Spain's Socialists rule out early elections

[May 28, 2010]  MADRID (AP) -- The governing Socialists on Friday ruled out holding early elections even though a cliffhanger vote on austerity measures showed that Prime Minister Jose Luis Rodriguez Zapatero has only shaky support as he tries to shepherd Spain through Europe's debt crisis.

On Thursday, Zapatero's austerity package freezing pensions and cutting civil servants' wages passed by just one vote in parliament and opposition leaders called for a new election.

Jose Antonio Alonso, a spokesman in parliament for Zapatero's Socialists, said his boss's job was to serve out his full four-year term in both good times and bad and "he will continue to do so." He spoke on Spanish National Radio.

The austerity measures -- which aim to cut spending by euro15 billion ($18.4 billion) this year and next -- have been welcomed by the European Union and the International Monetary Fund but much criticized at home as a major U-turn by the Socialists. The cuts are designed to reassure markets that Spain's government debt problems won't mushroom into a Greek-style crisis.

Europe's top job creator only two years ago, Spain now has the region's highest unemployment rate at just over 20 percent and is the slowest of the major economies to emerge from the global recession.

Many Spanish newspapers ran editorials Friday calling Thursday's vote a turning point in Zapatero's efforts to lead Spain through its economic crisis, with conservative dailies calling it the beginning of the end for him.

Yet there also seemed to be a national sigh of relief that the austerity package passed, albeit by a razor-thin margin.

Rafael Simancas, one lawmaker in Zapatero's party, wrote that had it not, Spain's credibility would have taken a beating in the markets, dragging down stock prices and sparking a huge rise in the government's borrowing costs.

Even the El Pais newspaper, which generally supports Zapatero, said "Spain came within one vote of situation that would have take it closer to that of Greece."

Zapatero's party was the only one in Parliament to vote in favor of the austerity package. It passed only because three smaller parties abstained to spare Spain humiliation, not because they backed the measures.

Josep Antoni Duran y Lleida, whose party helped Zapatero by abstaining, said the prime minister should enact economic reforms such as loosening up a stodgy labor market then resign and call elections for next year. Currently elections are not scheduled until 2012.

"Your time as prime minister is over," Duran y Lleida said Thursday.

Countries across Europe -- including Italy, Ireland, Portugal, Greece and non-euro member Britain -- have also announced spending cuts and tax increases to maintain public confidence in their ability to manage their finances. But the measures have drawn protests and criticism from union leaders, particularly in Greece.

Some economists also fear the austerity cutbacks to appease the bond market may help kill off Europe's hesitant economic recovery by withdrawing government stimulus efforts too soon.

[Associated Press; By DANIEL WOOLLS]

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