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What happens to a country without a government? Take a look at Spain. (+video)

The country's bureaucracy continues to trundle on, but the deadlock exposes political and economic risks that could have long-term effects – both positive and negative.

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    Spain's King Felipe signs a decree to dissolve parliament today and call new elections at the Zarzuela Palace in Madrid.
    Courtesy of Casa de S.M. el Rey/Reuters
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It's been more than four months since Spain's inconclusive parliamentary election left the country without a government. But around Plaza de Colón and Plaza Alonso Martinez, where several of Spain's ministries are located, no one seems to worry.

An assistant at the Ministry of Public Administration shrugs her shoulders. Cafes and restaurants in the area are busy with civil servants grabbing bocadillos with fried squid or serrano ham. Metro trains in the center run every one to three minutes as they always do.

And on a holiday weekend marked by May Day protests, the police were deployed across Madrid to keep the demonstrators in line – even though protests were scarce.

“We don’t even know to whom we should address our concerns and demands,” says Alba Villanueva, a protester who struggled to entice a small group of young people in Puerta del Sol on Saturday, "and so we’re stalling."

Spain has been waiting for a new government since elections on Dec. 20 produced no clear winner. It is set to wait even longer after King Felipe VI today officially dissolved parliament for a second round of elections, expected to be held on June 26. Even then, the political deadlock is unlikely to be resolved, as no party looks set for a majority. 

The country's bureaucracy continues to trundle on, with basic functions being carried out and Spaniards largely unconcerned about the lack of government. Yet the deadlock is exposing Spain to political and economic risks that could have long-term effects – both positive and negative.

'Enough oil in the machine'

The five month political deadlock means that Fernando Sánchez-Beato Lacasa’s days at the Ministry of Public Administration have slowed down a bit. He is deputy general in charge of bilateral relations between the Spanish central government and the Spanish regional governments, and right now there’s not much for him to mediate.

“The number of initiatives the autonomous regions are proposing has diminished. Most of them are waiting for a new government to ask for what they want,” Mr. Lacasa says. "The pace of work around here has diminished a little, but we’re sticking to our routine of maintaining the daily contact with the regions where everything is running smoothly."

The prior conservative-led government has stayed on as an “acting government.” The budget for 2016 was approved in October last year, (the Spanish Constitution establishes that it can last until a new government passes a new one) and many powers have been transferred to the regional governments that are totally autonomous in fields such as education, health, and social services.

State bureaucracy, independent of partisan divides, is “planned in such way as to not let anything prevent it from working,” says Paloma Román Marugán, a political scientist at Complutense University in Madrid. “All the acting government needs to do is to make sure it puts enough oil in the machine to guarantee it operates effectively,” Dr. Marugán says.

And the Spanish public does not seem concerned about the lack of government – though they are unhappy with the partisan divide that prevented a government agreement. When Spain hit the 100 days with no government mark at the end of March, the newspaper El País released a poll in which 64 percent of Spaniards wanted political disagreement to be put aside so that a government solution could be found.

“It’s really frustrating to realize, with all the history of consensus in our political system, that the current politicians were unable to put they personal interests and their partisanship aside. I think that shows how divided we are as a country right now”, says Arturo Briones, a designer who lives in Madrid.

How political can the government be?

By being limited to a caretaker role, the acting government's presence also means there’s no room for new bills or political decision-making.

That has taken its toll in the Spanish parliament, with both the legislators elected in December and the holdover acting government refusing to recognize each other’s authority and squabbling over pending proposals on education, labor legislation, and a law restricting protests.

Recently, the parliament challenged the acting prime minister, conservative Mariano Rajoy, on his backing of the controversial European Union’s deal with Turkey regarding unwanted refugees. The majority of Spanish Congress (227 deputies out of 350) rejected the agreement and accused Mr. Rajoy of overstepping his current position as acting executive official.

Before finally agreeing to appear before his own Congress to explain the position, Rajoy claimed that an acting government isn’t subjected to parliamentary control. Other ministers have refused to appear before parliamentary committees on similar grounds. The opposition deputies have taken the government to court for not recognizing parliament's legitimacy.

Rajoy's backing of the EU-Turkey deal “was a political decision and Rajoy didn’t want to account for it, but backing the agreement is way over the line on what an acting government can do,” says Marugán.

The lack of political guidance has some upside, though. After an almost two-year hiatus, the central – though acting – government and the Catalan government resumed talks two weeks ago when Rajoy and Catalan premier, Carles Puigdemont, met in Madrid. Albeit, there was no agreement, as the two leaders hold opposite views on Catalan nationalists’ desire for an independence referendum.

“It may seem like a paradox, but the fact that there’s no government allows for the détènte between the two parts,” says Marta Romero de la Cruz, deputy general of the progressive think tank Alternativas. "As there’s no government, there’s a relaxation and an ease that allows for a meeting to occur without the usual tension."

Economic uncertainty

There may be an economic cost as well to the stasis. Last week, the National Statistics Institute announced that unemployment rose by 21 percent in the first quarter of 2016, even though Spain’s economy grew 3.2 percent in 2015. Analysts disagree on whether the issue can be attributed to the lack of government, as the first quarter is usually bad for jobs in Spain. But some advise caution.

“Foreign investors are thinking twice before investing in Spain. And even on the national level – who will buy a house right now? The political uncertainty takes a toll in the economy,” says Jaime Ferri Durà, head of the Political Science department at Complutense University.

“It may seem there’s a cause-effect relationship and this will certainly be used as a political weapon during the campaign, but the economy moves more slowly than that,” says Marugán.

Still, for the most part, Spaniards will go about their businesses while waiting for a new government. From his sunny office in downtown Madrid, Lacasa expects his team to proceed with no major hurdles. He’s relaxed and cheerful as he offers his explanation of why the regional governments he deals with know not to demand big things of the bureaucracy.

“The problem can arrive, but the solution won’t be ready,” he says.

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