Spain | Socialists Lose Control of Parliament Amid Financial Crisis
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Socialists Lose Control of Parliament Amid Financial Crisis
The government dissolved Parliament in January 2008 and called for new elections. In the March election, Prime Minister Zapatero of the Socialist Party was reelected, taking 43.7% of the vote. Mariano Rajoy of the Popular Party garnered 40.1%. On April 12, Zapatero announced his cabinet, which for the first time includes more women than men.
Spain was hit particularly hard by the global recession beginning in 2009, with a contracting economy, a yawning budget deficit, and unemployment reaching 20% in March 2010. In May, Prime Minister Zapatero announced austerity measures, including deep spending cuts, pay reductions for government and civil workers, and an increase in the retirement age. Thousands of workers protested against the proposal. Parliament, however, passed the $18 billion spending cuts in late May. The country's woes continued into 2011—unemployment ticked up to 21%—, and anger over the austerity plan took its toll on Zapatero's Socialist Workers Party in local and regional elections in May 2011. Zapatero called for early elections, to be held in November, and said he would not run. In an attempt to close the budget gap, the government brought back a tax on the country's wealthiest citizens that had been abandoned in 2008.
In Nov. 2011 elections, Zapatero's Socialist Workers Party took a drubbing at the polls. The party's representation in the lower house of parliament fell to 110 seats from 169, and the conservative Popular Party won 186 seats, securing a majority in the 350-seat chamber. It was the Socialists' worst performance in about 30 years. Mariano Rajoy succeeded Zapatero as prime minister. Rajoy is no stranger to politics. He held several minsterial roles under José María Aznar from 1996 to 2004. He took over as party leader in 2004 and was expected to become prime minister, but was defeated by Zapatero and the Socialists. The two faced off again in 2008, with Zapatero winning reelection.
In April 2012, Spain was hit with a trifecta of grim economic news: the government released the country's most austere budget since 1975, which called for $36 billion in cuts and tax increases; unemployment hit 24.4%, more than double the European average; and the country fell into recession for the second time in three years. Spain's banks were also suffering, as many Spaniards could not meet their mortgage obligations. In June, Spain accepted a bailout of up to $125 billion from the European Union to recapitalize its banks. In return, Rajoy agreed to impose another round of austerity measures to further reduce the country's budget deficit, which included an increase to the sales tax, a move he had previously resisted.
In September, Rajoy's domestic woes grew more complicated after he rejected a request by the independence-seeking region of Catalona for more control over the collection and distribution of tax money. In response, the president of Catalona called for early elections, prompting concern that the drive for independence would intensify. Days later, Rajoy introduced a 2013 budget that called for increased taxation and spending cuts that he said would help the country meet the deficit-reduction requirements of the EU. In October, the unemployment rate reached 25%, the highest rate in decades.
Spain's prime minister, Mariano Rajoy, remained staid in the face of mounting evidence of financial and political corruption. On July 15, 2013, the Popular Party’s (PP) former treasurer, Luis Bárcenas, went public with documents and text messages implicating party leaders—including Mr. Rajoy—of receiving and distributing illegal funds.
In 2013 on the eve of one of Spain's most important religious festivals honoring St. James, which takes place every year on July 25, at least 79 people died and more than 140 were injured when a train derailed on the outskirts of Santiago de Compostela. The greatest loss of life for the country in 40 years, the accident is under judicial and civil investigation. Preliminary black box data indicated that the train was travelling at more than twice the speed limit for that stretch of track when it derailed.