ALL talks of a possible coalition including the PSOE and left-wing independents Podemos have broken down after the former's leader, Pedro Sánchez, struck a pact with liberal-centrists Ciudadanos.
Extensive talks between the unlikely partners, Sánchez and Ciudadanos' leader Albert Rivera, led to agreements on some of the areas closest to both parties' hearts including job contracts, taxes, social welfare and healthcare.
But Podemos' leader Pablo Iglesias said if the PSOE wants to form deals with Ciudadanos, it 'might as well do so with the PP'.
The latter, the right-wing side of the 'big two' – of which PSOE is the centre-left – gained power in November 2011, but promptly broke all its electoral campaign promises: IVA (VAT) went up to 21%, with arts and entertainment, literature and even school books rising from the 4% bottom bracket to the full whack, whilst income tax retentions for the self-employed rose to 21% with no minimum threshold, having previously sat at 15%.
Healthcare was withdrawn for all non-EU migrants who did not possess a valid residence card – in many cases, because of job loss meaning they could not renew their visas – and pensioners, the long-term sick and low earners having to pay for their prescriptions for the first time.
A labour reform forced wages to an all-time low to make Spain 'more competitive', and made it easier and cheaper for employers to sack workers.
Public debt and unemployment have barely altered in that time, and huge funding cuts were made in health, education and social welfare after a European Union bail-out loan was sought to prevent mismanaged banks – the managers of some of which are facing trial for money-laundering – from going under.
Other unpopular moves included a schools reform with weighted exams from primary school upwards, scrapping of university grants – even for tuition fees – where sixth-formers failed to reach a certain grade in their entrance exams, an attempted abortion reform which would have effectively outlawed terminations except where the woman's life was in danger, and the so-called 'gagging law' which includes fines of between €60,000 and €300,000 for demonstrations not authorised or which get out of control, and even for photographing policemen.
Acting president Mariano Rajoy has always claimed the unpopular cost-cutting and tax-increasing decisions were necessary to meet Spain's EU debt obligations and to rebuild the economy, and said his labour reform had reduced unemployment – but in practice, more workers are on contracts of less than three months and earning the minimum wage or lower than ever before.
Podemos wanted to undo all of this, including introducing a guaranteed minimum income, and the PSOE sought to undo most of it whilst Ciudadanos was keen to undo some of it.
“What has been agreed with Ciudadanos is not compatible with our values,” said spokesman for Podemos, Íñigo Errejón.
“Our aim was always, not just to keep the PP out, but to keep their policies out.”
Without Podemos, though, Sánchez's drive to become president could be hanging in the balance.
The PP gained 123 seats out of the required 350, but needed 176 for a majority; four members broke away from the party, leaving 119, and Rajoy declined King Felipe VI's nomination to form a government as he did not believe he had enough support from the other parties.
The PSOE gained 80 seats, but one MP broke away leaving 79.
Podemos won 69 seats, making it the third-largest political force in Spain barely two years after it first formed in a rented garage in Madrid, led by a university lecturer in his 30s who lived as a tenant and earned €900 a month.
And Ciudadanos won 40 seats, whilst Podemos' natural ally, United Left (IU) gained a disappointing two.
Also, it appears IU's leader Alberto Garzón may not be willing to join in any coalition which features Ciudadanos.
Pablo Iglesias has been accused of being more concerned about his sought-after nomination of deputy president and placing his party members in charge of key ministries than resolving Spain's political situation.
And Podemos claims Ciudadanos, rather than being centre-liberal, is more far-right than the PP.
“If anyone thinks this deal is not left-wing, please tell me where,” Sánchez said in response to Podemos' refusal to negotiate further.
The PP has already said it will vote against any party leader other than its own taking the presidency, and the latest breakdown in relations means Podemos may well vote against Sánchez as well as against Rajoy.
Iglesias said he is not even prepared to abstain from voting, which may increase Sánchez's simple majority during the in-house elections on March 1.