Spain's PM defies doubters as election looms

By Matt Spetalnick

MADRID (Reuters): When Jose Maria Aznar was sworn in as prime minister after a narrow victory in the 1996 election, many Spaniards wondered how long it would take for the government he stitched together to fall apart.

Four years later, the former tax inspector who told an early cabinet meeting "our job is to hold on" is standing for re- election on Sunday with every opinion poll showing him heading for a second term.

Though he has confounded critics who said he was too colorless to last after the charismatic Socialist Felipe Gonzalez, Aznar is not ready to let down his guard.

He has good reason for caution.

The opposition Socialist Party -- the main challenger to Aznar's center-right Popular Party -- has raised the stakes by joining forces with the Communists for the first time since the bloody civil war of the 1930s.

Relations with moderate Basque nationalists, Aznar's parliamentary allies until last year, have broken down amid bitter recriminations over the latest deadly bombing campaign by the separatist group ETA.

Even more disconcerting, Aznar's lead in the polls -- averaging four to five percentage points -- looks too close for comfort with just three days to go before the general election.

That has contributed to unease in Aznar's camp, which had expected to coast to victory on the back of Spain's booming economy and its qualification for the euro zone.

Even the staunchly pro-Aznar newspaper El Mundo is now calling the outcome of the vote "up in the air".

Overhanging the final round of campaigning is the threat of further ETA violence. A new wave of attacks has claimed three lives since late January, putting the long-running separatist conflict back at the top of the political agenda.

Socialist candidate Joaquin Almunia has seized the chance to accuse Aznar of not doing enough to keep the Basque peace process alive.

But Aznar, who survived an ETA assassination attempt in 1995, believes his hardline stance against Basque separatists goes down well with the majority of Spanish voters.

Despite that, most political analysts say ETA's attacks are unlikely to sway the election result because both major parties equally oppose the guerrillas' aim of Basque statehood.

It is the showdown between left and right that has turned the campaign into one of Spain's most bitterly fought election contests of recent times.

Aznar has harshly criticized the new alliance between the center-left Socialists and the Communist-led United Left coalition as a "throwback to the past" that would undermine economic stability.

Almunia accuses Aznar, who has worked to distance his party from the fascist legacy of the late dictator Francisco Franco, of reviving old conspiracy theories of a "red menace" lurking on the Spanish left.

The Socialists say the use of scare tactics by Aznar -- who heads one of the few remaining right-wing governments in the European Union -- shows he is rattled by their challenge.

"Aznar realizes the Spanish electorate tends moderately towards the left," political scientist Antonio Elorza said. "That is why he has moved his party steadily toward the center."

Almunia, a 51-year-old former cabinet member, hopes to lure back voters who deserted the Socialist party after it was rocked by corruption scandals during Gonzalez's nearly 14 years in power.

Almunia says the combined left, with 2.5 million more votes than the Popular Party, would have won a parliamentary majority in 1996 if their voters had not canceled each other out.

Instead, Aznar claimed victory with just 39 percent of the vote -- about one percent more than the Socialists -- and cobbled together a government backed by regional nationalists.

Some pundits believed Aznar's fractious alliance would never last and predicted he would be forced into early elections.

Yet the 47-year-old conservative has ended up the first Spanish prime minister to complete his full term since the transition to democracy following Franco's death in 1975.

Aznar's campaign strategy has been to focus attention on the economy, claiming credit for buoyant growth, falling unemployment and lower taxes -- and promising more of the same.

But Almunia argues that wealthy business interests, including Aznar's own friends, have reaped most of the benefits.

While confidence in the government's handling of the economy has reached record levels, Aznar has failed to translate that into significant improvement in his own popularity.

His party now holds a narrower lead in the polls than it did before the last election. That would again leave Aznar short of an outright majority in the 350-seat parliament, where the Popular Party now has 156 seats.

A final round of polls last weekend showed the Popular Party winning between 158 and 171 seats, while the Socialists -- who now hold 141 seats -- were seen taking between 131 and 144.

Most Spaniards are betting Aznar will again be forced to turn to the Catalan nationalists to prop up his government.

In return, Catalan leader Jordi Pujol -- a shrewd negotiator who relishes his role as kingmaker -- has made clear he will seek new concessions for greater self-rule in the wealthy Catalonia region.