SPAIN: ELECTION UPDATE JANUARY 18

UNCLAS SECTION 01 OF 03 MADRID 000055

SIPDIS

SENSITIVE
SIPDIS

FOR EUR/WE

E.O. 12958: N/A
TAGS: PGOV SP
SUBJECT: SPAIN: ELECTION UPDATE JANUARY 18

REF: A. MADRID 38


B. MADRID 43


1. (U) Summary: As explained in ref a, the official campaign
runs February 22 to March 7 (meaning that is when the
candidates can unleash their advertising),but President Jose
Luis Rodriguez Zapatero of the Spanish Socialist Workers'
Party (PSOE) and Mariano Rajoy of the Popular Party (PP) have
been busy on the campaign trail. In this cable and
subsequent ones, we will attempt to give the flavor of the
campaign and the issues the candidates are trying to
highlight. End summary.

Rajoy Leaves Madrid Mayor Gallardon in the Cold
-------------- --


2. (U) The rivalry between popular Madrid Mayor Alberto
Ruiz-Gallardon and President of the Autonomous Community of
Madrid Esperanza Aguirre came to a head January 15. As
explained in ref a, parties list congressional candidates by
province. The number of seats in the national congress a
party wins from each province is determined by the vote it
captures there. The higher on the list a given candidate is
(and the safer the province for his party),the better his
chance of getting a seat. There has been long-running
speculation over whether Gallardon would be on the lists and
which position he might occupy. As reported in ref b,
Rajoy,s January 14 choice of Manuel Pizzaro to take the
number two spot on the Madrid list was a blow to Gallardon.
On January 15, Rajoy told Gallardon in the presence of
Esperanza Aguirre that he was not going to be on the lists at
all. Gallardon reportedly responded by threatening to quit
politics after the election. Getting the bad news in front
of his rival Aguirre was said to be particularly galling. It
did not help when the news came that six other PP mayors
would be on various congressional lists. On January 16
Gallardon publicly described himself as "defeated" and said
March 9 would mark the beginning of a period of personal
reflection about his future (he did not say he was quitting).
On January 17, Rajoy defended his decision as the best thing
for his candidacy and the party. Nevertheless, the Gallardon
angle overshadowed Rajoy's presentation of Pizarro.


3. (U) The feud has implications not just for the elections
but for the future of the PP. If Rajoy loses, there will
probably be a battle for leadership of the party. An
unwritten rule says the party leader must be in congress
where he can serve effectively as the voice of the opposition
(the PP's experience several years ago with a leader not in
congress was a failure). The anti-Gallardon faction needed
to keep him off the electoral lists, out of congress, and
thereby out of the running for leadership of the party. This
was particularly urgent since Aguirre, by virtue of being
president of an autonomous community (analogous to a U.S.
state governor),was legally barred from being a candidate
for congress, a disqualification that does not apply to
mayors. Aguirre reportedly raised the stakes at the last
moment by threatening to resign as president and demand a
place on the lists if Gallardon was given one.


4. (SBU) Comment: Although we probably have not seen the
last twist in this story -- and we cannot quantify the impact
until we see the polls -- the incident could hurt Rajoy in
several ways. The media coverage has been obsessive. The
battle between Gallardon and Aguirre is about who leads the
party if Rajoy loses, giving the impression the PP is
preparing for defeat. Gallardon is believed to have a
significant following in Madrid and beyond who might abstain.
To help mobilize its base, the PSOE is pointing to the
moderate Gallardon,s fate as evidence that the PP is a
radical, far right party. The leftist press lost no time in
reminding Spaniards that Aguirre is close to the left,s
favorite bogeyman, former President Aznar (ironically, if
Gallardon were to resign as mayor his likely replacement
would be the current number two in the city government, Ana
Botella, Aznar's wife). Finally, even some PP supporters are
asking why Rajoy did not lance this boil last year instead of
letting it fester and burst less than two months before the
election. End Comment.

Trading Blows on the Economy
--------------


5. (U) Rajoy and the PP have made it clear the economy will
be issue number one. Rajoy hit hard when it was reported
January 4 that inflation was up to 4.3 percent and
unemployment up to 8.2 percent. Zapatero counter-punched
January 9 saying that under his government Spain had created
a record number of jobs and per capita income had surpassed
Italy's. He said he could not be blamed for international

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economic events such as rising oil prices. He suggested the
PP's alarmist tactics were bad for Spain and unpatriotic.
Zapatero landed another blow January 11 with the announcement
that the government's 2007 budget surplus had reached two
percent of GDP. On January 15 Rajoy announced Manuel Pizarro
would be number two on the PP's candidate list for Madrid,
behind Rajoy himself (ref b).


6. (U) Many observers initially credited Rajoy with having
scored something of a coup as a result of the Pizarro
recruitment. Pizarro,s extensive business experience
presumably gives him some credibility in both criticizing the
government's economic record and in proposing policies.
However, Pizarro is primarily a lawyer by training, not a
professional economist. Moreover, while Pizarro,s hard-line
opposition to the Gas Natural takeover bid for Endesa
probably endeared him to many life-long PP voters, his
appointment may not play well in Catalonia, a crucial
electoral battleground. Housing Minister Carme Chacon (she
is Catalan) has criticized Pizarro as the man who would
rather sell Endesa to a German company instead of
Barcelona-based Gas Natural. The socialists are already
asking voters in Catalonia whether they would rather have
Catalonia negotiate budget transfers with Pedro Solbes or
Manuel Pizarro. The socialists will attempt to use Pizarro
as much as possible to mobilize their voters in Catalonia.


7. (U) With respect to economic policy, both the PSOE and the
PP still appear to be in the mode of floating trial balloon
proposals. Both major political parties have fairly
sophisticated websites but neither party, as of yet, has
posted their official electoral platform. That may not
happen until well into February. What is striking, so far,
about both parties, economic proposals is their centrism.
Belying socialist accusations that the PP is the hands of the
hard right is the PP tax cut proposal, which emphasizes tax
cuts for the lower paid. The PP,s website also has a moving
promise, "there are 52 days, two hours, 19 minutes and 47
seconds until pensions are raised," not exactly the immediate
priority that comes to mind for a supposedly right of center
reform minded political party. It will be interesting to see
if Manuel Pizarro offers meaningful structural reform
proposals, for instance for the labor market. Meanwhile, the
socialists have offered to eliminate estate taxes, not a
proposal normally associated with a left of center party.
The PSOE also emphasizes the need for fiscal conservatism,
although it is offering some tax cuts and additional social
spending. Indeed, in a recent El Mundo interview, President
Zapatero was asked whether he had learned anything from the
right. Zapatero,s answer was that he had learned that
budgetary stability was essential, and that was a position
normally adopted by the right.

Zapatero Takes on the Catholic Church
--------------


8. (SBU) On December 30, three Spanish cardinals, several
archbishops, and a platoon of bishops participated in an
event in Madrid's Plaza Colon entitled "For the Christian
Family." The Pope made a video appearance. Attendance
estimates ran from 150,000 to two million, and the gathering
got wide media coverage. Speakers criticized the government
for supporting gay marriage, quickie divorce, abortion, and
left-wing civic education programs in schools. Cardinal
Garcia-Gasco, the Archbishop of Valencia, said the government
should "protect and defend the family, not undermine its
foundations." PSOE officials responded angrily, suggesting
the Church was meddling in politics on behalf of the PP.
Since then, the PSOE has kept up the attack. On January 1
President of the PSOE and the Autonomous Community of
Andalucia Manuel Chaves said some prelates held "archaic
ultra-conservative" views. On January 13, Zapatero told a
campaign rally in Valencia that "in a democracy, liberty
supposes that the citizens decide who governs them, but also
they decide with whom they wish to live and what type of
families they wish to form."


9. (SBU) Comment: This is risky business. The history of
the Catholic Church in Spain during the 1936-39 civil war and
the subsequent dictatorship is complex and it evokes
conflicting passions. Though its role has diminished over
the years, the Church remains a force in Spain. Many claim
Zapatero is trying to energize his base by painting himself
as the victim of reactionary clerics, but if he overplays his
hand he risks alienating Spaniards who may be leaning towards
the PSOE but who also happen to be loyal Catholics.
According to one poll, in 2004 the PSOE got nearly 1.3
million votes from practicing Catholics (those attending Mass
at least once a week). One conservative paper claimed
Zapatero's tactics would cost the PSOE half a million votes.

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End comment.

Rajoy Attacks Zapatero on ETA Negotiations
--------------


10. (U) The Zapatero government's controversial effort to
negotiate an end to the ETA problem ended in December 2006
when ETA blew up a parking garage at Madrid's Barajas
Airport, killing two people. Shortly after the bombing, the
government announced that all negotiations had ceased. Since
then, government security forces have kept the pressure on
ETA. While the PP has never stopped criticizing the PSOE for
attempting to negotiate with ETA, the story may have seemed
old news. Zapatero gave it new life in a newspaper interview
published January 12 in which he admitted government contacts
with ETA had continued as late as May 2007. The PP and the
conservative press leaped on the admission, accusing Zapatero
of lying to the Spanish people. The PSOE riposte is that PP
intransigence has prevented formulation of a consensus
national policy on how to defeat ETA.

Congress Formally Closed
--------------


11. (U) On January 14, Zapatero carried out the rituals of
closing the Spanish legislature (Cortes) and convoking the
March 9 elections. Zapatero took the occasion to say his
priority if reelected would be amplifying social programs and
the rights of Spaniards.
AGUIRRE