Spanish business. Whose head will roll?

The new Socialist government's impact on Spanish business

SPAIN'S shock change of government in March has left its corporate bosses all a-fluster. They do not know whether the new Socialist prime minister, José Luis Rodríguez Zapatero, will poke his nose into business as much as did José María Aznar, his centre-right predecessor. Above all, they are wondering if he will let them keep their jobs. In the past, a change of government in Spain has often been followed by a purge of company bosses with connections to the opposite political camp.

Last week Pedro Mielgo, the well-regarded boss of Red Electrica de Espana, a 29% state-owned company that operates most of Spain's high-voltage electricity cable, had to step aside for Luis Atienza, a former Socialist minister. Reports in the Spanish press say that two board members of Telefonica, a telecoms giant, will be replaced by Carlos Solchaga, a former Socialist economics minister, and Claudio Aranzadi, a former minister of industry. The job of Cesar Alierta, the boss of Telefonica, is rumoured to be on the line.

The privatisation of many big Spanish firms has not ended the state's influence over them, though it has been weakened to an extent that may soon become clear. Mr Zapatero has tried to ease worries about the state's heavy hand. He appointed a reassuring economics minister, Pedro Solbes, a former European commissioner for monetary affairs. His economic adviser is Miguel Sebastin, a well-respected economist, who says that the government's economic policy will be inspired by America's under Bill Clinton.

Yet Mr Aznar, when he became prime minister, paid lip service to free competition too, only to engage in complicated telephone diplomacy to secure top jobs in newly privatised companies for his friends. “Aznar's men were control freaks,” says William Chislett at the Real Instituto Elcano, a think tank in Madrid. In 1996 Alfonso Cortina, a close friend of Rodrigo Rato, Mr Aznar's economics minister, replaced scar Fanjul as boss of Repsol, an oil and gas firm. Mr Alierta, another friend of Mr Rato's, took over at Telefnica in 2000. Pablo Isla succeeded Mr Alierta at the helm of Tabacalera. Manuel Pizarro, an ally of Mr Aznar, became boss of Endesa, an energy utility, in 2002. Fernando Conte became top dog at Iberia, the national airline, in 2003. Many observers think that the ties of Messrs Cortina, Pizarro, Alierta, Isla and Conte to the party that lost the elections will now cost them their job.

Mr Zapatero has ways to exert control even over privatised firms, should he wish to. The government has golden shares in many of them, giving it the right to veto important decisions - despite the European Court of Justice declaring such shares illegal. Though entirely in private hands, firms such as Repsol and Telefonica are subject to government regulation. (Mr Solbes is planning to free the competition authority from state influence, but the regulators for energy and for telecoms, as well as the stock-exchange commission, are likely to remain under government control.) If their boards or big shareholders are made aware that the government is likely to regulate less favourably while the current boss remains in place, they will know what to do. Mr Cortina of Repsol, one of the most heavily regulated firms, is widely tipped to lose his job soon.

What will be the impact of the new Socialist government on Spanish business?