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Spanish government pact dealt fatal blow hours after announcement

MADRID (Reuters) - A government deal between Spain’s Socialists and liberal Ciudadanos was dealt a fatal blow hours after it was announced on Wednesday when both the Conservatives and anti-austerity Podemos refused to back it.

Socialists' (PSOE) party leader Pedro Sanchez (L) and Ciudadanos party leader Albert Rivera shake hands after signing an agreement in Madrid, Spain, February 24, 2016. REUTERS/Juan Medina

Such is the fragmentation of Spain’s political landscape after an election last December that the Socialists and Ciudadanos, with only 130 seats in the 350-seat parliament between them, cannot govern alone.

Podemos won 69 seats and the center-right People’s Party (PP) 123.

Continued bickering between all sides means Spain could be without a government for several more months at a time when the economic recovery is still fragile and unemployment stubbornly high at over 20 percent.

To be elected prime minister, socialist leader Pedro Sanchez needs an absolute majority on March 2 or a simple majority of seats in a second vote that would take place in parliament on March 5.

The pact with Ciudadanos could have gone through only if the PP or Podemos had backed it or at least abstained in the second vote, something they again ruled out.

Podemos said it did not agree with the social and economic policies outlined in the deal, which includes tax reforms and measures to make government spending more efficient. The party also said it was suspending its own talks with the Socialists.

“This is a deal that is incompatible with Podemos,” Inigo Errejon, a senior party member, told a news conference.

Hours earlier, the leader of the PP, acting Prime Minister Mariano Rajoy, had also reiterated his party would vote against the pact which he called “misleading” because it fell way short of any majority.

Rajoy said he would try and forge his own alliances afterwards, although he also said he believed the most likely outcome at this time was new elections, probably in June.

Teneo Intelligence analyst Antonio Barroso, who described the Socialists-Ciudadanos deal as both “strategic and futile”, said parties would probably continue negotiations beyond the two confidence votes scheduled next week.

“The pact between the Socialists and Ciudadanos is aimed at tagging the PP and especially Podemos with the blame of potential new elections if they do not abstain to facilitate a Sanchez-led administration,” Barroso said in a note.

“The strategy is to force Podemos to assume the cost of voting alongside the PP, and to accuse incumbent Prime Minister Mariano Rajoy of irresponsible behavior for not wanting to support a reasonable, encompassing reformist agreement,” he also said.

Editing by Julien Toyer/Ruth Pitchford