May 25, 2015 / 3:59 PM / 2 years ago

Rajoy's Spanish re-election plan in doubt after local battering

Spain's Prime Minister Mariano Rajoy reacts at the beginning of a People's Party (PP) executive committee meeting at the party's headquarters in Madrid, Spain, May 25, 2015.Susana Vera

MADRID (Reuters) - To anyone who doubted his re-election strategy, Spanish Prime Minister Mariano Rajoy has had a simple answer: "Trust me". Now, a battering in local polls has cast doubt on his plan that an economic recovery will secure him a second term later this year.

In six months' time, when the next general election is due, the Spanish economy will be growing at 3 percent and half a million jobs will have been created. This was Rajoy's message as he campaigned across Spain for his conservative People's Party (PP) before the municipal and regional polls last weekend.

But many voters have hardly felt the recovery and, following a string of corruption scandals that have touched the ruling party, they turned on Sunday to new forces such as the anti-austerity Podemos ('We Can') and market-friendly Ciudadanos ('Citizens').

Although the PP won the most votes overall, the rise of the upstart parties meant it lost its majorities in powerful regional governments and city halls across the country, its worst result in 20 years.

"It's time to reflect. The party is badly hit... For sure, we're going the wrong way. We are the party that won the most votes but voters sent us a message of anger," said a senior PP member who attended a meeting of the PP's executive committee on Monday and declined to be named.

"We haven't seriously done self-criticism ... Something is not working and we have to properly diagnose what," he added.

After the meeting, Rajoy stuck to his guns.

He said he would keep the focus on the economic recovery and simply try to explain it better to Spaniards but would not reshuffle his cabinet or overhaul his strategy.

Asked if he still believed he was the best possible candidate for the general election, he said: "Yes."

"The victory of the People's Party is unquestionable although we suffered a notable loss in votes," he said.

The PP lost about 2.5 million votes from the last local elections four years ago, and close to 5 million from its landslide victory in the 2011 general election.

Even loyal PP voters believe their party is heading for more trouble unless it changes.

"They need to find a way to give jobs to the young. The message that the economy is rebounding doesn't reach people," said Salvador Soriano, a retired cook from Valencia. "They promised a lot, but they're falling short," he said as he strolled among office workers in the city center.

Spanish unemployment is almost 24 percent and more than double that for the young. Even under the government's forecasts, the overall jobless rate will still be 17.7 percent in 2017.

PACTS?

At a local level, the PP faces a new era of coalition and compromise for which it is ill-prepared.

Rajoy - whose party must form pacts with some of the new groups if it is to retain power in a number of regions, including Madrid - has campaigned hard against them. Earlier this month he said they were "gangs" and a threat to Spain's political and economic stability.

In Valencia, a PP stronghold since the mid-1990s, the party again won the most votes on Sunday. However, it is likely to be forced into opposition by a coalition of left-wing parties after it lost its overall majority on both the city council and in the regional assembly.

Political analysts say left-wing blocs could push the PP out of power in half a dozen regions. On top of this, the center-right upstart Ciudadanos, initially seen as a coalition partner for the PP, may avoid helping Rajoy for now.

"Parties on the left will secure deals between themselves and force a change wherever they can. But I also see Ciudadanos backing them so that it doesn't appear to be propping up the PP and so that it can capture votes on the left," said Jose Pablo Ferrandiz from the Metroscopia polling firm.

Although Ciudadanos and Podemos kept their cards close to their chest on potential local coalitions during the campaign, Ferrandiz said both may now want to back stable governments to reassure voters they are not a threat to Spain's political and economic stability.

The mainstream Socialist Party, which has alternated in power with the PP since the restoration of democracy 40 years ago, may benefit from this.

Socialist leader Pedro Sanchez was quick to say after Sunday's election that he would contact the two parties' chiefs this week to start discussing potential alliances.

"It's the beginning of the end of Mariano Rajoy as Prime Minister," Sanchez said.

Editing by David Stamp and Peter Graff

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