Spain’s Socialists face hard choices in aftermath of inconclusive election

“Reaching a deal between the Socialists, Ciudadanos and Podemos is not going to be straightforward”.

“Until now, Spain has had a two-party political system, similar to that of the U.S. But these elections broke that, with four main parties vying for and winning power”.

“This party is still the No. 1 force in Spain”, Rajoy declared. The Socialists have said a clear “no” to participating in a second Rajoy administration on Monday, December 21st.

The results of the most-closely fought elections in modern history create huge uncertainty for a country only just starting to recover from a devastating financial crisis, and the Spanish stock market slumped 2.5% at the start of trading.

In a bid to soothe concerns, incumbent prime minister and PP leader Mariano Rajoy said early Monday he would strive to form a government, standing on top of a tall, blue podium in Madrid marked “Gracias” (“Thank you”) and speaking down to cheering supporters.

The Popular Party won 28.71% of the vote, giving it 123 seats in the 350-seat parliament, well short of the 176 seats needed for an absolute majority and down from 186 seats in the outgoing assembly.

The Socialists, already hemorrhaging support to Podemos, are well aware of what happened in Greece, where the once powerful center-left party Pasok was damaged by joining a coalition led by the center-right New Democracy in 2012 and saw its support plunge, while left-wing Syriza got into power.

Mr. Iglesias also said he would soon begin a round of talks with all other political parties to discuss possible agreements.

Socialist party official Cesar Luena said Rajoy’s Popular Party, which won the most votes, should have the first crack at forming a government but ruled out supporting Rajoy, eliminating the already slim possibility of an unprecedented coalition of the two parties which had dominated Spanish politics for decades.

After holding talks with the leaders of each party that has won seats in parliament, King Felipe VI, the head of state, will nominate a prime minister, most likely Rajoy.

The nominated leader must then win a vote of confidence in the assembly in order to take office – a process that can drag on.

Despite garnering the most votes, the centre-right People’s Party (PP) had its worst result ever in a parliamentary election as Spaniards angered by high-level corruption cases and soaring unemployment turned away from the party in droves.

Ciudadanos has said it will abstain in the vote to allow the PP to govern in a minority but this would not be enough.