- - Thursday, November 17, 2011

MADRID Spanish voters on Sunday are expected to dismiss the Socialist government of Prime Minister Jose Luis Rodriguez Zapatero and usher in the conservative People's Party (PP) and its leader, Mariano Rajoy.

Mr. Zapatero’s Socialist party (PSOE), which has been in power for eight years, has borne the brunt of public blame for Spain’s increasingly perilous economic situation, which has tainted the party’s leadership candidate, Interior Minister Alfredo Perez Rubalcaba.

Meanwhile, Mr. Rajoy has been coasting toward an expected landslide victory without saying much about how he plans to reverse Spain’s economic course.

“The Socialists are being punished for not being realistic about the crisis,” said Jose Luis Gonzalez, who is 41 and unemployed. “They undertook a lot of social reforms, but right now, those reforms pale in comparison to the economic disaster Spain is experiencing.

“But really, both parties have done a horrible job in the regions, between the corruption of the PP and the economic mismanagement of the PSOE.”

The situation is bleak for the eurozone’s fourth-largest economy. Spain’s growth this year is projected at less than 1 percent, and the unemployment rate hovers near 23 percent, meaning 5 million people are out of work.

That is the highest unemployment rate in the European Union and more than double the eurozone average of 10.2 percent, according to Eurostat, the EU statistical agency.

The jobless rate for young Spaniards is double the national average.

A PP victory on Sunday will mark the fifth time this year that Europe’s financial crisis has prompted the ousting of a government:

• In February, the Irish evicted the governing Fianna Fail party, the first time the party has not dominated the parliament since 1927.

• This summer, Portugal voted out its socialist party amid severe austerity measures.

• Last week, the Greek and Italian governments collapsed under pressure from the EU and the financial markets.

Spanish economic indicators do not bode well. On Thursday, yields on Spanish 10-year bonds were close to 7 percent, and the spread between Spanish and German 10-year borrowing costs widened to nearly 500 points, two thresholds widely seen as unsustainable.

Market analysts also are concerned that Spain’s budget deficit will not meet its 2011 target of 6 percent of gross domestic product. Last year, Spain’s deficit was 9.2 percent of GDP.

“The Spanish economy has always been on a knife edge,” said William Chislett, who writes reports for the Madrid-based think tank Elcano Royal Institute. “And Rajoy will need to move fast during his first 100 days to make labor reforms, and that means facing down the trade unions and any strikes.

“Like in the rest of the eurozone, Spain can’t keep cutting and cutting without a plan for growth,” Mr. Chislett said. “But we can’t expect a quick turnaround. Even if Spain takes the right medicine now, it won’t take effect for years.”

Spain’s economy has suffered in the global credit crunch like other countries, but it bears problems that have pushed the country into more trouble: The housing and construction bubble, which had accounted for 18 percent of GDP, burst in 2008, and the savings bank sector has collapsed as well.

What’s more, the savings bank sector - run by private banks and politicians - heavily financed the real estate sector and made risky investments. Spanish authorities are investigating several of the failed savings banks on corruption charges.

Unemployment and the economy have become such important issues for Spaniards that even the Basque separatist group ETA’s recent announcement that it would end its 43-year violent campaign for independence has barely registered in polls.

A Center of Sociological Research poll from October showed the PP winning 46.6 percent of the vote, compared with the Socialists’ 29.9 percent. In 2008, Mr. Zapatero won with 43.8 percent of the vote, and the PP had 39.9 percent.

A PP victory will have less to do with its candidate than the Socialists’ implosion during the economic crisis. Mr. Rajoy, 56, is a bland career politician who has lost the past two general elections and who often has polled lower as a politician than the disgraced Mr. Zapatero.

Mr. Rajoy was the deputy prime minister under the previous PP government of Jose Maria Aznar, who hand-picked Mr. Rajoy to lead the party in 2004. (Spanish political parties do not hold U.S.-style primaries.)

Rajoy hasn’t revealed his cards yet, but people remember the Aznar period, when the economy started to boom,” Mr. Chislett said.

However, Mr. Rajoy lacks two factors on which Mr. Aznar was able to capitalize between 1996 and 2004: a strong global economy and an annual influx of $13.5 billion in EU structural and cohesion funds.

Mr. Rubalcaba appears headed for defeat, at least in part because of his party. The Socialists initiated an austerity package that cut public spending, reduced civil service salaries and froze pensions, but the measures have done little except provide a temporary reprieve.