Will the Spanish Prime Minister Withstand the Corruption Tsunami?

08/02/2013 08:37 am ET | Updated Oct 02, 2013

For some, a successful political career is mainly a question of stamina. Mariano Rajoy, the Spanish Prime Minister, gave a master class in political resistance under severe pressure in his intervention this Thursday at the Spanish Parliament. But too many questions remain unanswered. Rajoy is from the region of Galicia, and their politicians are often known to be cunning foxes with a knack for overcoming difficult situations. This time, however, the on-going accusations of corruption have become an overwhelming burden to the government's credibility. In this piece we explore three potential outcomes of the so-called Bárcenas affair.

Briefly, the background is as follows: On January 31st this year El País, Spain's leading newspaper, published the unofficial handwritten book keeping ledger of the former treasurer of the governing Popular Party, Luis Bárcenas. This document manifested multiple illegal payments to the party by construction groups and other companies. Bárcenas was accused of having created a secret slush fund which, according to his ledger, was used to top up the wages of party executives, including PM Mariano Rajoy who allegedly received 300.000 euros over the last 20 years.

Until yesterday, Mr Rajoy had opted for his favorite strategy: taking a deep breath and submerging until the tsunami has passed. He avoided the media for months, even after the publication of a very recent SMS interchange with Bárcenas, in which the PM offered him all his support. Rajoy only agreed to address Congress when all the other groups represented in the chamber threatened him with a vote of no confidence.

In his speech to Congress, Rajoy recognized his mistake in trusting a person recently charged with tax evasion and money laundering to handle the party accounts for years. But he failed to provide a convincing answer to some key questions: (1) Did he, the party, or any of its members received illegal funds as the documents presented by the treasurer to the judge imply? (2) Why did the Prime Minister continued supporting Bárcenas after it came to light that he had been hiding tens of millions of euros in Swiss Bank accounts in his name? and; (3) Were the illegal donations received by the party given in exchange of favours?

Rajoy will not have to respond to these three allegations unless the judicial investigation finds further evidence of illegal activities against him or his party in the coming months. This is however entirely possible. On the other hand, Rajoy is in a strong position politically: his party enjoys an absolute majority in Congress which would allow him to win any potential vote of no confidence. But will the Spanish population remain impassive?

While the most likely outcome is that Rajoy will withstand this tsunami, a complex judicial investigation and a potential new wave of indignados in the streets may threaten Spain's political stability after the summer break.

Here are the three possible scenarios in the next few months:

1. An early election: highly unlikely. Even if the situation worsens, neither the Popular Party nor the PSOE, the largest opposition party, would have any incentive to call for elections. In fact, if elections were celebrated tomorrow, according to all polls the two big parties would suffer their worst results ever and the country would enter into a difficult period of political instability with a fragmented parliament. Almost certainly the Popular Party will try to last out the term.

2. Rajoy steps down: also an unlikely outcome. However, if some of the allegations were proven, party divisions would deepen and increasing social tension could force Rajoy to resign. A turning point would be if the judge were to find evidence that the Popular Party received illegal financing in exchange for. It is feared that certain influential construction companies during the boom years might have paid large amounts of money to regional sections of the PP in exchange for licenses for construction projects. If Rajoy resigns, the Vice-President, Soraya Saenz de Santamaria, his closest ally in the cabinet and untainted by the Bárcenas affair, would be the most likely substitute.

3. Everything remains as it is: this is still the most likely outcome. Bribery is difficult to prove and the other accusations would not lead to any criminal investigation of the PM. The absolute majority would do the rest and Rajoy would prove once again that his capacity for resistance is limitless.

However this scandal ends, the question is: Can a country in such a difficult economic situation afford the luxury of prime minister whose morals are under question? Rajoy's continuity may be too much of a burden for a country in need of a massive collective effort to restore its institutions after years of economic, financial and political deterioration.