VZCZCXRO9439
PP RUEHAG RUEHROV
DE RUEHMD #0348/01 0791620
ZNY CCCCC ZZH
P 191620Z MAR 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC PRIORITY 4523
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3370

C O N F I D E N T I A L SECTION 01 OF 03 MADRID 000348

SIPDIS

SIPDIS

DEPARTMENT FOR EUR AA/S VOLKER AND EUR/WE

E.O. 12958: DECL: 03/18/2018
TAGS: PGOV PREL SP
SUBJECT: SPANISH ELECTION WRAP UP: ZAPATERO SET TO FORM
SPAIN'S NEXT GOVERNMENT AS PARTIDO POPULAR REVAMPS FOR THE
FUTURE

REF: MADRID 288 AND PREVIOUS

MADRID 00000348 001.2 OF 003


Classified By: DCM Hugo Llorens for Reasons 1.4 (b) and (d)

¶1. (U) The absentee votes are in, and recounts have taken
place in the most contested districts of Spain. The final
electoral numbers for Spain's 350-seat Congress are as
follows. The ruling Socialist party of President Jose Luis
Rodriguez Zapatero (PSOE) - 169, the main opposition Partido
Popular (PP) - 154, the Catalan centrist party Convergence
and Union (CiU) - 10, the Basque Nationalist Party (PNV) - 6,
the Catalan Republican Left (ERC) - 3, the United Left (IU) -
2, the Canaries Coalition (CC) - 2, the Galician Nationalist
Bloc (BNG) - 2, the Navarran/Basque party (Na-Bai) - 1, and
the new party Union, Progress and Democracy (UPD) - 1.

//TIMELINE TO FORM THE NEW GOVERNMENT//

¶2. (U) The new Congress will meet for the first time on April
1 and President Zapatero will be given the opportunity to
form a government. As his party fell seven seats short of an
absolute majority, Zapatero will look to enter into a pact
with one or more of the smaller parties to put him over the
top. Depending on the demands of each of the smaller
parties, there remains the chance that Zapatero may feel he
has enough of a plurality to preclude having to forge a
formal pact, choosing instead to form pacts "a la carte" as
each new piece of legislation comes up for a vote. Zapatero
has consistently stated his preference to lead a stable
government, making an "a la carte" situation less likely.
The investiture debate is due to occur on April 7-8, and if
all goes as planned and the King swears in Zapatero on April
9, the new cabinet of ministers would then be sworn in on
April 10, and the first meeting of the new Council of
Ministers would be held on April 11.

¶3. (C) No one doubts that Zapatero will end up being Spain's
next president, but he may have trouble gaining the necessary
176 votes during the first round of investiture voting. This
could change in the coming days, pending the results of PSOE
negotiations with the smaller parties. At this time, the
most likely scenario appears to be a pact with the PNV and
their six seats, with the final vote to gain a majority in
Parliament coming from any one or several of the numerous
smaller parties that make up what is known as the "Mixed
Group" (CC, BNG, IU, Na-Bai, ERC). As the leftist parties IU
and ERC lost much of their power and influence with respect
to the previous legislature, they probably would be willing
to join Zapatero for a very small price. Reports surfaced in
the press in the days following the March 9 election
suggesting that the PSOE's natural partners in this new
legislature were the Basque nationalists. PNV leaders
visited the Embassy on March 12 and told us that they would
be favorably disposed to an alliance with the PSOE. Contrary
to post-election statements in the press, the PNV leaders
told us there was some flexibility in their demands for a
controversial referendum on the political status of the
Basque people. The officials said that the PNV realizes that
it suffered a severe electoral setback on March 9, and is in
no position to make unrealistic demands if it wants to repeat
its participation in a Zapatero government. These sentiments
appeared to be confirmed by PNV President Inigo Urkullu on
March 17, when he said publicly that his party would be
willing to cooperate with the Socialists over the coming
months and would consider standing down on its plans for a
referendum in October of this year, provided that President
Zapatero make sincere efforts to discuss the status of Basque
autonomy.

¶4. (U) Although CiU could put the PSOE over the top without
having to turn to the PNV and the Mixed Group, the PSOE's
allies in Catalonia handily defeated CiU in almost every
Catalan province, and there would be some pushback from these
allies were Zapatero to consider forming a pact. In
addition, CiU's demands for senior leadership roles in both
the Congress and Senate (Spain's upper house) may be a deal
breaker. Finally, Zapatero could gain a majority by forming
a broad alliance exclusively with the remaining smaller
parties (most are nationalist and/or leftist), but most
analysts have ruled this out as a repeat of the weak and
unwieldy coalition the president formed during the last
legislature.

//PARTIDO POPULAR LOOKS TO PICK UP THE PIECES AND MOVE ON//

¶5. (SBU) Despite external speculation and pressure for his
resignation after a second straight national election loss,
Mariano Rajoy announced on March 11 during a meeting of the

MADRID 00000348 002.2 OF 003


PP's executive council that he would not resign as president
of the Partido Popular. Rajoy said he would again present
his candidacy for this position during the PP's National
Congress in June, and the party's executive committee
immediately expressed their support for the decision.
Although Rajoy appears set to lead the party for the
foreseeable future, he probably will look to reshuffle his
team in efforts to improve the party's image. On March 13,
PP Congressional spokesman Eduardo Zaplana announced that he
would not remain in the post for a second term, in a move
pundits and political leaders immediately signaled as the
first casualty of the electoral defeat. Speculation has
since arisen that the Secretary General of the party, Angel
Acebes, may be on his way out as well. Zaplana and Acebes
are considered right-wing members of the PP old guard,
closely linked both to the Aznar administration and the
controversial handling of the aftermath and investigation of
the 2004 Madrid train bombings.

¶6. (C) In a separate announcement on March 13, centrist
Madrid Mayor Alberto Ruiz-Gallardon said he had no plans to
leave his position and would work for the good of the party
in the coming years. After the Mayor had a public dispute
with party leaders in January over his possible candidacy as
Rajoy's number two, he said he would wait until after the
elections to make a decision about his political future.
Ruiz-Gallardon is seen as a more moderate member of the PP
and has often had public disagreements with the party's more
conservative members. The Mayor previewed this announcement
in a private meeting with the Ambassador on March 12.
Ruiz-Gallardon confirmed that he would be staying in office,
and said that he would be taking steps to mend his
relationship with Rajoy and hopefully return to the party's
good graces. The Mayor and Rajoy were due to have lunch this
week. The Mayor confirmed for the Ambassador that Rajoy was
the PP's leader, as there were simply no other credible
options. He said that someone like he or Madrid regional
President Esperanza Aguirre could try and take over the
party, but at the risk of splitting it right down the middle.
He said that Rajoy staying put was the best way to minimize
damage to the PP.

¶7. (C) Ruiz-Gallardon said that Rajoy would now take
concerted steps to mold the party more in his image and
decouple it from the strong influence of Aznar. As an
example, the Mayor said that Rajoy had asked Anzar not to
participate in the March 11 executive council meeting. The
departure of Zaplana and potentially Acebes may be further
signs of Rajoy trying to distance himself from the PP's
controversial past. Ruiz-Gallardon also told the Ambassador
that Rajoy would take steps over the coming months to appear
more "statesmanlike," and would temporarily cease his
constant criticism of every Zapatero policy initiative. The
Mayor also mentioned that Rajoy is considering a strategy
whereby he would tell Zapatero that the PP will support him
for 12 months, voting for his budget proposal and any other
policy issue that does not cross PP "redlines," so that
Zapatero would not need the support of the other parties. At
some point the pact would dissolve and Rajoy would be free to
make a public announcement saying that his party had
supported the president in good faith, but that his policies
were leading Spain over a cliff and they could not in good
conscience continue their support.

//COMMENT//

¶8. (C) Both main candidates departed for separate vacations
on March 14 and will return after Easter to prepare for the
new legislature. We will work closely with the new
government (we expect several holdovers and a few new faces)
to build on the progress we have made over the past three
years. President Bush's phone call to President Zapatero and
reported plans for the two to chat at the NATO summit in
Bucharest are receiving positive play among our Spanish
counterparts and the local press, and will serve as a
positive base to our relations with the new government. We
also will maintain good relations with our friends in the PP,
while reminding them that it is in both U.S. and Spanish
interests that we work well with the government in power. It
will be interesting to see whether Rajoy actually pledges his
support to the government as the Mayor suggested, but we
doubt that Zapatero would accept this proposition with
anything but the utmost caution. Rajoy may find himself
walking a fine line between acting statesmanlike and changing
the tone of political discourse in Madrid, while also
remaining faithful to his traditional PP supporters, over 55
percent of whom want him to lead an even harder opposition to
Zapatero in the new government, according to a recent poll

MADRID 00000348 003.2 OF 003


from Sigma Dos.
AGUIRRE