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1/25/08

Economist.com: Spain: Zapatero's bear fight

For the complete report from the Economist.com click on this link

Spain: Zapatero's bear fight

The surprise ingredient in the Spanish election of March 2004 was the Madrid train bombings, which killed 191 commuters just three days before the vote. Thanks to the clumsiness of the outgoing People's Party (PP) government, which tried to blame Basque terrorists, not Islamist radicals, the bombs provoked an unexpected change. What had looked like a PP shoo-in turned into a Socialist bounce-back, handing victory to José Luis Rodríguez Zapatero, now Spain's prime minister. Four years on, Mr Zapatero is seeking re-election. This time, too, a surprise ingredient has arrived ahead of the March 9th poll. But, despite the recent arrest in Barcelona of 14 Muslim immigrants suspected of planning fresh attacks, it has nothing to do with Islam. After four years in which Spain's politicians have argued bitterly about almost everything else, the new ingredient is the economy.

Few would have predicted this even six months ago. An economy growing at a healthy lick of 3.8% seemed to be one of the strongest of Mr Zapatero's weapons. But since then Spain's housing bubble has burst and inflation has risen. Global financial turmoil now threatens to turn a hoped-for soft landing into something much harder.

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