SPAIN: THE SOCIALISTS ON THE THRESHOLD OF POWER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83-00857R000100160002-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 21, 2016
• Document Release Date: October 2, 2008
• Sequence Number: 2
• Publication Date: October 1, 1982
• Content Type: REPORT

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Directorate of Secret
DIA review
completed.
Intelligence
Spain:
'The Socialists on the
Threshold of Power
State Dept. review completed
Secret
EUR 82-10099
October 1982
Copy ~ ~ ~~
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Directorate of Secret
Intelligence
Spain?
The Socialists on the
Threshold of Power
This assessment was prepared by
Iberia/Aegean Branch, West European Division, Office
of European Analysis. Comments and queries are
welcome and may be addressed to the Chief,
Iberia/Aegean Branch, EURA,
Secret
EUR 82-10099
October 1981
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Spain:
The Socialists on the
Threshold of Power
Key Judgments The Spanish Socialist Workers Party is a heavy favorite to become the
/nlormation available largest party in Parliament after the national election on 28 October. If it
as oj20 September 1982 falls short of a parliamentary majority, we believe it would try-probably
was used in this report.
successfully-to form a coalition government with centrist participation.
Although the party leadership is committed to a moderate course, pres-
sures inside and outside the party for more leftist policies could grow after
it took power.
A Socialist-led government would in our view be a less reliable partner for
the United States than the current regime. It could make heavy demands
of the Western allies on the issues of military modernization, the repatria-
tion of Gibraltar, and security guarantees for Spain's North African
enclaves-demands that would be endorsed by Spanish rightists and would
reduce their qualms about the Socialists' rise to power. The Socialists
might use Western failure to meet their demands to justify a reduction in
Spain's commitment to the Alliance as well as a less cooperative posture in
bilateral relations with the United States-steps that would please party
leftists.
Bilateral defense issues that the Socialists might press include coproduction
of military materiel, the freedom to use US aid to buy military equipment
from non-US suppliers, and limitation on transit and overflights to the
Middle East as well as on visits of nuclear ships to the naval base at Rota
and other Spanish ports. The Socialists would probably give greater
support than the current government to leftist regimes in the Third World
and would be particularly interested in strengthening Spain's ties with
Latin American and Arab countries. If-as appears likely-Spanish
businessmen lost some of their enthusiasm for entering the Common
Market and if the military grew dissatisfied with NATO and the bilateral
agreement with the US-a somewhat less likely development-the moder-
ating influence of those groups on the Socialists would decrease. Spanish
foreign policy would become more erratic in that case-remaining formally
aligned with the US, but flirting more with neutralist rhetoric and
overtures to Soviet Bloc and nonaligned states.
At home, we believe the Socialists would begin by pursuing policies that
are more moderate than those advanced by most other left-of-center parties
in Western Europe. Their approach to controversial Spanish regionalism
iii Secret
EUR 82-10099
October 1982
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would include circumscribing the autonomy of the new regional govern-
ments by granting increased powers to the lower level provincial and
municipal governments. In response to the demands of their leftist
constituents, they would reverse the present government's emphasis by
fighting unemployment more than inflation. The Socialists would pursue
administrative ref~~rm, but their policies in that area would have only
limited success in holding down an already oversized budget deficit and in
deflecting radical demands for more ambitious social and economic
engineering. The :socialists are also likely to legalize abortion and increase
aid for public education at the expense of subsidies for Catholic schools.
A Socialist victor~~ would alarm conservatives, particularly in the military
and to a lesser extent in the business community, while raising unrealistic
expectations among leftists. The military, church, and business community
appear willing to give the Socialists a chance. But unless the Socialists
hedge on what the: party already sees as moderate policies, political and
economic confidence could erode. If the Socialists' attempts at accommo-
dation with conservative interests become futile, demands could develop on
the party leadership to move to the left, a course that would increase
political polarization and possibly give rise to a new round of coup plotting.
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that had grown up since the 1930s
Despite progress, the PSOE in 1979 was still strug-
gling to reconcile its radical past with the electoral
exigencies of the more prosperous and complex society
Embassy contacts reported that party
greater in the south and the cities.
Spain:
The Socialists on th
Threshold of Power
The dramatic election victory of the Spanish Socialist
Workers Party (PSOE) last May in Andalusia estab-
lished the party in the eyes of political observers in
Madrid as the front-runner in the 28 October national
election. The party has drafted a platform pointed
toward the middle-of-the-road voters it needs to win,
but its programs mask important differences within
the party that could resurface quickly after the
election.
was stronger in northern rural areas and among
A Checkered Past
The PSOE is the only major Spanish party with
significant roots that go back to before the civil war of
1936-39. After Franco's death in 1975 this history
and aid from northern European socialists and social
democrats combined to help the party recapture the
leadership of the left that it had lost to the Commu-
nists after the civil war. In 1977 and 1979, in Spain's
first democratic elections in four decades, the Social-
ists established themselves as a broadly based mass
party. Polling data indicated that PSOE voters, like
party members, ranged from committed Marxists to
moderate social democrats and Catholic reformers,
but while party activists leaned to the left, the
Socialist electorate tended more toward the center.
PSOE voters in 1979 were almost evenly divided
between the traditional working classes on the one
hand and white-collar professionals, technicians, and
small businessmen on the other. There was consider-
able overlap with the constituency of the victorious
Center Democratic Union (UCD), although the UCD
25X1 practicing Catholics and the PSOF's streneth was
leader Felipe Gonzalez was convinced that the PSOE
had to drop its commitment to Marxism to attract the
decisive bloc of centrist voters. Controversy over that
issue cut to the PSOE's core. The contrasting back-
grounds of the leadership and rank-and-file members
intensified the conflict. Many moderate leaders were
university educated and middle class, whereas most of
the more leftist rank and file were manual workers.
Intellectuals excluded from the PSOE inner circle
championed the discontented militants.
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It took Gonzalez's dramatic resignation and an ex-
traordinary party congress to persuade the PSOE
formally to abandon Marxism as an essential article
of party doctrine. According to Embassy reporting,
the absence of an alternative leader with stature and
charisma contributed to Gonzalez's success. So, too,
did the behind-the-scenes skill of Alfonso Guerra, the
party's second in command. Although Guerra classi-
fied himself as a Marxist and had some sympathy for
rank-and-file concerns, he supported Gonzalez's effort
to reach out to the political center. 25X1
We believe the PSOE under Gonzalez has generally
conducted itself as a loyal opposition, but it has not
been inhibited from engaging in backroom parliamen-
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Electoral Prospects
One major factor favoring the Socialists in the Octo-
ber elections is the deep, continuing decline of the
UCD. Internal squabbling over personalities and pow-
er and the contending pulls of diverse constituencies
have wracked that party and left it without a clear
and convincing program. Inflation and high unem-
ployment-both now running at nearly 16 percent-
have also hurt the Center Democrats. In the regional
election in May in Andalusia-Spain's largest re-
gion-the UCD received only 13 percent of the vote,
finishing a distant third to the Socialists, who gained
52 percent. Recent polls, showing the Socialists with
nearly twice the support of the UCD and the conserv-
ative Popular Alliance combined, confirm that ,the
Andalusian outcome has national implications.
Fratricidal infighting within the Communist Party is
another plus for the Socialists.' With parties to each
side of it in disarray, the PSOE is freer than in either
previous national election to reach out for centrist
voters. The Socialists' responsible role in opposition
and its temperate policies, moreover, have been care-
fully crafted to appeal to just that segment of the
electorate
We nonetheless believe that obstacles to a PSOE
victory remain. Although public statements and some
recent Spanish business publications suggest that the
economic elites may be more resigned to a PSOE-led
government since the Socialist election sweep in An=
dalusia, we believe a portion of the electorate is still
concerned that to elect the PSOE is still, to an extent,
to risk instability-with results ranging from a flight
of business capital to an outright military takeover.
The Communists have been badly split between three principal
tendencies: pro-Soviets favoring a highly centralized party organi-
zation, self-styled "renovators" advocating independence from the
Soviet Union and internal party democracy, and supporters of party
Secretary General Santiago Carrillo's disassociation from Moscow
and maintenance of an authoritarian party structure. The conflict
between these groups has distracted and discredited the Communist
Finally, although the PSOE faces little threat from
the Communists, the Socialists must worry about
leftist regional parties because much of the PSOE
vote comes from areas with strong regionalist senti-
ments. Indeed, disputes over regional autonomy, as
reported in the press, have already badly split the
PSOE in populous Catalonia, where the party drew
much of its strength in the past two elections.
On balance, we believe that the PSOE can expect to
run ahead of the approximately 30 percent of the vote
it won in 1977 and 1979 and that it will probably top
40 percent. Spain's system of proportional representa-
tion makes it possible to win a majority of the seats
with only a plurality of the vote, but the system is
skewed toward rural areas where the Socialists are
weak. Thus, we believe that even with 40 percent of
the vote the PSOE could fall short of a majority in the
lower house and would almost certainly lack a maior-
ity in the largely decorative upper house.
After the Election
Given this outcome, the PSOE could probably gain a
solid legislative majority if it formed a coalition with
the UCD or with other centrist and regionalist ele-
ments. Gonzalez has publicly ruled out an alliance to
the left. Failure to find a partner, on the other hand,
probably would not dissuade Gonzalez from trying to
form a minority government. To have a chance of
success at this, the PSOE would need to control at
least 160 of the 350 seats in the lower house.
In the event that the Socialists receive much more
than 40 percent of the vote-a possibility raised by
recent polls-they might win an absolute parliamen-
tary majority. Even then Gonzalez might offer key
government posts to independents and centrist politi-
cians to counterbalance leftists in his own party.
We believe that the party congress in October 1981
foreshadowed the shape and internal dynamics of a
Socialist government as well as many of its potential
political problems. Gonzalez carefully balanced the
need to satisfy a moderate electorate with the need to
mollify a predominantly leftist party membership. He
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socialist country but added that achievement of that
goal would require at least 20 years.
Overall, careful management and the incentive of
electoral victory produced what we view as a false
sense of unity at the congress. The months before the
election could prove to be Gonzalez's political honey-
moon. Victory would mean that the leadership could
no longer avoid hard policy choices or facing up to the
gap between what the party's rank and file wants and
what rightist power centers may be willing to tolerate.
Domestic Program
In its initial months, we believe a PSOE-dominated
government would tread carefully and would attempt
to carry out the temperate policies Gonzalez has
endorsed in opposition. The state's precarious finances
and the reservations of the military about the Social-
ists would reinforce the government's commitment to
gradualism, as would an alliance with centrists. Such
an alliance would also provide a counterweight to the
PSOE left, thereby increasing Gonzalez's freedom of
maneuver
Regional Policy. In our opinion, one of the first and
most serious issues facing aSocialist-led Cabinet
would be regional autonomy. Few matters have
aroused the military-and Spanish conservatives gen-
erally-more than the reemergence of regional na-
tionalism and the advent of autonomous regional
governments since the death of Franco. Originally a
champion of the regionalist movement, the PSOE has
developed strong second thoughts over the past two
years. In fact, since the abortive military takeover in
February 1981, the Socialists have actively cooperat-
ed with the UCD on legislation limiting the powers of
the regional governments. On the other hand, the
party still seems reluctant to defy the powerful grass-
roots support behind the autonomy movement in
Catalonia and the Basque Provinces-areas that pro-
vide much of its backing. The Socialists' dilemma is
how to square the circle-to satisfy regionalist aspira-
tions but to prevent autonomy sentiment from weak-
ening the state or provoking the military.
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To judge from the PSOE's public statements, its
solution is twofold. On the one hand, the Socialists
would leave the regions with significant home rule
powers. On the other hand, the PSOE would circum-
scribe the regionalists by entrusting many programs
to provincial and municipal governments. It might
also discontinue the arrangement whereby the UCD
has extended financial concessions to the regions in
exchange for parliamentary support from regional 25)(1
parties, although emergence of a postelection pact
with Catalan parties could prolong the practice~~
The regional issue, in our opinion, will hurt the PSOE
before as well as after the next election. The Social-
ists' dependence on votes from areas with strong
regionalist sentiments makes them vulnerable to re-
gionalist parties, which are more radical than the
PSOE on many social and economic issues. Compet-
ing with the regional left before an election or work-
ing with it afterward could push the Socialists toward
a stronger commitment to regional autonomy or to-
ward more radical programs nationally.Z Either devel-
opment would risk confrontation with military and
conservative opinion 25X1
Economic Policy. The Socialists would not initially
attempt major changes in economic policy.
we expect that they wou mere y continue extsttn?25X1
programs. Indeed, press reports indicate that, along25X1
with broadened civil liberties, improving governmen
tal efficiency would be an important emphasis of a
z The Socialists' dilemma stems from the fact that the autonomous
regions are an important subset of the national PSOE electorate.
Catalonia and the Basque Provinces, in particular, are two of the
most heavil industrialized areas of Spain, and among the more
leftist. 25X1
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Socialist government and one that we believe moder-
ate Socialist leaders would try to use to deflect leftist
pressure for more far-reaching reforms. But the
PSOE argues that Spain must also reduce income
inequalities, both between citizens and between re-
gions. We believe a Socialist government would rely
to a greater extent than the current government on
transfer payments to promote a limited redistribution
of wealth
In the struggle against stagflation, public statements
and Embassy reporting indicate that the Socialist
party would reverse the current government's empha-
sis by fighting unemployment more than inflation.
Last year the party called for atwo-year, $23 billion
effort to reduce unemployment through expanded
social services spending, with much of that money to
be channeled through local and regional governments.
The Socialists would also attack unemployment with
extended schooling and restrictions on moonlighting.
The party platform issued on 20 September declares
that initiatives similar to these could create 800,000
new jobs. The Socialists have also promised to reduce
corporate taxation, a move that-other things being
equal-could encourage private investment.
Public spending increases would also tend to raise
inflation above the current annual rate of 16 percent.
The Socialists have argued, however, that official debt
is relatively low and that Madrid could afford a 50-
percent increase in the 1982 deficit-projected by the
government at $7.5 billion and 4 percent of GDP-to
$1 1.5 billion and 6 percent of GDP. In fact, this year's
deficit will probably turn out to be $10 billion, already
over 5 percent of GDP. The Socialists also argue that
the combination of greater increases in the money
supply would depress interest rates, while increases in
social spending would induce workers to moderate
their wage demands.
As public concern with the size of the deficit has
grown in recent months, the Socialists have tended-
most notably in their platform-to play down the
expansionary side of their program. To boost reve-
nues, they are advocating a stronger effort against tax
evasion and increases in the value-added tax and other
indirect taxes. They also stress administrative re-
form-requiring government employees to meet the
same performance standards as private-sector workers
and turning some services over to local governments.
Press reports indicate that PSOE economists have
begun to attach greater importance to structural
modernization of industry as a means to long-term
prosperity and expanded employment. They are par-
ticularly interested in high-technology industries, ar-
guing that the state should act as a catalyst for
dynamic new enterprises. As part of that effort they
would use the "privileged lending circuits" that pri-
vate banks inherited from the Franco era to fund
investment in promising small- and medium-sized
firms. We believe the Socialists would also encourage
foreign investment, although so far they have said
little on this point
Gonzalez has publicly disavowed sweeping national-
izations, telling party leftists that such radical action
must await modernization of the bureauracy-which
could take decades. This line has not sat well with the
leftists, however, and in February Guerra publicly
contradicted the no-nationalizations pledge. Gonzalez
is willing to consider some nationalizations, however,
and the party platform calls for state takeover of the
grid connecting separate electric power companies.
Moreover, the PSOE is on record as favoring greater
public-sector involvement in the food, pharmaceutical,
coal, and electronics industries
The Socialists are not united on energy policy, but
Embassy reporting indicates to us that Gonzalez
seems ready to heed majority sentiment in the PSOE
against further development of nuclear power. To
reduce dependence on imported oil, the party has
promised government support for greater conservation
and conversion to coal and gas
Potential Pitfalls
Economic Constraints. The Socialists' dirigiste pro-
gram would face substantial obstacles. Even now,
double-digit inflation, high unemployment, and esca-
lating budget deficits are feeding on each other. The
combination of slow growth and rapidly rising prices
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has strained the social service system by simulta-
neously increasing outlays and reducing revenues. To
keep the system solvent, the government has increased
unemployment fund contributions for companies, fur-
ther reducing their profits. The tax base has not
expanded significantly in recent years, and deficits
have risen to worrisome levels. In addition, the gov-
ernment's competition with business for capital has
hampered private-sector growth
Despite the Socialists' growing awareness of the dan-
gers of expanding the deficit and boosting inflation,
they would feel obliged to implement key parts of
their program. Such a course would, in our view,
constitute ahigh-risk wager similar to the unsuccess-
ful gamble undertaken by Mitterrand. The PSOE
would be betting Spain's economic fortunes and its
own political future on the notion that easy money
would prompt a dramatic rise in business investment.
It would be assuming that the payoff in employment,
production, productivity, and-ultimately-tax reve-
nues would offset the inflationary and balance-of-
payments pressures stemming from ashort-term ex-
pansion of the deficit.
Such a program could not succeed without business
confidence, and Gonzalez has recently tried hard to
convince doubters of the PSOE's moderation. He has
promised that a Socialist government would not sub-
stantially alter relations between government and
business. In our view, however, Gonzalez's failure to
force Guerra to recant on the nationalization issue did
little to ease the apprehensions of businessmen and
bankers. More recently, Guerra stated publicly that in
preparing to take power, the PSOE has drafted
measures to block capital transfers out of the country.
Although several large banks have contributed to the
party, the stock market has fallen sharply since
August when the election was announced. Business
uncertainty would increase the odds against the So-
cialist program
Military pressure to increase defense spending would,
w oblem. According to Embas-
sy pain's generals do not wish
to be NATO's poor relations, and a Socialist govern-
ment would be even more concerned than the present
one about maintaining the military's good will. Final-
ly, the Socialists would also have to persuade labor
not to regard a PSOE victory as a green light for
higher wage demands; indeed, in our view labor would
have to accept falling real wages for a time if the
Socialists' program is to work. 25X1
Challenge From the Right. We also believe that the
PSOE's controversial social programs are likely to
work against the consensus the party must have. The
Socialists have somewhat mollified the Church by
calling for legalization of only limited categories of
abortion. Many Church officials, however, continue to
be worried by the Socialists' commitment to secular-
ize public school curriculums and expand public
education at the expense of parochial schools-espe-
cially at the secondary level. 25X1
The armed services, we believe, would raise problems
on another front. Guerra created a furor earlier this
year when he charged that the court martial of those
implicated in the coup attempt of February 1981 was
a farce. The military would be angrier still, accordin?
to Embassy 'f it thought the 25X1
Socialists were inter eying in suc matters as military
organization, troop stationing, and membership in
NATO. Press reports indicate that the PSOE is
seriously considering a sweeping reform of the mili-
tary justice system-a step that would raise hackles in
many barracks.
Moreover, Em assy contacts
indicate that the Socialists' efforts to establish
a dialogue with the military have largely failed
25X1
widespread conviction in rightist circles,
that a Socialist government was in
itself destabilizing. Rightists would tend to see a
Socialist victory, not the passing of Franco, as the first
true change between "ins" and "outs" in Spain. The
military, the Church, and large business interests
have influence and power far beyond the limited
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number of votes they command, and the Socialists
could not easily govern in the face of their sustained
opposition.
Challenges From the Lelt. At the same time, Gonza-
lez would have to tread carefully in dealing with the
PSOE left and with the Socialist trade unions. ATost
of the Socialist party's moderate programs are the
result of difficult and incomplete victories of middle-
of-the-roaders close to Gonzalez. We suspect, m~~re-
over, that the Communist Party and the trade unions
linked to it would exert pressure on the PSOE, seeking
to bolster their own positions by making demand:. that
a Socialist government would have to reject. Although
the umbrella Socialist General Union of Workers
(UGT) is closely tied to the PSOE, the party ma;y not
be able to prevent rank-and-file trade unionists from
falling into line behind aggressive Communist leader-
ship if labor-management relations worsen signifi-
cantly. Indeed, even now the UGT leadership has
begun to put distance between itself and the PSOE in
order to reserve its credibility in coming trade anion
elections
Outlook
A PSOE-led cabinet faced with these problems might
try to substitute the rhetoric of change for its sub-
stance. Such a tactic might work for a while. Wye
believe, however, that eventually it would heighten
tensions in the PSOE and produce recriminations
similar to those afflicting the current UCD govern-
ment. But a PSOE government's internal divisions
and shifts in course would raise political temperatures
more than the UCD's current decomposition has.
Gonzalez could come under increasing pressure to
drop his moderate policies and to join with the
regional leftist parties and even the Communists. In
short, nearly a half century after the civil war, vie
believe the possibility lingers that a victory by ttie
Socialist party-now avowedly moderate-could. lead
to the political polarization of Spain. By that time, not
only would factionalism be intense within the PSOE,
but a centrist coalition partner would come under
pressure to defect and bring down the government.
The government's rightist or center-right succes:;or,
we believe, would not be made much more stable.'
Pressure for e~:traconstitutional action would build
within the military and other segments of the tradi-
tional establishment if the PSOE clung to power and
reversed course on regionalism or if it turned sharply
to the left by inviting the Communists into the
government, nationalizing major economic sectors, or
reverting to the language of class struggle and anti-
clericalism. By then the military would probably be
making increa;>ingly public demonstrations of con-
cern, which, if unheeded, could escalate into coup
plotting. We think the Socialists can avert that out-
come and maintain the old establishment's acceptance
of the constitutional system as long as they are firm
on regionalism and keep terrorists on the run and the
left within bounds. Gonzalez's record in overcoming
adverse circumstances suggests to us that, even if the
economy should deteriorate and political tensions rise,
he would be able to meet these basic conditions for
keeping democracy on track. 25X1
PSOE Foreign Policy: Implications for the United
States
In the short term, we believe that Felipe Gonzalez's
commitment to moderation and to amicable, if not
close, relations with Washington means that his par-
ty's policies in government would be less radical than
its stated positions in opposition. Gonzalez, who en-
joys unrivaled popularity and stature within his party,
would be the principal maker of foreign policy in a
Socialist-led government. Letting pragmatic consider-
ations as well as ideology shape his thinking, he would
in our view be an important barrier to a major foreign
policy reorientation. His moderation would be rein-
forced from several different directions: from Europe-
an socialists arrd social democratic leaders with whom
he has close ties; from his potential centrist coalition
partners; and from conservative power centers, espe-
cially the military and business communities, who
would exert behind-the-scenes influences.
Over the longer term, however, we are concerned that
pressure both within and outside the PSOE could
grow during the next several years to loosen Spain's
recently developing ties with the West. Gonzalez, with
his well-honed political skills, can probably keep all
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except the worse combination of domestic and inter-
national pressures from producing dramatic diplomat-
ic shifts. But given Gonzalez's own genuine, if tem-
perate, leftist predilections and the pitfalls his
government would face, Spain under the PSOE could
drift back into the schizoid diplomacy of former
Prime Minister Suarez-remaining formally aligned
with the West while building informal ties with the
Third World and nonaligned states and lapsing inter-
mittently into ill-considered neutralist or pacifist rhet-
oric.
A Traditionalist Approach. In many respects we
believe the Socialists in the beginning would tend to
pursue traditional Spanish diplomatic objectives-
good relations with the United States, Latin America,
and Arab states, closer ties with Western Europe, and
repatriation of Gibraltar. They are part of the nation-
al consensus embracing Common Market entry. Pub-
licly and privately they have indicated that they
would continue the effort to build special relationships
with Latin America and the Middle East, particularly
the attempt to use diplomatic and cultural ties to
advance trade relations. Whereas the present govern-
ment has had good relations with conservative and
centrist regimes in those areas, the Socialists would
probably try to emphasize closer ties with leftist
25X1 states. They would also be more opposed to Israeli
military initiatives and territorial expansion
Gonzalez would use his prominence in the Socialist
International (SI) to promote Spanish interests. In
particular, he would rely on the limited leverage that
that tie provides to seek support for EC entry and
international cooperation against terrorism as well as
stable energy supplies from Algeria and other leftist
producer countries. The SI tie is reciprocal.
Gonzalez has repeatedly criticized the spread of "to-
talitarianism" in the Third World, and in comments
to US officials and in behind-the-scenes actions at
home and in the SI he has demonstrated increasing
concern about Nicaragua's slide to the left. Nor
would Gonzalez be inclined to lower Spain's military
defenses. Better relations with the armed forces and
the Socialist goal of bringing them under firmer
civilian control have led the PSOE to champion
military modernization. 25X1
Bilateral Issues. At a minimum, we believe the
United States will find a PSOE-led cabinet sometimes
hard to work with, even in the opening phases of its
tenure. Although party spokesmen have privately
signaled to US officials that they are generally in-
clined to accept the recently negotiated bilateral
agreement as a "given" and find it more acceptable
than earlier arrangements, public statements and off-
the-record conversations with Socialist leaders indi-
cate that the party may try to renegotiate the agree-
ment's references to Spanish participation in NATO.
Past party statements suggest that the Socialists may
also push for coproduction of military materiel, lower
interest rates on FMS (Foreign Military Sales) cred-
its, and the freedom to use US financial assistance to
purchase military equipment from non-US suppliers.
Even after accepting the agreement, the PSOE would
probably be more restrictive than the current govern-
ment on US use of bases in Spain and particularly
prickly on questions involving US operations in the
Middle East or US nuclear deployments. They would
also be likely to reexamine the current government's
decision to purchase the F-18, but the military's 25X1
strong public endorsement of that $3 billion deal
would make them move cautiously.
We believe that the Socialists would not necessarily
regard a bid for US concessions on these points as
inconsistent with decreased Spanish cooperation on
security issues. Given press reports of the widespread
belief among Spaniards in Spain's importance to the
United States, the Socialists might conclude that
somewhat greater assertiveness might jolt Washing-
ton into becoming more forthcoming. We suspect,
moreover, that the Socialist leadership could see a
tougher stand on bilateral issues as a "no lose"
proposition. If the United States acceded to national-
ist demands, including increased assistance for the
armed services, the Socialists would strengthen their
credentials with the military. And a rebuff might
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accomplish the same result: the PSOE and the mili-
tary might move closer together as they each be~~ame
more independent of Washington.
NATO Membership. A similar dynamic could occur
with respect to NATO membership, which the F'SOE
opposes. Opinion polls indicate that Spain's recent
entry into the Alliance was unpopular with man~/
CI'he Socialists have publicly pledged to hold
a referendum on continuing in NATO, while privately
sending out inconsistent signals to US officials on the
seriousness of that commitment
We believe one way the Socialists could try to defuse
military unhappiness with their intervention in v~hat
many officers see as an essentially military affair by
delaying the referendum, while seeking Alliance
backing for Spanish military modernization, rep;3tria-
tion of Gibraltar, and security guarantees for the
North African enclaves of Ceuta and Melilla-rnat-
ters of importance to the armed services and to
rightists generally. Should Spain not receive signifi-
cant concessions, the Socialists might at least decide
to keep S ain out of the NATO military command
structure.
The USSR. We believe that the PSOE if in power
would persist in its disconcerting habit of sending
alternately warm and cold messages to Communist
Bloc countries. They have exchanged high-level visits
with Soviet and East European Communist partiies.
Even if the PSOE were to accept entry into NATO,
the party would probably continue occasional over-
tures to the East in an effort to assuage its own ].eft
wing and to widen the divisions within the rival
Communist Party
The PSOE leadership, however, has a strong sense of
the USSR as an expansionist, totalitarian power. The
Socialists eagerly took the lead away from other
Spanish leftists in denouncing the Soviet invasio~l of
Afghanistan and the Polish regime's imposition of
martial law. Prominent Socialists have also spoken
privately to U:i officials of their fear of Soviet support
for separatist movements in the Basque provinces and
the Canary Islands. Gonzalez himself recognizes that
in the split between West and East, Spain belongs in
the Western camp. His unenthusiastic but unequivo-
cal identification with the United States is reflected in
his statement that he would "rather be stabbed going
into a subwa in New York than live 30 years in
Moscow.' 25X1
Opportunities and Risks. There is, nonetheless, a
potentially da-igerous contradiction in the Socialist
party's-and (3onzalez's-world view. Although ac-
knowledging t:he Soviet threat, the party tends in our
opinion to reg~ird efforts to counter it, such as nuclear
rearmament and support for the Salvadoran Govern-
ment, as undermining peace. Many Socialists, partic-
ularly on the party's left, publicly blame the United
States for what they call the "militarization of
thought" in the postdetente era and still see the Soviet
challenge as distant. The PSOE's years in under-
ground opposition to Franco also color its views on US
policy. To mar-y Socialists, the United States remains
the country that supported the regime that repressed
them for nearly four decades. They have argued
widely that Washington now misjudges events in the
Third World in much the same way it did earlier in
Spain. Specifically, they contend that the United
States "bets on the wrong horse" by supporting
narrowly based forces of reaction, a course that drives
reformers into the arms of Moscow.
In our view, a more independent Spanish diplomacy
under the PSOE would create opportunities as well as
problems for Washington. While Spain would dis-
tance itself from some US positions, it would also see
itself as a bridge between the West and the Third
World. Gonzalez would claim to be particularly well
suited to play that role in parts of Latin America and
North Africa. He and other PSOE members in the
past have offered to intervene on behalf of the United
States in Chad and Nicaragua, partly out of concern
with developments in those countries and partly out of
desire to curry favor with Washington.
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25X1
Such benefits might not outweigh the liabilities that
would accompany the Socialists in power. But the
value that Gonzalez places on good ties with Wash-
ington leads us to think that the United States could
probably obtain at least his limited cooperation over
the short term on high-priority NATO and bilateral
defense issues. In return, Gonzalez might expect the
United States to understand his need to throw at least
rhetorical bones to his party's left wing on secondary
issues such as the peace movement and Third World
radicalism
We are nonetheless concerned that, over the longer
term, the advent of a PSOE government could in-
crease the potential for serious difficulties in US-
Spanish relations. Long a marginal factor in great-
power diplomacy, neutral in the two World Wars, and
largely isolated from the rest of Europe under Franco,
Spain is not as firmly linked to the West as most
NATO and OECD (Organiztion for Economic Coop-
eration and Development) states. Moreover, because
the Spanish military and perhaps a centrist coalition
partner would limit the Socialists' freedom of maneu-
ver in the domestic sphere, Gonzalez might find it
necessary to pacify leftists with feistiness in foreign
policy. If-as seems likely-the government's domes-
tic program should worsen the economic situation,
Gonzalez could try to distract the electorate with
showy, independent foreign policy initiatives.
The risk of such moves would grow if the conservative
power centers that would otherwise serve as a check
on the PSOE became disillusioned with Spain's West-
ern ties. The failure to obtain increased US military
aid for continued US use of bases in Spain has,
senior military commanders. Their concern might
deepen should the PSOE agree to full participation in
NATO, because Alliance membership could bring
painful organizational adjustments-particularly for
the Army. NATO membership will involve greater
financial costs and fewer modernization benefits than
many military leaders may have thought. Discontent
will be particularly strong if NATO entry does not
improve prospects for repatriation of Gibraltar or if
the Alliance fails to help Spain fend off North
already upset
African challenges to its hold over the Canary Islands
and the enclaves of Ceuta and Melilla. The surge of
Spanish support for Argentina in the Falklands dis-
pute underlines the tentative nature of Spain's identi-
fication with its new European allies
25X1
Indeed, it is conceivable that traditional opposites-
military officers and the PSOE left-could someday
make common cause. The Socialists have often tried
to portray leftist positions as defending Spanish hon-
or. A PSOE government might make Spain's continu-
ance as a full NATO member and US ally contingent
on greater financial support for the Spanish military.
Whatever success they had in that bid, indeed their
effort alone, would please many in the military. Allied
rebuffs to outsized demands, on the other hand, would
justify the more independent diplomacy sought by
party leftists. Only last spring, the Socialist party
made a theatrical bid to delay entry into NATO
pending resolution of the Gibraltar issue and the
Falklands conflict
Spanish difficulties with the European Community
would further increase the possibility of such develop-
ments. Frustration will grow in Spain if the Commu-
nity continues to stall on Madrid's application. But
many foreign observers believe, contrary to public
opinion in Spain, that should Madrid actually enter
the EC on or soon after the 1984 target date, the
adjustment process would be painful, protracted, and
likely to produce an anti-Community backlash
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Appendix
Who Would Be Who in a
Socialist Government
A Socialist-dominated cabinet would experience the strong tug of contending
interests. Felipe Gonzalez, by virtue of his centrist leanings as well as his
recognition of the need to placate rightist power centers, would probably staff key
ministries with moderates and technocrats-individuals upon whom he has relied
to develop Spanish Socialist Workers Party (PSOE) policies in the past. Economic
portfolios, for example, would probably go to professional economists, with Miguel
Boyer, Joaquin Almunia, and Carlos Solchaga strong contenders for major posts
and Javier Solana, Enrique Baron, and Pedro Bofill candidates for lesser nosts.^
25X1
The politically sensitive Defense Ministry might fall to moderate parliamentarian
Luis Solana or Social Democrat Felix Pons, the latter mentioned as a prospect for
the Justice Ministry as well. Recent press speculation has also raised the possibility
that Gonzalez might assume the defense post in addition to the premiership. In any
case, Miguel Bueno Vicente could be a strong candidate for an important
secondary defense post. Gonzalez's former law partner, Manuel Chaves, could be a
prime prospect for the Labor Ministry, although Carlos Corcuera, a protege of
UGT (Socialist General Union of Workers) chieftain Nicolas Redondo, might also
be a candidate. Gregorio Peces-Barba, an academic and former Christian
democrat who enjoys good relations with conservative politicians, is the front-
runner for President of the lower house Congress of Deputies. Cabinet moderates
and members of an informal kitchen cabinet including Miguel Boyer and
international affairs adviser and longtime confidant Elena Flores, would be the
clubbish clique surrounding Gonzalez in government 25X1
More independent figures, both from within and outside the PSOE, would
probably also receive cabinet posts. Suarez's former Deputy Prime Minister for
Economic Affairs, Enrique Fuentes Quintana, could be brought back in a move to
build business confidence. Current head of the Democratic Alliance Party and
former UCD Finance and Justice Minister, Francisco Fernandez Ordonez, might
return under aSocialist-led government to one of his earlier posts or to the Foreign
Ministry. University professor Jose Maravall would be a solid prospect for either
the Education or Culture Ministry, while Catalan economist Ernest Lluch and
Basque lawyer Jose Maria Benegas, both moderate parliamentarians closely
identified with Gonzalez, might be tapped for the ministry dealing with the
regional autonomy process. Benegas could be a candidate for the Justice Ministry
as well.~~ 25X1
The need to keep the leftist bulk of the Socialist party supporting him, as well as
the dearth of capable individuals to staff the government, would lead Gonzalez to
hand some ministries to individuals such as Joaquin Leguina, who either do not
have strong ties with him or who have been uncomfortable with the party's
increasingly centrist course. As Gonzalez demonstrated at the party congress, he
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would probably be careful in choosing the issues on which he would buck the left-
leaving moderate ministers occasionally unsupported and forced to retreat when
they veered too far from the party's base..Alfonso Guerra might receive an
important governmental post-possibly as a minister in the Prime Minister's
office-in addition t.o his party post, but in any event Nrould continue to influence
party policies and to voice rank-and-file dissatisfaction
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