Narrowing Horizons

Indeed, the political terrain that had not long ago been so hospitable to a then insurgent Podemos appeared increasingly distant during this Madrid campaign. It has been dominated by a series of far-right provocations, coming not only from the extremist Vox but also from Spain’s growing neofascist street movement.

Only hours after standing down as deputy prime minister, Iglesias found himself eyeballing a group of five neo-Nazi skinheads in a dramatic confrontation outside a Podemos event. This was followed a week later with a petrol bomb attack on Podemos’ headquarters in the southern region of Murcia — while, in the final stretch of the campaign, Iglesias received death threats accompanied by army-brand bullets. Coming after years of constant media attacks, numerous politically motivated police investigations, as well as prolonged factional infighting, a toll had clearly been taken on Iglesias and his family’s security and well-being besides his personal popularity.

Yet Iglesias was also the driving force behind his formation’s strategic wager to enter office as a junior partner to PSOE, a party which is ostensibly social democratic but deeply embedded within the circuits of Spain’s neoliberal regime. The Left’s disastrous result in Madrid in large part reflects a growing sense of frustration with the PSOE-Unidas Podemos government, with the coalition parties only able to point to a rather limited set of advances up to this point.

In the wake of two general elections in 2019, and the formation’s growing exhaustion, the prospect of entering coalition had been viewed by Unidas Podemos as offering the left-wing alliance a renewed focus after a period of vicious factionalism, as well as a way of avoiding the type of implosion the Corbyn project has undergone in Britain. Despite having to accept the omission of many of its more transformative policies from the program for government, the formation’s wager was that by entering office, it could secure a number of substantive concessions to its legislative agenda, particularly around housing, labor rights, and social spending.

With the COVID-19 pandemic hitting Spain only six weeks into the coalition’s term, however, the formation’s ministers at cabinet quickly came up against a series of limits to the governing arrangement which has marked the parameters for the subsequent fifteen months. Some of these have been structural. Spain’s increasingly hollowed-out state, which had seen its capacities and resources eroded during the previous decade of savage cuts and outsourcing, was not fit to respond to a generational health and social emergency. As a southern eurozone state dependent on EU funding, Spain has had only limited autonomy in terms of developing its stimulus recovery plan, instead having to accept an EU-wide framework heavily weighted toward various forms of public-private initiatives.

A further factor curtailing the coalition’s more progressive elements has been the degree to which PSOE itself has come to act as a barrier to implementing the negotiated policies agreed in the program for government. Over the last year, strategic PSOE-run ministries have repeatedly stonewalled and delayed its junior partner’s legislative priorities — at times seemingly due to personal and political rivalries but more generally because many such measures would impinge on the interests of the corporate sector and those of the state security apparatus. Time and again, Pedro Sánchez’s progressivism has stopped short of implementing measures that would require imposing losses on the economic elites or challenging existing power relations.

An Accumulation of Tensions

By Iglesias’s final months at cabinet, tensions between the coalition partners had reached near-breaking point as a series of conflicts raged over rent controls, pension and labor reform, trans rights legislation, and the repealing of the PP’s gag law. PSOE “disloyalty” toward the coalition agreement had become a common criticism from within the Unidas Podemos camp, while Equality Minister Irene Montero asserted at the beginning of March that friction at cabinet would only dissipate “if PSOE fulfill their commitments under the program for government.”

Probably the clearest example of this disloyalty is with respect to the coalition’s proposed new housing law. With many of Podemos’ leading figures having come from the PAH anti-eviction movement and with the party’s electorate heavily overlapping with “generation rent,” Iglesias chose to leverage a major part of his political capital on legislation to introduce rent controls and a tax on empty housing units (both of which were included in the program for government). From late last summer, he had pushed hard for the housing law to be finalized as part of the budget negotiations, insisting on legal mechanisms to both reduce prices in high-pressure zones and to cap further increases via a rental price index.

But with PSOE dragging their feet on even agreeing to a comprehensive eviction ban during the pandemic (something that was only finalized in December), Iglesias had to settle for a signed commitment from Sánchez to bring rent control legislation before cabinet no later than February this year. Yet even securing this written commitment had required that Iglesias threaten to block the budget the night before its announcement in late November. As Izquierda Unida’s economic spokesperson Carlos Sánchez Mato told us: “PSOE has no desire to confront those who own thousands of housing units, like the vulture funds, or even the smaller rentier class that live off the income generated by ten or fifteen apartments.”

In early February, Spain’s largest landlord Blackstone threatened to pull out of the country while financial entities like Caixa were lobbying hard behind the scenes against the law. As the deadline for the draft legislation approached, Transport and Housing Minister José Luis Ábalos signaled that PSOE could no longer accept “imposing” limits on the rental sector, instead insisting it would be more effective to secure rent reductions by offering “fiscal incentives” (i.e., tax breaks) to landlords. “Housing is a right but also a market commodity,” he claimed as a means to explain away his party’s cynical U-turn.

Iglesias hit back, insisting: “The commitment is there on paper. Pedro Sánchez cannot afford to lie to his voters.” Yet with the ex-Podemos leader having left office without an agreement, a draft text of the housing law has now been delayed until next October. Senior sources within Unidas Podemos have insisted the party will collapse the government if the legislation is not passed, but either way, it was forced to fight the Madrid election campaign without having secured one of its core reforms.

Nor is it an isolated case. A COVID-19 wealth tax had also been another high-profile proposal of Iglesias’s. But, along with other major progressive tax reforms, negotiations were pushed back until next year’s budget — with the government’s orthodox economics chief Nadia Calviño already indicating she would be opposed to any significant tax increases. As Carlos Sánchez Mato notes, the suspension of EU budgetary rules until 2022 has “won the coalition breathing space,” but if “Spain is to avoid a new round of austerity in 2023, it has to use this time to build up its tax base, with measures like a meaningful wealth tax and reform of corporate taxation.”

Similarly, the repeal of the PP’s gag law and other speech crimes offenses were meant to be express reforms completed in the coalition’s first months in office. But Interior Minister Fernando Grande-Marlaska has offered no timetable for their removal despite more than a week of mass protests in February around the jailing of rapper Pablo Hasél. “Actively or through passivity, PSOE have played their cards well — not only avoiding the most progressive aspects of the agreed program but also delaying reforms and watering down their contents,” notes ex-Podemos MP Manolo Monereo.

Qualified Achievements

In this context, Unidas Podemos’ policy achievements have centered more around securing increased social spending commitments and its successful management of the country’s furlough scheme. Under the 2021 national budget agreement, targeted expenditure aimed at strengthening strategic areas of Spain’s hollowed-out public services was framed by Iglesias as marking a break with the previous decade’s austerity program. €5 billion in additional funding has been earmarked for Spain’s national health care system — arguably the hardest-hit part of Spain’s public sector, after years of outsourcing and various forms of mismanagement, on top of the pressures of the pandemic.

More than €1 billion of combined funds are to go toward Spain’s social care sector under the budget deal, helping rebuild it around smaller care sites with higher staff numbers, and another €1 billion to be injected into the country’s network of primary care centers. Elsewhere, the first funds have been allocated toward the coalition’s program of developing free universal preschool, while a 44 percent increase in public university scholarship funds is designed to provide support to low-income students.

Arguably the clearest achievement to show for its time in office has been new deputy prime minister Yolanda Díaz’s handling of Spain’s ERTE (furlough) scheme, alongside her efforts toward wider job loss mitigation. The labor minister — and arguably Unidas Podemos’ standout ministerial performer in 2020 — has won praise from a number of quarters for helping secure several extensions of the scheme, while also ensuring a considerable number of under-threat jobs avoided the ax through protracted talks with unions and employers.

Added to this is new legislation driven by Díaz that recognizes food delivery riders as employees of the “gig economy” digital platforms they work for (as opposed to their hitherto self-employed status) on the back of a September Supreme Court ruling. The legislation forces such platforms to share the algorithms they use with unions so employees and their representatives have a clear sense of how they affect working conditions. Díaz also negotiated the initial minimum wage hike in January 2020, which saw it rise from €900 to €950, and has been the main proponent at cabinet for a further increase this year as she attempts to hold the Socialists to the coalition’s pledge of boosting the net minimum wage to 60 percent of the average monthly pay packet (€1,200) by the end of its four-year term.

Yet the delivery of one of Unidas Podemos’ key ostensible gains as part of the coalition to date has also shown some of the defining limitations to the spending commitments secured as part of the coalition. Spain’s guaranteed minimum income scheme, which Iglesias sold to the public as arguably the star policy of his party’s first six months in office, has so far been undermined by poor administration, in part caused by a lack of state capacity and personnel — despite recent efforts to widen access criteria and strengthen the social safety net.

Spearheaded as a policy by Iglesias but administered by a PSOE-controlled ministry, the program has only processed a fraction of applications to date — with a number of beneficiary groups, including migrant groups, those without bank accounts and places of fixed residence, and those younger than twenty-three, having been excluded from the scheme. Having initially estimated the number of likely beneficiaries at 850,000 families, ten months after its introduction only 210,000 households have actually managed to access the payment, creating huge frustration among hundreds of thousands of failed low-income applicants.

In a wider sense, too, current spending levels are far from what could be considered adequate to begin addressing the scale of Spain’s worsening social crisis. Youth unemployment stands at 40 percent while a recent report from Oxfam estimates that those living in poverty rose from 20.7 percent of the population before the pandemic to 23 percent (or 10.9 million people) at the end of 2020. With an estimated 7 Euros lost by the poorest 10 percent of the population for every Euro the richest 10 percent miss out on in the new economic climate, it remains acutely clear that, even if spending levels were considerably higher, this alone would not be a catch-all solution to Spain’s deep-rooted structural problems.

Changing the Dynamic

The Madrid election must serve as a wake-up call for the coalition parties. After three years as premier, Pedro Sánchez has very little to show in terms of progressive legislation and policy advances and faces a demoralized base (his party having lost three hundred thousand votes in yesterday’s ballot). For Unidas Podemos, Iglesias’s swift exit has sped up an already-planned-for leadership transition, with Díaz now the likely candidate to lead the party into the next national election. A labor lawyer and Communist Party member, she was far from a well-known figure nationally before she took over the labor ministry. Over the last year, however, she has consistently polled as one of the government’s most popular ministers — even among PSOE voters.

In this respect, one party-political gain from the formation’s fifteen months in office has been to facilitate this renewal of its leadership, allowing figures like Díaz and the new minister for social Affairs, Ione Belarra, to build national political profiles. Yet the concern going forward is the possible threat that the new Más País party, set up by former Podemos deputy Íñigo Errejón, could now pose at a national level after its success in the capital. It remains to be seen what type of cooperation is possible between the two formations, now that Podemos is under new leadership, with many of the key differences separating the two platforms centered on personal differences.

Beyond that, the next six to nine months will be definitive for the coalition — and in particular for any advancement of Unidas Podemos’ agenda. The party leadership still believes that the existing correlation of forces in parliament can be made to work to its advantage. Spain’s fragmented but polarized political landscape leaves PSOE with no other option but to look to its left flank in order to secure a governing majority, particularly after the swift collapse in support for the liberal hinge party Ciudadanos. Díaz’s ascendency aims to reinforce Unidas Podemos’ hand in the upcoming negotiations, giving it greater staying power while preparing the formation for any potential snap general election next autumn/winter if the coalition collapses.

Added to the standoffs on rent controls and taxation, one of the defining battles over the next twelve months will be around the repeal of PP-era labor reforms — which will see Díaz square off against PSOE’s economic heavyweight Nadia Calviño over trade union and employment rights. These represent the type of areas where Unidas Podemos must secure advances in order to justify its continued presence at cabinet. As the PSOE comes under pressure from the country’s oligarchy to resist even such a basic set of reforms, any of these points, along with the commitment to pardon Catalan political prisoners, could see the coalition fall.

Consequently, in the wake of Iglesias’s exit, it remains unclear how long Spain’s first left-wing coalition in eighty years can survive.