Spanish King Meets Party Leaders to Form New Government

Spain's King Felipe VI began Monday a week of meetings with party leaders in a bid to break a potentially damaging impasse over the formation of a new government following inconclusive elections.

Acting Prime Minister Mariano Rajoy has headed a caretaker government with reduced powers since a December 20 general election produced a hung parliament in which a ruling majority cannot easily be formed.

Under Spain's constitutional monarchy the king must now meet with the leaders of all parties that won representation in parliament before nominating one of them to try to form a new government.

The nominated party leader must then win a parliament vote of confidence to take office.

If there is still a deadlock two months after the first vote, the monarch must call new elections.

Felipe, who took the throne when his father Juan Carlos abdicated in June 2014, began the talks on Monday by meeting with the leaders of small regional parties.

The consultations are due to end on Friday when he meets with Rajoy, whose conservative Popular Party (PP) won the most seats but fell far short of an absolute majority in the 350-seat parliament.

Rajoy has called for a "grand coalition" of the PP, which has 123 seats, his traditional Socialist rivals who came in second place winning 90 seats and new center-right party Ciudadanos which took 40 seats.

The Socialists instead are seeking a left-wing alliance that includes new anti-austerity party Podemos, which won 69 seats.

Rajoy said Monday he hoped a new government is formed "as soon as possible," warning political uncertainty threatens to derail the eurozone's fourth largest economy.

"It is obvious that uncertainty has consequences. This is why it is so important that we concentrate on what matters," he said during an interview with Spanish public radio.

The majority of Spanish voters, 61 percent, oppose holding fresh elections to resolve the political impasse, a poll published in daily newspaper El Pais showed.

The survey also showed that if new elections were held the results would be similar to the December vote and the deadlock would remain, although Podemos would edge out the Socialists from second place.

As such, European Union officials and Spanish business figures have pressed party leaders to move quickly to form a new government.

"I hope that Spain will get a stable government as quickly as possible given that it is a member of the eurozone," European Commission chief Jean-Claude Juncker said Friday.

The PP hopes to hold a first vote of confidence during the last week of January or the first week of February.

"From the point of view of companies, what matters to us is that there is a solid, strong government formed by those who will face up to economic difficulties," the head of the Spanish Confederation of Business Organizations (CEOE), Juan Rosell, told AFP.

Rajoy, who passed several reforms including a 2012 labor market shake-up that reduced firing costs, has kept quiet regarding which policy areas he would be willing to make compromises on to pact with other parties.

"The one who puts his cards on the table before starting a negotiation is a poor negotiator," he said.

The king traditionally has invited the winner of the most seats to form a government but he can opt for other leaders if it appears that they are better positioned to provide a stable cabinet.

That has happened at the regional level in Spain but never following a general election.