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INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

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 
 
MADRID 00000055  002 OF 003 
 
 
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. 
 
MADRID 00000055  003 OF 003 
 
 
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