Spain's Rajoy's hidden agenda is no big secret
* Centre-right People's Party has commanding lead ahead of vote
* PP's Rajoy has not detailed austerity plans
* New government is expected to make deep cuts
By Fiona Ortiz
MADRID, Oct 5 (Reuters) - Centre-right leader Mariano Rajoy is headed to a landslide victory in Spain's election in November but he is keeping his drastic economic policies secret for fear of changing the mood.
It is a novel election strategy but analysts believe voters are so keen to replace the outgoing Socialist government that they will trust Rajoy without fully knowing what are expected to be painful austerity measures.
Although he is keeping his platform largely secret, economists and political pundits say there is little doubt that Rajoy is planning "shock and awe" tactics to take Spain out of the group of European countries with their backs to the wall over the debt crisis.
Opinion polls show Rajoy will win Nov. 20 general elections by a wide margin, up to 15 percentage points, and throw out the Socialists who voters blame for economic stagnation and the European Union's highest jobless rate.
This is all the more remarkable because the PP has been in opposition for eight years.
If his lead holds over the next few weeks, Rajoy will win commanding power -- a likely absolute majority in parliament on top of his party's control of most of the country's 17 autonomous regions and thousands of city halls.
Keen to hang on to his advantage, Rajoy says at campaign events and in interviews that the solution for Spain is not decreeing more austerity measures, but restoring the confidence that will kick-start lending.
"Rajoy's campaign is all about confidence. There's no radical policy lay-out, it's all 'trust us,'" said David Bach, professor of strategy and economic environment at Madrid's IE business school.
People's Party officials -- who hold their party convention from Thursday through to Saturday -- are wary of repeating what they perceive as mistakes by British Prime Minister David Cameron, who failed to win an outright majority in elections last year after pledging aggressively to cut costs.
Despite the cagey campaign strategy, political analysts say Spaniards are well aware that a vote for Rajoy will mean deep cuts in public spending that will bite into formerly untouchable institutions such as health care and education.
"The hidden agenda is wide open," said Jose Ignacio Torreblanca, senior fellow at the European Council on Foreign Relations in Madrid.
Rajoy also plans deeper economic reforms, making it cheaper for companies to hire and fire, and a new round of mopping up bad loans at Spain's banks, on top of economic reforms and austerity already imposed by the Socialists.
READY TO PAY THE PRICE
Rajoy's advisers believe austerity will stimulate the economy rather than strangle it, because it will restore credibility in public financing which will release pent up bank lending, Torreblanca said.
Spanish banks expect lending to continue shrinking next year and household debt is at its lowest level in four years as families concentrate on saving after a decade of cheap financing and a property bubble that burst in 2008.
Spaniards seem ready for bitter medicine.
"We all know (austerity) will deepen. Even the most common citizen perceives this," Fernando Vallespin, political scientist at the Autonomous University of Madrid, wrote in a column in El Pais.
Teachers in Madrid have gone on strike for several days this year to protest cost cutting in education, and medical workers have protested in Catalonia.
But analysts do not believe that further austerity in Spain will set off a wave of destabilizing protests like the ones in Greece, which has decreed painful cuts in public spending.
"People underestimate Spain's ability to reinvent itself. Spaniards understand that things need to change. If people see that the pain of adjustment is broadly distributed they won't destabilize a PP government by taking to the streets," Bach said.
In recent decades Spain has gone from being a poor country with a rural economy under the Franco dictatorship to a top-10 world democracy with huge multinational corporations.
Spain's borrowing costs continue to be very high, due to uncertainty over a euro zone bailout for debt-crippled Greece, but investors are giving Spain significantly more credit for resolve than neighbouring Italy, where the government has given an impression of confusion and indecision on reform plans.
Since the mid-summer Italy has been paying higher interest rates to investors who buy its debt than Spain .
With a victory looking all-but-impossible, Socialist candidate and former interior minister Alfredo Perez Rubalcaba is concentrating on trying to prevent the PP controlling parliament.
But he has a tough job trying to distance himself from unpopular Prime Minister Jose Luis Rodriguez Zapatero in whose cabinet he served for many years as a senior minister.
Opinion polls show Spaniards believe Rubalcaba would be a better president than Rajoy and give him higher marks for leadership capacity and concern for citizens. However, in two key areas, Rajoy polls better than Rubalcaba: managing market demands and taking on the economic crisis.
Rubalcaba has accused the PP of going too far on cutting social services in some autonomous regions, but he has not generated enough outrage to narrow the gap with Rajoy.
At a recent meeting with foreign correspondents, Rubalcaba was so grimly realistic about the election result that a South American journalist felt the need to deliver him a little pep talk before she asked him a question.
"You haven't lost yet," she said. (Reporting By Fiona Ortiz, editing by Barry Moody)
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