How Long Can Sánchez Survive as Spanish PM?

A shocking kickbacks scandal - dubbed "the Koldo case" by Spain's press - has severely damanged Sánchez's minority government

"Pile of Euro Notes" by Images_of_Money is licensed under CC BY 2.0.

In 2018, Spain’s centre-right Popular Party (PP) was hit with multiple convictions in a shameful corruption scandal. Shortly afterwards, the country’s Socialist leader, Pedro Sánchez, grabbed power for the first time through a no-confidence vote in his conservative predecessor Mariano Rajoy. Sánchez said at the time that his bold move was meant to “recuperate the dignity of our democracy.”

It is ironic that nearly six years later, Sánchez finds himself in a very similar situation to Rajoy before the no-confidence vote. The Socialist Party has been rocked by its own kickbacks scandal, with the news getting worse by the day. The Prime Minister (PM) finds himself without a solid majority and with unreliable allies. The PP’s leader, Alberto Núñez Feijóo, can easily copy Sánchez’s playbook for a no-confidence vote. This essay will look at whether or not this move would be likely succeed.

First, though, let me run through the details of the ongoing scandal for the sake of non-Spanish readers, given that the affair has received too little coverage in the international press so far. On 21st February, 15 people were arrested, including a Socialist fixer called Koldo García. The press quickly dubbed the scandal “the Koldo case” (“Caso Koldo” in Spanish).

García and the others are accused of receiving illegal commissions between March and April 2020 as they tried to find surgical masks during the first phase of the pandemic. Other procurement deals are also under investigation.

A former bouncer in a brothel, with two convictions for violence to his name, García is a long-time Socialist activist. He became a bodyguard to senior figures, then a driver and then an advisor to former Transport Minister José Luis Ábalos. He was later appointed to be a director of state-owned train company Renfe. Before his arrest, Sánchez described García as one of the reference points of the left in Navarre, one of Spain’s 17 autonomous communities.

In the wake of García’s arrest, the Socialists called on the fixer’s former boss, Ábalos, to resign his seat. He refused, saying that it would hurt his reputation, and now sits as an independent member of parliament (MP).

Once a member of Sánchez’s inner circle, Ábalos is no stranger to controversy himself. In January 2020, Delcy Rodríguez, the populist-left vice president of Venezuela, who is banned from entering the European Union (EU) for undermining democracy at home, flew to Barajas airport in Madrid. Ábalos had a controversial meeting with her on board her plane. A security guard has sworn under oath that following the meeting a number of suitcases left the plane without going through customs controls. The details of what was discussed on the plane are murky at best.

Matters have got worse for PM Sánchez after García’s arrest. An online newspaper published news that Sánchez’s wife, Begoña Gómez, had allegedly held secret meetings with Javier Hidalgo, the playboy CEO of travel company Globalia, as the company negotiated the €615m bailout of its troubled airline Air Europa in early 2020. The Spanish government later successfully encouraged the airline to merge with the owner of flag-carrier Iberia, which is called International Airlines Group (IAG). A previous attempt at securing a deal had failed during the first phase of the pandemic.

The Venezuelan government owed some $200m to Air Europa in early 2020; and the press has speculated that this debt was one of the topics under discussion when Ábalos met Rodríguez on her plane. García reportedly went with the minister, as did a businessman and football-club chairman called Víctor de Aldama, who had worked as an advisor to Globalia since 2021. He has also been arrested.

The PP’s spokespeople have argued, quite correctly, that if the meeting between Sánchez’s wife and Globalia’s executives took place, the PM should have abstained from the Cabinet vote on the bailout of Air Europa to avoid a potential conflict of interest. If we see a no-confidence vote in the weeks and months ahead, this could be one of the key issues on the agenda.

Gómez has drawn fire before. A lecturer in marketing, she was appointed to run the Africa centre at a business school shortly after Sánchez gained power in 2018. Under her leadership, the centre allied with an association with strong links to the Moroccan establishment. When Sánchez’s administration suddenly and unexpectedly dropped its neutrality over Western Sahara and backed a Moroccan proposal for autonomy for the disputed territory in March 2022, there was intense speculation in the Spanish press about whether his wife’s role constituted a conflict of interest.

PP up in polls

PP leader Feijóo is soaring in the latest opinion polls as a result of the smells coming from the presidential palace of la Moncloa. One recent poll tipped the PP to win between 166 to 171 MPs if a vote were held now, which is up from 137 in July 2023 (the Socialists came second with 121 in July and would fall to 108-113). With 350 MPs in total, parties need 176 votes to get a majority.

The PP’s strategic positioning has been helped by the ongoing collapse of hard-right party Vox. The same poll puts Vox on 18 to 22 seats, down from 33 in the last election. Many conservative voters have come to realise that splitting the right-of-centre vote only helps the Socialist Party. Sánchez’s party governs with the support of various populist and peripheral nationalist parties; and the PM’s aptitude for dealmaking means that he is perfectly comfortable coming second.

Sánchez won his investiture vote with 179 votes vs 171 in November 2023. Since then, though, his alliance has become shakier. For example, former Transport Minister Ábalos now sits as an independent MP, as mentioned earlier. Meanwhile, five MPs from United We Can (Unidas Podemos or UP) - a populist-left party - also declared their independence in December 2023.

UP had previously been a member of communist-led hard-left alliance Addition (Sumar), which is loyal to Sánchez’s government, at least for now. Sumar won 31 votes, including five MPs affiliated with UP, last year. Sumar’s support would be expected to fall to 23 to 27 if elections were held now.

If the PP called a no-confidence vote in the weeks or months ahead, all eyes would be on Ábalos and UP. If these six MPs abstained, Sánchez could scrape through with 173 votes against 171. If, however, they sharpened their knives, the PM could lose by four votes. UP could bring down Sánchez even if Ábalos backed his former boss.

UP began life during la crisis with populist narratives, which gained traction due to anger at widespread corruption by establishment politicians of all stripes during a deep recession. Its MPs have been going back to their roots with hard-hitting criticism of the alleged corruption in the Socialist Party in recent days.

The populist party faces an almost perfect prisoner’s dilemma (a branch of game theory that focuses on the tension between remaining loyal to an ally compared to the benefits of a strategic betrayal). Voting against Sánchez might help UP survive as an independent entity with its own strategic positioning, particularly if Sumar votes the other way.

Politics makes strange bedfellows, as the proverb says. If UP sends a message to the PP through a back-channel that it sees upside in taking a principled stance against corruption in a no-confidence vote, then Sánchez is toast. Consider the populist party’s attitude to the corruption scandal one of many wild cards at play in a complex and multi-layered game.

Together?

In November’s investiture vote, seven of the votes came from hardcore right-wing Catalan nationalist party Together (Junts). The party demanded an amnesty for its fugitive leader Carles Puigdemont in return. Sánchez is delivering a made-to-measure amnesty law, which passed through the lower house of parliament on Thursday and now faces the PP-controlled Senate. The PP can propose changes but will find it hard to block it. The law is expected to enter the statute books around May or June.

The bill has sickened many voters in Spain by including crimes like high treason and terrorism. Puigdemont’s circle had been talking to Russian spies about the possibility of boots on the ground around the time of the unconstitutional referendum on independence in 2017; and he is being investigating for allegedly organising riots in Barcelona in 2018.

Many voters see the amnesty as a form of corruption, as it frees politicians who openly broke the law from prosecution in exchange for their votes. One recent poll said that more than 70% of Spanish voters hate the law, including some 40% of Socialist voters.

Meanwhile, the Council of Venice, the Council of Europe's advisory body on constitutional matters, has said that even though amnesties for politicians can be valid, Sánchez should seek a bigger majority for his law. The proposal passed the first hurdle by 178 votes to 172, including votes from Junts.

Sánchez is delivering his side of the bargain, which he committed to so that he could form a government last year. However, he hasn’t able to close a budget deal for 2024 as he had hoped. Instead, his administration has rolled over the 2023 budget.

Unfortunately for Sánchez, Puigdemont is anything but a reliable partner. Like many Catalan nationalists, he is a dualist, who sees anything Catalan as good and anything from the rest of Spain as evil. People who subscribe to this strange worldview see Spanish democracy as fascistic, while the 2017 coup attempt is seen as a fine example of true Catalan democracy. The populist nationalists who hold this black-and-white worldview are rarely reflective or capable of understanding the opinions of their critics, as discussed at length on this blog.

What this means in practice is that Puigdemont and his followers have learnt nothing from the failure of their coup. They see Sánchez’s shameful decision to offer them an amnesty as a vindication of their smearing of Spanish democracy and the judges who tried to protect the rule of law. Gratitude is notably by its absence.

Although out of power in Catalonia since October 2022, Junts’ leaders are determined to try once again to split the region from the rest of Spain. Any vote of no-confidence in Sánchez will be seen through that prism. Junts would vote against Sánchez in a heartbeat if Puigdemont thought this would move independence half an inch closer, particularly once the amnesty has become law.

There is also another wild card. The Socialists have designed the amnesty as generously as possible, but have they done enough to cover every single crime that the Catalan nationalist leaders committed during their years of claiming that Spanish law no longer applied in the north-east of the country?

If Puigdemont ends up in jail at some point in the future due to an imperfectly drafted amnesty law, he will be able to bring down Sánchez’s government with a Thanos-like snap of his fingers. This would be particularly true if the PP makes loud noises about giving him a pardon if it wins the next general election.

Bildu or PNV?

Aside from the passage of the amnesty bill through parliament, there are several significant milestones in the months ahead. The Basque regional elections on Sunday 21st April will be worth watching closely, as discussed here. Sánchez’s big problem is that he has two allies in the autonomous community: the centre-right Basque Nationalist Party (PNV) and the radical separatist party Bildu, which is led by a convicted terrorist. Both are engaged in a tense horse race ahead of the vote. There are many scenarios where the Socialists will hold the balance of power. Which ally would Sánchez pick in a tie-breaker?

Probably the safest bet would be the Socialists sticking with the PNV, which has governed the region since 1980, with a brief interlude between 2009 and 2012 when the Socialists were in power in the Basque Country. In this scenario, it is easy to imagine Bildu deliberately positioning itself as an anti-incumbent populist party with an anti-corruption platform, whether that comes before or after the Basque elections.

Bildu’s six MPs might not want to remain as members of Sánchez’s “Frankenstein alliance” in Madrid if the party thinks Basque voters would reward a strong anti-corruption stance at home. The underlying dynamics in this scenario are similar to those discussed above with UP.

Meanwhile, the establishment Basque nationalists of the PNV have cut deals with both the Socialists and the PP over the party’s long history. Its leaders currently prefer the Socialists, but that could change if the PP continues to hold its strong position in the polls as Vox fades into irrelevance and support for the Socialists plummets.

There is a theoretical scenario where the PNV would be able to stay in power in its home region in April thanks to votes from the PP (assuming support for the Socialists drops in the Basque polls due to the ongoing scandal as support for the PP rises). In this scenario, Feijóo could easily lean on the Basque nationalist party’s five MPs to vote against Sánchez in Madrid in return for a deal in Vitoria-Gasteiz.

Another significant milestone will be the Catalan regional elections on 12th May. The regional president, Pere Aragonès of Republican Left of Catalonia (ERC), had until 31st March 2025, but called snap elections in the autonomous community on Wednesday after his minority government failed to pass a regional budget. The move blew up a Socialist plan to enter talks with its allies for a late national budget for 2024 in the wake of the amnesty deal.

As in the Basque Country, Sánchez has two allies in Catalonia, who are competing vigorously against each other. Aragonès’ ERC and Puigdemont’s Junts both voted for Sánchez back in November. ERC and Junts have seven MPs apiece in Madrid. ERC and Junts might agree on the largely imaginary benefits of independence, but they tend to squabble like bored children in the back of a car on a long trip when it comes to strategy, tactics and emphasis.

It is worth mentioning that the snap election comes too soon for Aragonès’s rival Puigdemont to return to Barcelona in triumph - the amnesty proposal is unlikely to hit the statute books in time. However, the Spanish press has flagged the possibility that Puigdemont might fly back to Barcelona so he can turn his inevitable arrest into the centrepiece of his party’s campaign, which will be based on the need for a referendum on independence.

Sánchez’s amnesty is significantly more popular in Catalonia than it is elsewhere in Spain; and support for independence is in the doldrums. The local branch of the Socialist party is ahead of ERC and Junts in the regional polls. Perhaps strangely, there are significant risks for the national Socialists party if its Catalan branch wins the regional elections while Sánchez hangs on in Madrid without calling a general election or facing a no-confidence vote. Would ERC and Junts continue to support Sánchez in Madrid if the Socialists control the contents of the pork barrel in Barcelona? I have serious doubts on this score.

Unfortunately for the Catalan Socialists, victory in the regional elections now looks less assured that it did before García’s arrest. The party’s leader in the the autonomous community, Salvador Illa, was Sánchez’s Health Minister in 2020 and 2021. A scandal over the procurement of masks in the first phase of the pandemic is potentially dangerous for him, although so far he has denied any knowledge or involvement. He will attract intense scrutiny in the weeks.

As well as Illa, another Socialist politician to watch is Francesca Armengol, the current speaker of the national parliament in Madrid. She was the president of the Balearic Islands (another autonomous community) up to June 2023 and is being investigated by the police for paying for defective masks in the first phase of the COVID-19 pandemic.

Meanwhile, European elections are due on Sunday 9th June in Spain. The Socialists already under-performed expectations in the regional elections in Galicia on 18th February, three days before García was arrested. How will the party do nationally in the wake of the procurement scandal? Badly would be a good bet. Even some convinced Socialist voters might want to switch sides in the European elections in protest at the corruption scandal.

If the Socialists flop in June, as seems likely, how many of Sánchez’s allies will re-consider their support for an administration that will increasingly be seen as doomed? It is difficult to imagine many wanting to go down with a sinking ship. Even Sumar’s leaders might see the hard-left party’s survival as being more important than remaining in power as a junior member of a struggling coalition government.

If Sánchez does survive through to the summer and autumn of this year, he should be able to have some fun negotiating a budget for 2025 around the end of the year. The PM is an expert at pork-barrel politics; and backroom talks swapping infrastructure for votes are where he feels most comfortable. Securing a budget would strengthen his position considerably as it would tie his allies into his alliance for a little longer.

Of course, there are also many wild cards in the year ahead. What will the next scandal be? Will any senior Socialists get arrested? Will anyone be able to find some slam-dunk evidence that makes Sánchez’s position untenable? Will European power politics come into play? How far will the Socialists fall in the polls?

There is also at least a theoretical possibility that the smell will get so bad that Sánchez will resign as PM and then call early elections with a new Socialist candidate, whose main job would be to rebuild the party’s reputation in opposition. I would bet hard cash against this scenario, but it is worth mentioning it because this is exactly what Portugal’s former Socialist PM António Costa has done in the smaller country to the west of the Iberian peninsula when faced with his own corruption scandal.

One slightly more realistic scenario would involve Sánchez calling a snap election to coincide with the European elections in June soon after his controversial amnesty becomes law. There have been noises in the press about the Socialists doing this, but no decision has been taken yet, as far as I can tell. I wouldn’t bet against this option.

Feijóo and the smuggler

On the other side of the table, another wild card is whether the PP’s Feijóo will be able to play his hand competently, let alone aggressively, assuming Sánchez declines to call a snap election. If the conservative leader follows Sánchez’s example in 2018 too closely and tries to govern after a no-confidence vote, his chances of success would decrease, given the hatred of the PP among the smaller parties that currently back the Socialists.

However, using a no-confidence vote to trigger an immediate election would be much more sensible. Sánchez’s fair-weather allies might calculate that a snap vote would be in their narrow interests even if the PP is the front-runner nationally and would be expected to win back la Moncloa.

On the other hand, the memories of the PP’s corruption during the boom years, which shocked many when scandal after scandal emerged during the long recession, are still fresh with many voters. Feijóo himself was once photographed on the yacht of a man who was later convicted of being a drug trafficker.

More recently, Isabel Díaz Ayuso, the PP’s president of the Madrid autonomous community, has been hit by scandal involving the tax returns of her boyfriend, who is a healthcare consultant. The Socialists have been spinning this hard as being equivalent to their own procurement scandals.

There is a slim chance that the Feijóo might not have enough stomach for a fight over corruption. Having said that, I suspect that a no-confidence vote or a snap election is more likely than not within the next 12 months or so. In either scenario, a narrow PP victory, probably without a full majority, would be the best bet. All eyes would be on the Basque nationalists of the PNV if the PP wins an election in 2024 but falls short of 176 MPs on the day.

I would be very surprised if Sánchez were still to be in power in March 2025. I might be wrong, of course, but it is difficult to see how he can survive if the kickback scandal gets much worse. His erstwhile allies might not want to see Feijóo in la Moncloa, but voting to save an unpopular minority government that is perceived by the populace as being rotten carries its own risks for elected officials who want to appeal to populist and nationalist voters.

Of course, I am an anti-populist institutionalist, who defends being a floating voter due to the corruptive nature of power. I think that Sánchez is a left-wing populist more than a mainstream social democrat. Am I talking my book, as we say in financial journalism?

If Sánchez’s government falls, it would give Spain’s Socialist Party a chance to regain a mainstream centre-left position that is critical of nationalism and populism; with an approach based on actually winning elections rather than cutting deals with smaller parties*. A period rebuilding in opposition would be good for the party and for Spanish politics as a whole, in my opinion. Has my hope for this scenario clouded my judgement? It is certainly possible!

It has to be said that betting against Sánchez has been a loss-making proposition for at least six years. Whatever his flaws (mainly preferring opportunistic tactics over strategy or principles; combining a certain smug superficiality with reflexive tribalism; and changing tack every time the wind turns), the PM is a canny operator and has always managed to land on his feet so far, no matter how bad the circumstances appear. He has often been helped by the PP’s mediocre leadership, which is often seriously lacking in strategic skill.

Can the conservative party raise its game in the months ahead? It remains to be seen. If the kickbacks scandal continues to get worse, the PP could be dealt such a good hand that even Feijóo and his somewhat unimaginative advisors struggle to find a way to lose the game.

Assuming I am right, it will be interesting to see what Sánchez’s next move would be after losing power. Manfred Weber, leader of the European Popular Party (EPP), said in December that the Spaniard “disqualified” himself from any future European role after using his position as head of the EU’s rotating presidency to attack the bloc’s mainstream centre-right.

Meanwhile, Sánchez’s decision to give ministerial positions to paid-up members of Spain’s Communist Party is unlikely to have gone unnoticed in Eastern Europe. This complicates any role in the North Atlantic Treaty Organization (NATO). Having said that, we have already mentioned the Socialist leader’s remarkable capacity to land on his feet, so I don’t think we should worry too much about his bank account when the time comes for him to leave front-line politics.

The comments are closed, as always when I discuss populists. In this case, online far-right publications in Spain regularly muddy the waters with disinformation and conspiracy theories about some of the names mentioned here. There have already been defamation lawsuits as a result. Quite why anyone needs to make anything up when the cast of characters is already quite so colourful is a mystery to me!

If you are a subscriber and you want to continue the conversation, you can hit reply to the email and speak to me directly. I might not get to it immediately, but I will reply when I get a chance. Please note that I will publish next week’s essay on Friday evening instead of Saturday. See you next week!

Further Reading

Prisoner’s Dilemma: John Von Neumann, Game Theory and the Puzzle of the Bomb by William Poundstone

*Sánchez has led the Socialists to five general elections. He lost three (2015, 2016 and 2023) and won two without a majority (both in 2019), although he has been able to govern continuously since his no-confidence vote in Rajoy in 2018.

This essay is released with a CC BY-NY-ND license. Please link to sharpenyouraxe.substack.com if you re-use this material.

Sharpen Your Axe is a project to develop a community who want to think critically about the media, conspiracy theories and current affairs without getting conned by gurus selling fringe views. Please subscribe to get this content in your inbox every week. Shares on social media are appreciated!

If this is the first post you have seen, I recommend starting with the third anniversary post. You can also find an ultra-cheap Kindle book here. If you want to read the book on your phone, tablet or computer, you can download the Kindle software for Android, Apple or Windows for free.

Opinions expressed on Substack and Substack Notes, as well as on Bluesky, Mastodon, Post and X (formerly Twitter), are those of Rupert Cocke as an individual and do not reflect the opinions or views of the organization where he works or its subsidiaries.