‘No quick fix’ for Spanish coalition says Mariano Rajoy

Spain’s major parties, taking stock after the most fragmented national election result in the country’s history, have embarked on potentially long and arduous talks to form a coalition government.

With neither prime minister Mariano Rajoy’s conservatives nor left-wing parties winning a clear mandate to govern, the country faces weeks of uncertainty that has cast doubt on the durability of its flagship economic reforms and unnerved financial markets.

Despite garnering the most votes, the centre-right People’s Party (PP) had its worst result ever in a parliamentary election as Spaniards angered by high-level corruption cases and soaring unemployment turned away from the party in droves.

The outcome was reminiscent of a similar situation in neighbouring Portugal, where the incumbent conservatives won an October election but a socialist government backed by far left parties was sworn in.

The inconclusive vote heralded a new era of pact-making, shattering a two-party system that has dominated Spain since the 1970s, with an unexpected surge from upstart anti-austerity party Podemos — the latest of several strong showings by populist parties in European elections — giving it a potential role as kingmaker.

“We’re starting a period that will not be easy,” Rajoy told cheering PP supporters at party headquarters in central Madrid.

However, the likelihood of a PP-led coalition faded with Podemos’s third place, outpacing fellow newcomer Ciudadanos, whose market-friendly policies had been seen as a natural fit for the PP.

A tie-up between the PP and Ciudadanos would yield 163 seats, far short of the 176 needed for a majority administration.

Ciudadanos leader Albert Rivera urged the main opposition Socialists, which finished second in the ballot, to support a minority PP government on a law-by-way basis.

“Spain can’t allow itself to become Greece. Spain can’t become a chaotic country,” he told TV station Telecinco.

However, the Socialists reiterated they would not back Rajoy, although they did not rule out supporting another PP candidate, in what would be a de facto grand coalition.

“The Socialist party is going to play a responsible role in this process,” senior party member Cesar Luena told Cadena Ser radio.

Overall, Podemos’s strong showing tipped the balance to the left of the spectrum with five left-wing parties led by the Socialists and Podemos winning 172 seats.

Such a left-wing alliance will be hard to form, as groups differ on economic policy and the degree of autonomy that should be awarded to the north-eastern region Catalonia, home to an entrenched independence movement.