Sánchez and the Peugeot Crisis
When Spain's PM tried to become party leader for the second time in 2016, he drove around the country in his own car with three supporters. All three of them are now engulfed in kickback scandals.
Sánchez tweeted a picture of his trusty Peugeot on 7 February 2017. He is with one of his allies, Adriana Lastra, who is now a regional politician in Asturias. She has not been implicated in any of the scandals mentioned in this week’s essay.
Spanish Prime Minister (PM) Pedro Sánchez is the last centre-left leader standing in a major country in the European Union (EU), albeit as a centre-left leader with fairly pronounced populist tendencies. However, his various overlapping corruption scandals have gradually become so bad since our last deep dive on the subject, on 14th December 2024, that the international press has finally taken notice of the issues. There have been recent critical articles in the BBC, The Economist, the Financial Times, Politico and even The Guardian.
Sadly for readers who don’t speak Spanish, most of the articles gloss over the seedy details of the various scandals. A paywalled article in The Telegraph is the only exception that I have seen. This week’s free essay will bring you up to speed on the decay in Madrid in case you have missed the details. The bulk of the information in this week’s essay has appeared in respectable papers in Spanish. There are no conspiracy theories here; although I will flag one or two of the more breathless angles as speculative. Think of this as an exercise in open source intelligence (OSINT). Before I begin, let me stress a very important point: everyone is innocent until proven guilty in a court of law.
We need to backtrack to 2016 to understand the various scandals. Let’s set the scene first. The late Alfredo Pérez Rubalcaba was an interim leader of Spain’s Socialist Party. He represented the incumbent party in the 2011 elections. The party got thumped, with just 7.0m votes, after mismanaging a long recession, while the centre-right Popular Party (PP) received 10.9m votes - its best-ever result in absolute terms. Rubalcaba stayed on as party leader in opposition. He failed to turn around the party’s fortunes in the European elections of 2014 and resigned.
Alfredo Pérez Rubalcaba, during a visit to the Basque Country in 2010, uploaded by Rastrojo with a Creative Commons Attribution 2.0 Generic license
Although he was an astute and principled politician, Rubalcaba hadn’t been blessed with particularly good looks. After he stood down, it was understandable that some factions in the Socialist Party assumed that it might be a good idea to look for a young and photogenic replacement.
Sánchez was a 42-year-old university lecturer and member of parliament (MP) at the time. He looked like an American president from central casting. He had been a councillor in Madrid and an advisor to the party’s delegation to the European Parliament; and to the local branch of the party in Galicia. He briefly served as an MP between 2009 and 2011, losing his seat in that year’s election. He later re-entered parliament in 2013; and then won a primary battle for the leadership in 2014 after Rubalcaba’s resignation.
Unfortunately for the Spanish left, Sánchez proved himself to be mediocre at one of the two major games of politics, which consists of winning elections. He won a shockingly low 5.5m votes in 2015 (a huge distance from the party’s record of 10.1m votes in 1982); and then his share of the vote fell even further to 5.4m in 2016. Quite understandably, he was ousted as party leader afterwards when the party failed to turn around its fortunes in regional elections in the Basque Country and Galicia.
The Socialist Party’s caretaker leadership decided to abstain so Mariano Rajoy, the leader of the PP, could return as PM in 2016. Sánchez resigned his seat as an MP in protest. Our story proper begins in the autumn of 2016. Sánchez went around Spain in his personal car, a Peugeot, for several months in a dogged campaign to persuade Socialist members to re-elect him as the party leader with a mandate to fight hard against Rajoy’s PP.
The campaign was successful. Sánchez was re-elected as party leader in May 2017 and became leader of the opposition despite not being an MP. In 2018, he made his move against Rajoy by organising a series of minority parties to support a no-confidence vote in protest against shocking levels of corruption in the PP after a court sentence showed systematic kickbacks on the right during the boom years.
Sánchez has been PM ever since, despite only winning two out of the next three elections, with his support ranging from 6.8m to 7.8m votes. He has proved an expert at cutting deals with populist allies, including Catalan separatists, who tried an unsuccessful coup attempt in 2017 (Sánchez had opposed the coup as leader of the opposition), and a Basque separatist party that includes former members of a defunct terrorist organisation that had killed members of the Socialist Party.
Let’s go back to Sánchez’s 2016 tour around Spain in his trusty Peugeot. He was joined by three allies. The driver was a former bouncer in a brothel turned party fixer called Koldo García. Two further allies were called José Luis Ábalos and Santos Cerdán.
García was the first to fall. He had been an advisor to Ábalos, who had become Transport Minister under Sánchez. In 2023, charges were filed against García for corruption. He and his wife were arrested in 2024, along with 18 other people. García had become a millionaire in the years since 2016. Not bad for a bouncer and a driver! The Spanish press dubbed the corruption scandal, which spanned alleged illicit payments from the populist government of Venezuela and illegal commissions for surgical masks during COVID-19, “the Koldo case.”
Ábalos, Sánchez’s Transport Minister at the time, was the next to fall. He was investigated on suspicion of corruption, embezzlement, influence peddling and organised crime from late 2024. He now sits as an independent MP. The politician is 65 years old and has five kids with his three ex-wives. The Spanish press has been having great fun with his personal life since the scandal broke: he has found public jobs for a girlfriend young enough to be his grand-daughter; and when the police raided his house, he was with a much younger porn star. She tried to smuggle a hard drive out of his flat in her trousers, but was caught red-handed by the police.
Feminists on Spain’s left have been up in arms after recordings emerged of Ábalos and García comparing notes on their favourite prostitutes. Oh, and here is a video of Ábalos in 2020 describing himself as a “feminist” before his unusual private life burst into the public eye. It is worth noting that Sánchez has tried and failed to ban prostitution during his time in power.
Cerdán is the latest member of the Peugeot gang to fall. Until recently, he was secretary general of the Socialist Party (the party’s number three). García had taped several of his conversations with Cerdán, who was forced to resign when these were found by the police and leaked to the press. In several taped conversations, Cerdán discussed kickbacks and using commissions to finance the party illegally. He was also recorded asking one of his friends to find a job for García’s Romanian lover. She was hired almost immediately afterwards by a public-sector company within Ábalos’ Transport Ministry.
What is more, Cerdán was also recorded while discussing cheating in the 2014 primaries to help make Sánchez party leader for the first time. Senior Socialists had already publicly raised the alarm that Sánchez’s team might have cheated in the internal party vote in 2016 that preceded his resignation, as well as in the 2017 primary battle that re-established him as leader.
Sánchez apologised to the Spanish public for trusting people who turned out to be corrupt earlier in June. After a day or two, he changed gears and began his usual attacks on the PP. Of course, this partisan schtick rather misses the point. If three out of three of Sánchez’s closest allies in 2016 have turned out to be corrupt, shouldn’t he just resign and call snap elections? Wouldn’t this be the best way of showing penance for his lapses in judgement when it comes to building his core team?
The PM also finds himself engulfed in multiple corruption scandals himself. His wife, Begoña Gómez, is still being investigating for influence peddling after helping a company that received a public bailout while living with the PM in la Moncloa (the palace for the head of government). Her own tax affairs while handling accountancy for the family business (gay saunas and brothels) have emerged as a potential scandal, as have accusations of blackmail of the clients. The details of this latest scandal remains murky and much of the reporting has been speculative so far, so I wouldn’t get too excited about this angle yet. Meanwhile, Sánchez’s brother David is also under investigation for irregularities in his public employment since 2017.
It is worth mentioning that the judge in the Gómez case has argued that Félix Bolaños, Sánchez’s Minister of the Presidency, Justice and Relations with the Courts, should be investigated for embezzlement and contempt of court for making a government advisor the personal secretary of the PM’s wife and allegedly covering up for Gómez under oath. Bolaños is designing a controversial and unpopular reform of the judiciary - expect judges and prosecutors to take to the streets of Madrid later today (Saturday) in protest ahead of a strike next week.
Sánchez’s team tried to change the conversation by leaking the tax details of the boyfriend of Isabel Díaz Ayuso, the regional president of Madrid for the PP. The attorney general, Álvaro García, is now under investigation himself for leaking confidential information. He has refused to resign, which means that prosecutors will have to bring a case against their own boss. Another scandal involves a Socialist fixer trying to bear pressure on the Civil Guard not to investigate the party. It didn’t work; and members of this organisation have searched the party’s headquarters for clues into the various interlocking scandals.
Any Spanish speakers who believe in OSINT should have sat up and paid attention when Emiliano García-Page, the Socialist President of Castile-La Mancha, gave a hard-hitting radio interview recently. One of a handful of high-profile critics of Sánchez within the party, he said: “The issues that most worry Sánchez aren’t even in the newspapers yet.” A few days afterwards, one of the judges investigating alleged Socialist corruption said that the Civil Guard’s investigative unit still has a “huge amount” of raw material to analyse.
García-Page and the judge have given us all a serious hint that what we have seen so far might just be the tip of the iceberg. It looks like the people around Sánchez might have been fairly systematic about dirty tricks, enriching themselves, and using public funds to reward allies for their loyalty despite being unqualified for the posts. How bad will the scandals get? I have no idea, and I don’t want to make any specific predictions, but the fact that a senior member of Sánchez’s own party will say something quite so dramatic in public and on the record is extremely significant.
The hint that the corruption scandals could be interlocking and systematic should give food to thought to those foreign correspondents who have chosen to ignore the various investigations or to be coy about the details. It is true that some of the scandals might feel a little anecdotal at times, but the underlying pattern of behaviour that they suggest should deeply concern all believers in liberal democracy, wherever you happen to sit on the political spectrum.
Sánchez’s apologists generally make two arguments at this point. The first is that he has had no choice but to do deals with populists. This is quite clearly false. When he was lining up his no-confidence vote in Rajoy in 2018, Sánchez decided against using the vote to trigger a snap election and then cutting a reformist deal with a liberal centrist party that had already found some common ground with the Socialists. He actively preferred deals with populists. The leader of the liberals was so upset that he publicly accused Sánchez of getting someone else to write his doctoral thesis for him.
When Sánchez lost the election in 2023, he decided to do a deal with a hard-right Catalan separatist party, Junts (Together). He had previously described one of the party’s former leaders as the Spanish equivalent of Marine Le Pen. Of course, this was long before he needed the party’s seven votes. A poorly designed amnesty was the price he was prepared to pay to stay in power.
Sánchez’s apologists say that he has tried to keep Vox, a hard-right party, out of la Moncloa. The second argument contains an element of truth. The one attitude that unites all members of Sánchez’s “Frankenstein alliance” is a hatred of Vox, which won 33 seats with a Spanish-nationalist platform in July 2023. This was a long way off 137 for the PP or 121 for the Socialists. Parties need a majority of 176 seats to govern, so the combination of the PP and Vox (170) fell short.
Sánchez actively chose to govern in 2023 without a real majority instead of exploring other options, such as a second election, a German-style national unity government, or a patriotic abstention so the winner of the elections could govern from the centre. He also undermined his own case as a bulwark against Vox by cutting a deal with a hard-right Catalan separatist party, as mentioned above.
Sadly for Sánchez, the latest polls show the PP continuing to gain ground with the public. One recent poll put the centre-right party on 154 seats. While falling short of a majority (176), a result like this in the next election means the party would be highly unlikely to need a full coalition deal with Vox. An abstention might be enough. Opinion polls like this undermine the case against a snap elections and will make some of Sánchez’s allies question their assumptions about the future.
I already lost one bet with a friend that Sánchez’s fragile reign would come to an end by Easter 2025. I still think that a snap election this year appears likely. If Sánchez can hold on beyond Christmas, I would say that the first half of 2026 is more likely than the second half. In theory, Sánchez has until August 2027, but given the volume of scandals that are breaking pretty much every week, it is hard to see how he can stay in power quite that long. I would bet against an election in 2027.
In the meantime, all of Sánchez’s allies face an exquisite prisoner’s dilemma. There will be costs to continuing to support him if and when the scandals get worse; and there are costs to betraying him. So far, Podemos, a small populist-left party with four independent MPs who split from the larger Sumar (Addition) coalition after voting to make Sánchez PM, has said that his government is “dead.” Although Sumar is generally loyal, at least one of its MPs is talking about resigning the party whip in protest at corruption. Ábalos also sits as an independent, as mentioned earlier.
All this erodes Sánchez’s margin of eight votes (179 vs 171) from the investiture vote in November 2023. In a hung parliament, a handful of mavericks can have an outsized impact on the history books.
Sánchez’s other allies are holding on for now. Junts - the Catalan separatist party he once (correctly) described as hard right - is enjoying his weakness and is seeing what concessions it can get. However, another Catalan separatist party, Republican Left of Catalonia (ERC), has raised doubts about the PM’s ability to survive into 2026. Both Junts and ERC are out of power in their home region, which is run by Sánchez’s former Health Minister, Salvador Illa, without a majority.
In the Basque Country, the Basque Nationalist Party (PNV), which switched sides in the midst of the 2018 no-confidence vote, is looking increasingly uncomfortable. It abstained in a vote that would have let Sánchez avoid explaining Cerdán’s resignation to parliament. The PNV governs in the Basque Country thanks to votes from the regional branch of the Socialist Party, which makes its position rather difficult. Meanwhile, radical Basque separatist party Bildu has asked the PM to be “brave” in fighting corruption.
There are several wild cards. Although a backbench rebellion within the Socialist Party is wildly unlikely, it is significant that García-Page and other critics are feeling a little bolder about criticising Sánchez in public. Three ex-ministers from the party this week signed a letter asking the PM to resign, for example. Later, former PM Felipe González said that he would vote against his own party for designing and putting through such a poor amnesty law (the law only passed because Catalan separatists who would benefit from the law voted for it; and in return they made Sánchez PM again despite having lost an election).
One of the Socialist party’s spokespeople invited González to hand in his membership card after his comments. This is not necessarily a sensible strategy for handling disagreement, given that 62% of Spanish voters disagree with the amnesty. Even among voters who supported Sánchez’s Socialist Party in 2023, nearly 50% oppose the amnesty, while only 38% support it.
González has described Eduardo Madina, a former Basque MP who lost to Sánchez in the 2014 primary battle, as his pick to lead the party if there were a primary battle. Madina is discretely raising his profile in the press during the scandal. The politician, who lost a leg in an attack by Basque separatists in 2002 and has been a critic of populism, would also be my pick to rebuild the party in opposition. It is worth mentioning that even some of Sánchez’s allies, such as former Socialist PM José Luis Rodríguez Zapatero, appear to be plotting against the party leader, if some of the more speculative stories in the press are to be believed.
As the international press gradually gets braver in discussing the scandals, clearly Sánchez’s issues will gain attention in Brussels and other European capitals. Pressure from other European centre-left leaders to resign and hold a snap election are a factor to watch. This angle tends to be under-discussed in Spain. Sánchez also played a good hand badly in the Hague a few days ago when he made a reasonable argument against sharp increases in military budgets, but angered US Donald Trump, who has been pushing the European member states of the North Atlantic Treaty Organization (NATO) to spend more on defence. The other member states held a united front and many were annoyed at Sánchez’s posturing.
Meanwhile, El País, Spain’s centre-left paper of record, could also bring a snap election closer if it toughened up its stance on Socialist corruption. The press has carried rumours that Sánchez allies want to buy the newspaper or take a controlling stake in its parent company. His side is clearly aware of the risk of the paper taking a tougher stance on sleaze.
Sánchez’s team probably thinks there are two advantages of holding on to 2027. One is the chance that the situation might clear up in the months ahead. Support for the Socialists is actually gaining a little as Sumar collapses. The same poll that put the PP on 154 (compared to 137 in the last election), put the Socialists on 124 (compared to 121), while Sumar would collapse to 11 (from 31). It looks as if populist-left voters are switching their allegiance to the Socialists, while some mainstream Socialists are thinking of lending their votes to the PP as a protest vote. The centre-right party also seems to be picking up some votes from Vox, which could slip to 27 (from 30).
I must say that I suspect that a scenario of Sánchez turning the corner is largely based on wishful thinking. If García-Page is right, and what keeps Sánchez up at night are stories that have yet to break in the press, combined support for the left could fall further with every new scandal. It might prove better for the Socialists to lose the next election in 2025 than it would to lose in 2026, let alone in 2027.
There is another issue. Spain nationalised a quarter of a million immigrants last year. It takes a few months for new immigrants to join the electoral lists. If the country kept up that pace in 2025 and 2026, and 70% of the new votes went to the Socialists (which defends the welfare state and subsidies for newcomers), the party might go into elections halfway through 2027 with more than half a million new voters. The party was only 340,000 votes behind the PP in 2023 (8.2m for the PP vs 7.8m for the Socialists), so there are clear advantages to waiting as long as possible in this context.
If you speak Spanish and decide to dig deep into this material, let me give you a warning. Spanish summers are hot and there is always a risk of hyperventilation. Much of the right-wing commentary about the scandals suggest that Sánchez is about to cancel Spanish democracy and install himself as a dictator. While it is true that populists struggle to understand the institutions that are designed to hold them back, and the PM has indeed engaged in some democratic backsliding in line with his populist tendencies, evidence of a full-blown coup before 2027 is notable by its absence. I would urge caution if you come across this thesis on the internet. Having said that, reports that Sánchez wants to hobble the Civil Guard’s investigative unit to protect Cerdán and Gómez from further scandals should be taken very seriously.
Let me finish this week’s essay with two pieces of advice. Mainstream Socialists, who are worried about Sánchez destroying the party’s standing with the electorate, should be much bolder about challenging him. Try to actively build up alternatives, like García-Page and Madina; and maybe even build anti-Sánchez coalitions within the party to become as strong as possible when the time comes for a primary fight.
Finally, PP leader Alberto Núñez Feijóo, should borrow a principle from startups: build in public! He should start putting together a no-confidence vote loudly and publicly. He should pick an establishment figure, such a a former Governor of the Bank of Spain, to lead it. This person should renounce his (or her) salary and refuse to govern afterwards. The only decision would be to call a snap election immediately after becoming PM and then to resign without making a cent from it.
Feijóo and the person he picks for this mission should go round the TV stations and explain the project to the public. Use the metaphor of a “reset,” which is familiar to everyone nowadays. A no-confidence vote is basically the control-alt-delete of liberal democracy. At the same time, Feijóo should put pressure on Sánchez’s allies to explain why, exactly, a reset is a bad idea. Of course, the PP leader should also explain that he will only go ahead once with this plan he is sure that he has enough votes for it be a guaranteed success.
At the same time, Feijóo’s team needs to hold discrete talks in private with the four Podemos MPs, Ábalos, and the Sumar MP who is threatened to sit as an independent. Would they actively vote against Sánchez in a vote of no confidence? If so, six defections would be enough (the anti-Sánchez bloc would be on 177 vs 173). Would they abstain? If so, the PP would need three further abstentions, to bring Sánchez’s bloc down to 170 against its own 171. Feijóo’s team also needs to discretely raise the idea of snap elections in the Basque Country to try and free the PNV from Sánchez’s web of interlocking deals.
The comments are closed, as usual when I discuss populism. If you are a subscriber and you want to have a chat about it, please hit reply to the email. I might not answer immediately, but I will get to it when I can. See you next week!
Previously on Sharpen Your Axe
Sánchez’s populist tendencies (part one and part two)
Last essay on corruption scandals from December 2024
The two major games of politics
Immigration to Spain (part one and part two)
Further Reading
What Is Populism? by Jan-Werner Müller
Prisoner’s Dilemma: John Von Neumann, Game Theory and the Puzzle of the Bomb by William Poundstone
How Democracy Ends by David Runciman
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