MercoPress. South Atlantic News Agency

ECB comes to the rescue of Spain; Conservative landslide anticipated Sunday

Rajoy’s first commandment: “don’t spend what you don’t have”

Spaniards may hand the biggest majority in three decades to the conservative opposition People’s Party leader Mariano Rajoy, as polls suggest Europe’s debt crisis will push a fifth government from power.

Rajoy will win as many as 198 of the 350 seats in Parliament in Sunday’s federal elections, the largest majority any Spanish government has secured since 1982, polls show. Set to inherit a 23% jobless rate and one of the highest financing costs since Spain joined the Euro, Rajoy has pledged to deepen spending cuts and overhaul the economy after a four-year downturn.

Spaniards already bearing wage cuts and frozen pensions are due for a further squeeze on spending in exchange for Rajoy’s pledge to create jobs. The vote comes with government borrowing costs near the level that pushed Ireland, Greece and Portugal to seek aid and Rajoy said he hopes the country won’t need a bailout before the new government takes over.

Most opinion polls show Rajoy and the PP with at least a 15 percentage point lead. Even if Rajoy does clinch the majority that polls predict, Spain faces a power vacuum of as long as a month before the new government is sworn in. Spanish law doesn’t allow Parliament to resume any sooner than Dec. 13, with the new government not voted in until the following week.

Rajoy is wooing Spaniards by making employment the focus of his campaign. The PP says it will cut “superfluous spending,” without giving details, and promises a “restructuring” of the financial system, without saying what this will involve. Traditional supporters have abandoned the ruling Socialists after Prime Minister Jose Luis Rodriguez Zapatero, who’s not seeking re-election, slashed wages and changed labor laws to favor employers as part of the deepest austerity measures in 30 years.

Rajoy is also campaigning on the PP’s track record of shepherding Spain into the Euro in 1999. The PP-led government eliminated a 6.5% budget deficit in the eight years it ruled through 2004, and reduced the gap between Spanish and German borrowing costs from 300 basis points to seven.

That gap widened to more than 500 basis points this week, before bond-buying by the European Central Bank pushed bond yields down to 6.79% with a spread of 483 basis points.

“Spain wants to be in the Euro,” Rajoy, 56, said in an interview Friday with Onda Cero radio. “The Euro brings with it obligations and commitments, the first is not to spend what you don’t have. Spain will do its homework, as we already did in 1998.”

Rodriguez Zapatero, with his popularity at a record low, decided not to run again and the Socialist candidate, former Deputy Prime Minister Alfredo Perez Rubalcaba, has tried to woo back voters by pledging new taxes on bankers and the wealthy. Rubalcaba, 60, has also promised to make changes to the electoral system in response to nationwide protests by the so-called “indignant ones.”