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Trust but verify

7 October 2011 By Fiona Maharg-Bravo

Mariano Rajoy somehow lives up to the stereotype of his native Galicia, a region in the north of Spain. They are said to be hard to read – when you see a Galician on a staircase, you never know whether they are going up or down. The country’s probable next prime minister isn’t quite so cryptic – his agenda is clear. What’s not is how he plans to execute it. Voters must guess whether his agenda will be swift and radical, or whether he will take his time with watered down measures.

This can make sense from a political standpoint. Although he admits that the next few years will be hard, Rajoy for now sticks to general goals everyone can agree with – reform the financial sector, create jobs, cut waste in regional governments, and improve education. Frightening voters with dramatic proposals could lose him the votes needed for an absolute parliamentary majority. Even with a 15 point lead in the polls, he knows he shouldn’t take anything for granted.

On financial sector reform, Rajoy’s People’s Party says the banks must clean up their balance sheets so they can start lending again. But does this mean increasing provisions for bad loans? Or the creation of a bad bank, with another round of recapitalisation using public funds? On labour reform, will the PP propose a single work contract, even if this may mean aggravating unemployment in the short term, or focus first on decentralising wage negotiations? And how far will the reform go?

How will he tackle Spain’s unaffordable energy costs? And how can Rajoy bring Spain’s profligate regions in line fiscally, as he promised, without cutting health and education services?

The risk of remaining vague is that he will disappoint either the voters who don’t think a radical reform plan is necessary, or those who do. In his biography, Rajoy describes himself as a perfectionist and “very prudent”. This is maybe why he doesn’t attempt to speak English, despite studying the language several hours a week “for some time”. In many ways, these are laudable traits, but getting Spain out of the hole requires bold decisions. The hope is he will take them. The worry is that he will delay.


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