Can Zapatero's Stepping Down Redeem Spain's Socialists?

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Francisco Bonilla / Reuters

Spanish Prime Minister José Luis Rodríguez Zapatero greets supporters during an electoral rally in Murcia, Spain, on April 3, 2011

In an attempt to stop the downward spiral of support for his ruling Socialist party, Spanish Prime Minister José Luis Rodríguez Zapatero ended months of speculation by announcing on Saturday that he will not seek re-election after completing his second four-year term next March. Now high-ranking members of the Spanish Socialist Workers' Party (PSOE) will jockey for the job if, as expected, a primary is held after regional and local elections on May 22. Whoever is nominated as the new party head, however, will inherit Spain's worst economic crisis in 30 years and an electorate who of late have voted not for the best candidate but for the lesser of two disappointments.

"Both the incumbent and the head of the opposition — in theory the next Prime Minister — are regarded as a heap of rubbish," says William Chislett, who writes on Spain for Madrid-based think tank Elcano Royal Institute. "It's clear the people are fed up with the political parties, their bickering and their failure to resolve problems."

When Zapatero took office in April 2004, Spain was basking in economic prosperity buoyed by a booming property sector. Zapatero first complied with his campaign pledge to withdraw Spanish soldiers from Iraq, and then began an aggressive policy of social reforms. In 2005, Spain legalized same-sex marriage, made it easier for couples to get a divorce and gave working papers to around 580,000 illegal immigrants with work contracts.

While these moves sparked opposition from the right, Zapatero's push for peace talks with the separatist group ETA in 2006 ignited a caustic political discourse that has yet to abate. ETA, which has killed around 850 people over the past 51 years in a campaign for an independent Basque nation, ended negotiations nine months later with a bomb in Madrid's Barajas airport that killed two men. For Zapatero, it was a major political failure. With elections looming, the Socialists sought votes through a one-off $3,500 payment for new parents and a $560 income-tax rebate.

The tactic seemed to work, and Zapatero won re-election in 2008. But both measures were repealed when Spain's economy took a nosedive. While immune from the subprime hangover, Spain suffered its own economic crisis when the property sector, which accounted for around 18% of GDP, collapsed. In 2008, the unemployment rate was around 9%; now it's 20%. Add the debt crisis affecting Europe, and in three years Spain's economy has gone from robust to anemic.

The government tried to stop the bleeding by cutting civil servants' pay, lowering firing costs and increasing the retirement age. But experts say these reforms should have been implemented years ago when Spaniards could afford them. "Zapatero's economic policy has been a bloody disaster," says Chislett. "He was in denial for far too long about the dangers, and the measures that were put into place were more of a result of outside pressure from the International Monetary Fund, Brussels and the U.S. than anything else."

Despite a 60% approval rating in Zapatero's first term, the economic crisis has destroyed Spain's regard for him. According to a January poll by the Center of Sociological Research (CIS), 80.7% of respondents said they had little or no confidence in the Prime Minister and 58.8% said the government was doing a bad or very bad job.

The opposition Popular Party (PP) — marred by corruption scandals and led by the uncharismatic Mariano Rajoy, who has twice lost to Zapatero in general elections — does not excite voters either. In the same CIS poll, 78% of the respondents said they had little or no confidence in Rajoy. When asked to compare the two leaders, 27% said neither politician inspired more confidence than the other.

Following Zapatero's announcement on Saturday, analysts are looking at Deputy Prime Minister and Interior Minister Alfredo Pérez Rubalcaba as the Prime Minister's most likely successor. A longtime PSOE heavyweight, and a more aggressive politician than Zapatero, Rubalcaba consistently tops polls as the most respected Minister in the Cabinet.

But even if the popular Rubalcaba takes the lead, the Socialists know they are going to suffer in the May regional elections and likely lose the general election in 2012, says David Mathieson, a former adviser to the British government and now a Madrid-based political analyst. The hope would be that Rubalcaba's nomination could protect against the PP winning an absolute majority in parliament. Polls currently have the PP ahead of the PSOE by between 7 and 15 percentage points. The CIS report from January said that 71% of the respondents thought the PP would win the next general election.

By deciding not to stand for re-election and taking the blame for Spain's economic woes, Zapatero is hoping that the administration's mistakes stick with him and not with the PSOE. While that may not be enough to earn the party a victory in 2012, it could at least give it a chance to stay in the game. "If anyone can salvage anything, Rubalcaba is the sharpest tool in the box of any party in Spain," says Mathieson. "The question now is how fast the PSOE can rebuild themselves after being defeated."