent 10 months in political limbo after two inconclusive elections, a period that ended with Mr. Rajoy at the helm of a vulnerable minority government. New elections could well mean a replay and extend the uncertainty that has destabilized markets and the politics of southern Europe, starting with Italy.

What the two countries share are political systems that have been badly fractured by the emergence of upstart parties, by the lingering effects of the financial crisis and by waning faith in the traditional parties that have dominated politics for decades.

The only bright spot for Europe, analysts say, is that none of the main parties in Spain are challenging the European single currency, as is happening in Italy.

“Unlike the situation in Italy, the crisis of the Rajoy government and the vote of no confidence are not about the European Union or the euro,” said Bonnie N. Field, a professor of global studies at Bentley University in Massachusetts. “In this way, Spain is less of a threat to the European project than Italy.”

The reason for that has everything to do with the divergent paths the two countries took to try to get out of the euro and debt crisis from which much of Europe is only now emerging.

Italy blinked again and again at painful economic and political reforms, and its economy remains a laggard, saddled with high public debt and low growth. Mr. Rajoy on the other hand pushed through contentious austerity measures that have widened income inequality and made jobs more precarious, but have restored economic growth.

Spaniards surpassed Italians as a richer people in term of gross domestic product per capita this year for the first time in the countries’ shared history in the European Union.

On the other hand, Spain has been badly shaken by an ongoing territorial crisis over the prosperous northeastern region of Catalonia, which Mr. Rajoy blocked from seceding late last year. In fact, nationalist lawmakers from Catalonia and the Basque region could help decide his fate.

Mr. Rajoy, 63, a veteran of European politics, began serving in ministerial positions in 1996. Over the past two decades, he has managed to survive election defeats as well as a Spanish banking bailout in 2012, often by cautiously waiting for bolder rivals to fail.

But his current government depends on support from a smaller, pro-business party, Ciudadanos, which was founded in Catalonia and has seen its stock rise for its strong opposition to the region’s independence drive.

Ciudadanos would prefer to force Mr. Rajoy to either call a snap election or get Parliament to approve an interim administration of technocrats — rather than a Socialist government — before an election later this year.

That glimmer of daylight between Cuidadanos and the Socialists may offer Mr. Rajoy a last-ditch opportunity to survive the vote.

Even if Ciudadanos and the main left-wing opposition parties now agree on wanting to remove Mr. Rajoy because of the fraud scandals involving former officials of his party, they face considerable other hurdles.

A no-confidence vote needs approval not only by an absolute majority of lawmakers, but also agreement on a substitute prime minister.

No party has anything close to a parliamentary majority, and recent polls suggest only that Ciudadanos has an incentive to hold an election now.

A snap election would come at a fragile time for the two left-wing parties of Spain, the Socialists and Podemos, which failed to form an alternative coalition government to replace Mr. Rajoy in 2016 and then suffered from internal feuding.

Last year, Pedro Sánchez was unexpectedly re-elected to the leadership of his Socialist Party, seven months after being ousted in a party revolt and abandoning his parliamentary seat.

Pablo Iglesias, the leader of Podemos, has recently seen his own position threatened. Last weekend, he survived a no-confidence vote within his anti-establishment party over his purchase of a luxury family home outside Madrid. The acquisition irked hard-line militants and was at odds with his past criticism of the lavish spending of politicians.

In such circumstances, Jonathan Hopkin, an associate professor of comparative politics at the London School of Economics, forecast that the Socialist initiative to oust Mr. Rajoy would fail “because of the divisions between the interests of the main opposition parties.”

But even if he can survive, Mr. Rajoy and his Popular Party will be weakened, even more than they have recently been. Last week’s verdicts in the corruption case made the party the first Spanish political force to be convicted of operating a slush fund and ordered to pay a fine, 245,000 euros.

The party’s former treasurer, Luis Bárcenas, was sentenced to 33 years in prison and fined €44 million, alongside 28 other businessmen and politicians who received over 300 years in combined prison sentences for benefiting from a kickbacks-for-contracts scheme.

Since the court sentences, Mr. Rajoy and others from his party have acknowledged that the ruling was damaging, but also insisted that it didn’t imply fraud was committed by Spain’s current administration or the party as a whole.

“The sentence has nothing to do with corruption,” Rafael Catalá, Spain’s justice minister, said at a conference this week. “It has more to do with the benefits that some want to gain from this moment, and the aim that some have to provoke political changes in our country without going through the ballot boxes.”