MADRID (Reuters) - Spain’s biggest cabinet overhaul in seven years is an attempt by Prime Minister Jose Luis Rodriguez Zapatero to boost the party’s ratings after a slew of unpopular economic and structural reforms.
Spain emerged from a deep recession in the first quarter, although international debt markets are demanding higher premiums on doubts the government’s cuts, tax hikes and reforms can rekindle the economy and avoid a Greek-style bailout.
Zapatero faces an election in 2012 but polls show his popularity has fallen to record lows and support for his Socialist party is 15 points behind the conservative opposition.
The reshuffle comes hours after the government passed an austere 2011 budget through the lower house.
Following are the implications of Zapatero’s reshuffle:
* The economic team, headed by Economy Minister Elena Salgado, has escaped unscathed in a vote of confidence for the minister’s policies and handling of the economic crisis since replacing the previous economy minister, Pedro Solbes, in 2008.
* By leaving Salgado in post, Zapatero has signaled to international markets and critics, such as the European Union and International Monetary Fund, that austerity measures and efforts to deflate the public deficit will continue untouched.
* The reshuffle is mostly focused on the domestic audience in an attempt to claw back dwindling support ahead of the 2012 election.
* Interior Minister Alfredo Perez Rubalcaba has been given a place at Zapatero’s right hand as deputy prime minister. Rubalcaba is a Socialist old timer and one of the most popular members of the party with a strong track record in the fight against Basque separatists ETA.
* Zapatero may have to watch his back with Rubalcaba so close to the seat of power as many Spaniards consider the prime minister the main reason for the party’s unpopularity.
* Labor Minister Celestino Corbacho is out in an effort to restart talks with unions and business leaders stung by a Labor market reform passed without their consensus. Unemployment has soared to over 20 percent and tripartite talks broke down.
* New Labor Minister Valeriano Gomez has a good relationship with unions and, after the September 29 general strike, will try to placate Labor representatives over a pending pension reform.
* The minority government has struggled to garner support from regional parties in parliament and narrowly faced an embarrassing stand down in May after a 15-billion-euro ($21 billion) austerity plan was passed by just one vote.
The promotion of Rubalcaba has been applauded by the Basque party PNV, a party with six seats in parliament and essential for the Socialists when pushing through unpopular reforms.
* Promotion of the previous head of the Basque socialists Ramon Jauregui to head the deputy prime minister’s office will also help reinforce the fight against ETA and aid relationships with the PNV.
* Zapatero will hope the promotion of Leire Pajin, the Socialist’s youngest deputy when given a seat in parliament in 2000 at just 23 years old, to Health and Social Policy Minister will boost the youth vote.
Reporting by Paul Day; Editing by Janet Lawrence