2015–16 Spanish government formation


Attempts to form a government in Spain, and related events, followed the inconclusive Spanish general election of 20 December 2015, which failed to deliver an overall majority for any political party. As a result, the previous Cabinet headed by Mariano Rajoy assumed caretaker functions. According to Article 99.5 of the Spanish Constitution:
After a series of inconclusive inter-party negotiations, Pedro Sánchez tried and failed to pass an investiture vote on 2 March. Subsequently, a political impasse set in as King Felipe VI could not find a new candidate to nominate with sufficient parliamentary support. As a result, a snap election was held on 26 June. The second election also proved inconclusive, and a failed investiture attempt by Mariano Rajoy on 31 August raised the prospect of a third election.
On 1 October, a party rebellion resulted in Pedro Sánchez being ousted as PSOE leader and the party voted to allow the formation of a PP minority government. This materialized on 29 October when PSOE abstained in Rajoy's second investiture process, thus ending the political deadlock after 314 days without an elected government.

First formation round (December 2015 – April 2016)

Post-election developments

Initial statements

As the election produced a hung parliament, a multi-party agreement was expected to be required. Mariano Rajoy said he would try to form an administration, but Pedro Sánchez called for a change in government, while recognising the PP's right to try and form a government first. Two possible coalitions, the PP with C's and PSOE with Podemos, would both come up short of a majority by themselves.
There was speculation around four possible outcomes:
C's leader Albert Rivera announced he would not actively support either PP or PSOE, but that he was willing to abstain and allow the PP to form a government. He did, however, state his opposition to any pact in which Podemos was involved. In the meantime, Pablo Iglesias from Podemos laid out stiff terms in order to even consider starting negotiations for a coalition with the PSOE. Podemos' Policy Secretary, Íñigo Errejón, also expressed the party's initial refusal to support Sánchez as a prospective candidate for prime minister, suggesting instead to search for "an independent candidate, above parties". The PSOE accused Iglesias of "filling the political space with red lines" and demanded that Podemos withdraw its condition to hold a self-determination referendum in Catalonia before discussing a pact, with Sánchez stating that he would not be Prime Minister "at any price". Others within the party pointed out that, even if the PSOE obtained Podemos's support, it would not muster a majority without support from other parties.

PSOE stance

Attention focused on the PSOE as it became increasingly clear that it had been unexpectedly placed in a kingmaker scenario. The PSOE leadership had announced their intention to vote against a government headed by Mariano Rajoy and rejected the possibility of abstaining. However, regional PSOE leaders, headed by President of Andalusia Susana Díaz, warned Pedro Sánchez against reaching any kind of agreement with Podemos, seeing the conditions put forward by Pablo Iglesias as "unaffordable", while several party regional premiers—such as Ximo Puig, Javier Fernández, Emiliano García-Page or Guillermo Fernández Vara—favoured letting the PP try to form a government on its own first. Both C's and PP pressured the PSOE to abstain to allow a PP minority cabinet to be formed, but Sánchez's team did not hide their concerns that supporting Rajoy, either directly or by abstaining, would leave Podemos as the de facto main opposition party, and maintained their opposition to it.
On 23 December, Rajoy tried to reach an agreement with Sánchez that would allow the former to be appointed Prime Minister, but it was met with Sánchez's opposition and preference to study the possibilities of an alternative pact. Both men's personal relationship had begun deteriorating after their campaign "face to face" harsh debate, and worsened further after the meeting, in which Sánchez had allegedly told Rajoy he wanted to know "nothing" of him and his party. Albert Rivera's proposal of an accord between PP, PSOE and C's that promoted "the regeneration policy reforms that Spain needs" and explicitly excluding Podemos from it, went unheeded by Sánchez as well. Sánchez's leadership also faced increasing criticism from within his own party in light of the party's negative election result, as the figure of Susana Díaz grew in prominence and became the leading voice of Sánchez's critics. Díaz was said to be seeking to replace Sánchez as party leader and to eventually lead the PSOE into a new general election, also warning Sánchez that the party's pact policy had to be decided within a federal committee and not by the Secretary General, in a move seen as disavowing Sánchez's decisions.
The PSOE crisis deepened further when Sánchez suggested delaying the 39th Party Conference—due for February 2016 to renew the party leadership—until a new government was formed or a new election was held. The idea met with strong opposition from critics, who publicly proclaimed that the conference should be held "when it is due" and with several regional leaders demanding discussions on Sánchez's leadership in light of the party's negative election result, the worst in its recent history. Valencian President Ximo Puig said in an interview that "if a new election is held the PSOE must analyze a change of candidate", while Castile-La Mancha President Emiliano García-Page commented that "no one disputes Susana Diaz' abilities to be Prime Minister". On her end-year speech as President of Andalusia, Susana Díaz revealed her national interests and paved the way for the possibility of her turning into the PSOE icon at the national level.
The PP, Podemos and C's all took advantage of the PSOE's worsening internal situation to force Sánchez to the negotiating table. Pablo Iglesias questioned that people within the PSOE "wouldn't allow Pedro be Prime Minister", noting that Sánchez "does not control" the party, and warning of the dangers of a "three-way grand coalition" between PP, PSOE and C's that Podemos would oppose. Rivera pointed out that his party was waiting "for to solve its internal affairs", while the PP reaffirmed its claim to lead the next Spanish government, seeking a multy-party pact with PSOE and C's. Economy Minister Luis de Guindos suggested during an interview the possibility of a national unity government comprising PP, PSOE and C's. On 5 January 2016, PSOE spokesperson Antonio Hernando announced that the PSOE maintained its "definitive no" to the PP's proposal of a grand coalition. Both PSOE and C's feared that a new election could harm them and benefit both PP and Podemos.
On 30 January, amid discussion between the different party factions on the party congress' date, initially due for February 2016, the PSOE announced it would elect a new leadership through party primaries scheduled to be held on 8 May, with Pedro Sánchez seeking re-election for the post. The party congress to ratify the result of such election was set to be held for 20–22 May.

PP scandals

Meanwhile, as negotiations for the formation of a new government stagnated, corruption scandals kept rocking Rajoy's party, increasing the party's difficulty in obtaining support for the investiture vote. Even before Election Day, it was known to the public that a PP deputy, Pedro Gómez de la Serna, had been paid kickbacks worth millions through a business he shared with another PP member, Spain's ambassador to India, who resigned shortly thereafter. Gómez de la Serna, who was able to get re-elected in the 20 December election, refused to abandon his seat, being subsequently expelled from the PP and into the Congress' Mixed Group.
The PP became the first party to ever be judicially charged in a corruption case—a legal figure passed into law by Rajoy's Cabinet itself in 2015—on 22 January, after being accused of destroying Bárcenas' hard drives in 2013, which allegedly contained information related to the party's illegal funding. The same day, one of Deputy PM Soraya Sáenz de Santamaría's right-hand staff was forced to resign from his post after it was discovered that he had been involved in a case of fraudulent awarding of public contracts.
was forced to renounce as caretaker Minister of Industry after he came involved in the Panama papers scandal.
By early February, a massive illegal financing network had been uncovered affecting the PPCV, with dozens of party officials and city councillors indicted or arrested. Judicial investigation also pointed to former long-time Mayor of Valencia and PP icon, Rita Barberá, as a participant in the scandal. The party found itself at risk of losing its municipal group in the city of Valencia—the third largest of Spain, which had seen 24 years of PP rule under Barberá's command—and rumours arising on a refoundation of the party in the region. The PP had been expelled from the local and regional Valencian governments in the elections held throughout 2015 after a two decade-uninterrupted rule. As corruption scandals also spread to Madrid on 11 February, with evidence suggesting that the public work contract kickbacks of 'Operation Punica' could also involve a possible illegal financing of the PP in the region, Esperanza Aguirre, regional party president of Madrid, resigned from her position on 14 February, in a move that was widely interpreted as a broadside against Rajoy, her long-standing party rival.
On 13 April, the Spanish National Police Corps were sent to register Granada's town hall—the 4th largest city of Andalusia and 19th of Spain—after the city mayor and his government, from the PP, had been involved in an urban planning corruption scandal. The case had national impact as the party was already being assailed by corruption cases throughout the country, resulting in the PP expelling all those involved in the scandal. Concurrently on 14 April, the Spanish Treasury fined former Prime Minister José María Aznar for evading tax payments through a society.
Few days later, on 15 April, José Manuel Soria was forced to renounce his post as caretaker Minister of Industry, Energy and Tourism because of his involvement in the Panama Papers scandal, owing to the leaking of information earlier that week revealing that he and his family had maintained several offshore societies on tax havens during the previous decades. Soria initially claimed the falsehood of such claims, but during the ensuing days reports kept leaking that contradicted his initial clarifications. After it was revealed that he had owned one of such societies on Jersey until 2002 during his term as Mayor of Las Palmas, he was put in a critical political position as a result of his confusing and changing explanations on the issue, leading to his renounce.

Formateur Pedro Sánchez (PSOE)

Rajoy's withdrawal

On 12 January 2016, PSOE and C's reached an agreement to elect former Lehendakari Patxi López as new President of the Congress, who required a second round of voting as a result of lacking an absolute majority to be elected in the first ballot. After the PSOE-C's accord was announced, the PP reluctantly withdrew its candidate due to lack of support from other parties, while Podemos proposed Carolina Bescansa for the post, gathering the support of IU. The next week, King Felipe VI started a round of talks with the different political parties in order to nominate a candidate for Prime Minister—a formateur. Rajoy initially announced he would try to pass the investiture vote despite not having the support from any other party aside from his own, while Albert Rivera stated his will to try to mediate between PP and PSOE so that an agreement could be reached.
announced he was temporarily stepping down from the investiture race on 22 January 2016.
On 22 January, Pablo Iglesias shocked the PSOE by offering a "government of change" headed by Pedro Sánchez, with Iglesias as his deputy and including IU, while also laying out the future's cabinet composition. Sánchez welcomed the proposal but refused to comment on it—not wanting to afford to publicly reject Podemos' offer without taking the blame for the failure in forming a government—and had insisted earlier that day that "times should be respected" and that Rajoy "should have the first shot". The same day, Felipe VI nominated Mariano Rajoy as the first candidate to try to form a new government, but Rajoy surprisingly turned down the mandate by postponing his candidacy for a later date, arguing that he had now "a verified majority against him" after knowing on Iglesias' proposal, and that he would not stand "just to let the times die out".
After Rajoy's refusal, the King announced a new round of talks, with Sánchez being the most likely call. The PSOE, which had intended for Rajoy to go through the failure to be appointed by the Congress and preferred a pact with C's, suddenly found itself forced to either accept or reject Iglesias' offer, which some PSOE high-ranking members regarded as being aimed at "humiliating" and destabilizing them. Pablo Iglesias celebrated the fact that his proposal had caused Rajoy to step back and urged Sánchez to "rise to the challenge". The PSOE, on the other hand, attacked Rajoy and dubbed his decision as "irresponsible" while regarding Podemos' offer as "blackmail". Subsequently, Sánchez also declined to go to an investiture vote until Rajoy made his try or, alternatively, stepped back definitively, though he later added that he would accept the King's request if the PP rejected it again.
On 2 February, after the second round of talks was over, Felipe VI formally tasked Pedro Sánchez with forming a government, which he accepted. Sánchez announced he would try to muster parliamentary support to try to pass the investiture vote, and gave himself a negotiation period of "three weeks to one month". The investiture was set to start on 1 March, with the first ballot—required for the legal two months period to call a new election to start running—being scheduled for 2 March, automatically setting the date of a hypothetical new election for 26 June. Rajoy warned against a possible PSOE–Podemos pact and expressed his wish for Sánchez to fail in his attempt and later attempt a three-way "moderate" alliance with PSOE and C's himself. It was widely reported that the PP heavily favoured going into an early election, and it confirmed that it would vote against any candidate different than Rajoy.

Negotiations and PSOE–C's pact

Both Podemos and C's expressed their intention to vote against any pact that included each other. Pablo Iglesias asked Sánchez to "not seek impossible pacts with Podemos and Citizens", while Albert Rivera did not rule out the possibility of a PSOE–C's pact. PSOE and C's started negotiations, with the media pointing out that PSOE was interested in reaching an accord with C's in order to try to publicly hold Podemos responsible for the failure in forming an alternative government to Rajoy's. Rivera did not close the door to enter in a PSOE-led government, but conditioned it to seeking an approachment with the PP in order to obtain its abstention in Sánchez's investiture. The difficulty of a PSOE–C's a pact relied in the fact that it could only muster 130 votes, as well as because all three Podemos, Compromís and IU opposed the idea of a government accord between both parties.
On the following days, negotiations between PSOE and minor parties resulted in Canarian Coalition confirming its affirmative vote for Sánchez, while Republican Left of Catalonia and Democracy and Freedom announced they would coordinate themselves, together confirming their opposition to a PSOE-led accord unless it recognized Catalonia's sovereignty by allowing a self-determination referendum to be held. The PSOE accepted both parties' stance, as it would not accept their votes either, opposing a referendum. The Basque Nationalist Party had already rejected supporting Rajoy, and it conditioned support for Sánchez on a new political status for the Basque Country. Euskal Herria Bildu opened a window to "involving itself in the investiture" if there was "a real offer of change". Popular Unity kept negotiating with PSOE, with its leaders expressing their interest in preventing "a right-wing government" as well as in reaching an understanding with other left-wing forces.
On its part, Podemos outlined a detailed government programme to PSOE on 15 February, which included a referendum being held in Catalonia. Sánchez criticized Iglesias for "wanting to negotiate through press conferences", with the PSOE rejecting most of Podemos' document, including the referendum, proposals on deficit reduction, debt restructuring, an increase of public spending by 24,000 million euros a year, an increase in taxes, a constitutional reform through plebiscite, among others. On his part, Iglesias accused the PSOE of seeking a minority government and Podemos' obedience to it, demanding that Sánchez meet him to know what the PSOE wanted to negotiate. Pedro Sánchez answered by stating that he would only meet Pablo Iglesias "to sign an accord". Both Iglesias and Mònica Oltra from Compromís, Podemos' ally, stated that "if the PSOE wants to govern alone, they should openly say so. But Sánchez's government will be a plural one or won't be". On 18 February, Mariano Rajoy was recorded saying to David Cameron that he expected a fresh election to be held, noting that the most probable outcome of Pedro Sánchez's investiture on 2–4 March would be a failed vote.
Through Alberto Garzón's mediation, several meetings were agreed between PSOE, Podemos, Compromís and IU, starting on 22 February. In the meantime, concurrent with those talks, PSOE and C's secretly met to discuss a potential pact. The four-way meeting ended without agreement, with the four parties agreeing to meet the next day to renew negotiations. On the late night of 23 February, PSOE and C's reportedly struck a government deal, which they officially confirmed and signed the following day. Among the key measures contained within the agreement were:
  1. A reform of the PIT with a compromise not to raise its rates and to lower culture VAT
  2. A limit to cash payments of €1,000 as anti-fraud measure
  3. To change Rajoy's labour reform and establish two types of contracts: one indefinite for permanent jobs, and another "stable and progressive" for coverage of fixed-term jobs, with a limit duration of two years
  4. Minimum contribution of €45 to self-employed
  5. Extension of parental leaves from 18 weeks to 26
  6. Ensure the sustainability and efficiency of the public pension system through specific taxing
  7. Budgetary stability and compliance with public deficit targets
  8. Blocking of any referendum aimed at securing the self-determination of any territory in Spain
  9. Constitutional reform aimed at "effectively ensure social rights and complete the federal operation of the State's territorial organization"
  10. Transform the Senate into a 100-seat territorial chamber with functions linked to the articulation and cohesion of the territorial structure of the State
  11. Elimination of ground clauses in mortgages
  12. Universal health care system and establish a common portfolio of services for all regions
  13. Transparency and democracy measures for parties, including primary elections to be regulated through law, link funding to internal democracy, regulate micro-grants and establish liabilities for parties that have been financed illegally
  14. Separation from public office of those accused of political corruption
  15. Improve the Congress and Senate electoral system's proportionality, remove 'prayed vote' system for nationals living abroad, improve gender parity, facilitate voting for people with disabilities and regulate election debates
  16. A national pact for education and to paralyze the LOMCE's implementation
  17. Maintain the current law for voluntary interruption of pregnancy
  18. Subrogated maternity and joint custody for parents
  19. A law regulating the issue of dignified death
  20. A reform of the Public Safety Law and the repealing of the Reviewable Permanent Prison
However, the signed document, said to be aimed at pleasing the PP in exchange for its abstention in Sánchez's investiture, was revealed to include many points that were contrary to Podemos' election manifesto, including:
As a result, all three Podemos, IU and Compromís broke up negotiations with PSOE on 24 February. Podemos accused the PSOE of "dishonesty", while IU leaders stated their opposition to a deal they perceived as "regressive and contrary to the interests of the popular classes". Concurrently, Rajoy said that "the pact between PSOE and C's is useless", noting the shortage of parliamentary support for the alliance and reiterating that the PP would vote against Sánchez's investiture. Both PP and Podemos postponed any resumption of negotiations with C's and PSOE, respectively, until—at least—after Sánchez's failed investiture.
On 26–27 February, the PSOE submitted its accord with C's to its membership vote, which approved it by a wide margin, albeit on a 51.7% turnout. The vote, however, received wide criticism for the question's wording, as it was generic and did not explicitly name either C's or the specific document agreed with them. The result was widely interpreted as an effort from party members to avoid disavowing Sánchez just days ahead of his investiture attempt, rather than a genuine support to the pact with C's.
Both signatories soon clashed on the document's interpretation. In an effort to lure Podemos in, the PSOE claimed that the pact did provide for the repealing of several controversial laws passed under Rajoy's Cabinet. C's denied this and argued that the written document did not mention such repeals but, rather, proposed smaller modifications on specific points. Rivera said that he could not "prevent Pedro Sánchez from saying what the accord doesn't state", while Sánchez, without specifically naming Rivera, accused "those who deny that the accord de facto repeals" those laws of "lying". On the alliance's scope, Rivera had previously explained on 26 February that his compromise was with the signed document and that the deal only specified C's support for Sánchez in the 2–4 March investiture, further stating that the PSOE could not count on his party's 40-seat support beyond it. This came after it had transpired that Mariano Rajoy had sent a letter to Rivera the previous day, with C's willing to explore the possibility of an alternative pact with the PP if Sánchez "crashed". On 29 February, hours before the start of Sánchez's investiture session, the PSOE sent a last-minute offer to Podemos and the other left-wing parties to obtain their support. Podemos, however, rejected the offer and accused the PSOE of sending a "copy-paste" of the PSOE–C's accord with minor modifications, remarking on the PSOE's "lack of seriousness". C's also questioned Sánchez for trying to change their alliance's terms in order to desperately obtain other parties' support, stating that their support was "for the signed deal only" and that "any changes would have to be reviewed so as to see what stance is adopted by the party".

Investiture attempt: 1–4 March

's investiture session was scheduled to start on 1 March at 16:30 UTC with Sánchez's speech, followed on 2 March by speeches from all other parties' spokespersons and a first round of voting, with a second and final round of voting scheduled, if necessary, for 4 March.
During the hours previous to the session's start, the PNV revealed that they would not support Sánchez, rather deciding on whether to abstain or vote against him after analyzing his speech. After mutual disagreements over the previous weekend on whether the PSOE had answered a PNV offer made the previous week, it was revealed that the PSOE's counter-offer was "so unacceptable"—the precise content of which was not disclosed—that they both had initially agreed to arrange it as if no answer had been received. After Sánchez's speech, the PNV confirmed it would vote "no", pointing to the PSOE–C's pact as an impediment for negotiations. CC, previously expected to support Sánchez, also announced the withdrawal of its support shortly thereafter, opting to abstain on the basis that "there is no credible or viable majority to govern".
In his investiture speech on 1 March, Sánchez outlined his government programme, which was limited to most of the proposals contained in his accord with C's. He asked for Podemos' votes for "a government of change", warning them that voting against him would be akin to voting for Rajoy, while also attacking the PP and thanking Rivera's party for their support. He stated that, even if he did not obtain enough votes for being appointed, he was "proud to have unlocked the political situation". In his rejoinder the next day, in what was reported as "one of his toughest public speeches ever", Mariano Rajoy resorted to sarcasm and aggressive irony and ridiculed the PSOE–C's pact, dubbing it as a "farce". Rajoy also accused Sánchez for "trying to stage a personal promotion campaign" ahead of a new election, after which the engagement turned into a mutual exchange of accusations, with both Rajoy and Sánchez accusing each other of not allowing the formation of a government. The debate also showed PSOE and Podemos delving into their differences, with Pablo Iglesias accusing Sánchez and his party of "betraying the Socialist principles" and of "capitulating" to C's. Albert Rivera, on his part, defended his alliance with the PSOE "despite their mutual differences", in a parliamentary speech that also showed evidence of a major breakup between himself and Rajoy after urging the PP to "have the courage and bravery" to "set aside" Rajoy's era.
With 219 deputies voting against and only 131 in favour, Pedro Sánchez's investiture became the first defeat for a candidate to Prime Minister ever, with his candidacy failing to obtain the required majorities in both ballots. PSOE leaders, who had hoped to persuade Podemos into supporting them on the second ballot, gave up on their attempt after the harsh debate between Sánchez and Iglesias and acknowledged Sánchez's certain defeat. They tried, however, for others to abstain on the 4 March vote so as to reduce the large number of no votes, but only managed to have CC vote for Sánchez as a political gesture at the last minute, with no practical effect in the end result.

Subsequent events after Sánchez's failure

Investiture aftermath

The first failed investiture in democracy meant that the clock for new elections started to count. After Sánchez's failure, King Felipe VI opted to delay any new round of talks until a workable majority alternative was presented to him.
Despite this, PSOE and C's showed their willingness to keep their pact alive, announcing that future negotiations would be done with both parties simultaneously on the basis of their agreed document. Both Podemos and IU rejected resuming talks with the PSOE as long as its deal with C's was maintained. Concurrently, voices within the PSOE saw as "nigh to impossible"—or even desirable—any kind of agreement with Podemos, and began readying themselves for the scenario of a new election. Previously, on 5 March, Rajoy had staged what was regarded as a first pre-election rally, asking Sánchez to abstain and let the PP rule "as the most-voted party". Rajoy, however, acknowledged that the PSOE was unwilling to "come to terms" with him and that he had lost C's key support. As a result, commentators started to point out that the PP was also gearing up itself for a new election campaign.
The PSOE threatened to withdraw their support from Podemos-led local councils, to which Iglesias replied that "trying to threaten them is the wrong way to go", reminding the Socialists that they also relied on Podemos' support on several communities. Concurrently, Rajoy announced on 7 March he would call Sánchez "to hold a meeting this week" to restate his idea of a grand coalition, to which Sánchez replied he would attend with Rivera. On 9 March, in part due to C's pressure, the PSOE agreed to hold a meeting with the PP in order to start talks, but announced they would not "negotiate the accord's content with Rajoy". This approach to the PP was, however, a change from the Socialists' previous stance of refusing to negotiate even a PP abstention in a prospective Sánchez investiture. The PP went on to reject the prospect of holding a meeting with both PSOE and C's, refusing to negotiate on the basis of the PSOE–C's pact and seeking for a meeting between party leaders and not between negotiating teams, something which both PSOE and C's rejected.

Podemos and PSOE internal affairs

In the meantime, Podemos suffered an internal crisis as a result of several member resignations from several of its regional branches leaderships on 10 March amid various accusations to the party's national leadership. Podemos accused the PSOE of attempting to magnify their crisis to pressure them into avoiding a new election by supporting Sánchez, but the crisis aggravated itself on 15 March after Iglesias dismissed Sergio Pascual, the party's Organization Secretary, and close ally to Íñigo Errejón, the party's second-in-command. Pascual's dismissal was explained by Iglesias as a result of a perceived "lack of neutrality" in his territorial management, but the move forced Errejón out from the public view for several weeks, leading to many to comment that a possible power struggle in Podemos between both Iglesias and Errejón was underway. After scientist Pablo Echenique was unanimously named as Pascual's replacement, and with Errejón reappearing on 29 March to explain that, despite the differences, his allegiance to Podemos' project and Iglesias was total, the crisis seemed to alleviate.
Concurrently, the power strugge within the PSOE developed after Sánchez had lost the political initiative following his two failed investiture votings. Voices within the PSOE sought to delay the party congress scheduled for 8 May as Susana Díaz had seemingly confessed to her close aides that she was determined to dispute the party's leadership to Sánchez. However, many party members, including Díaz herself, did not see as desirable to open the issue of the PSOE succession amid negotiations for forming a government and with a new election looming for 26 June. As a result, on 28 March it was decided for the PSOE leadership race to be delayed "indefinitely", "until the formation of a new government".

Failure of three-way talks

As Podemos wanted to avoid being singled out as the main party responsible for triggering new elections, Podemos' leaders adopted a rapprochement and reconciliation strategy with PSOE. After a brief meeting with Sánchez to resume negotiations on 30 March, Iglesias announced that he was willing to give up the post of Deputy Prime Minister in any prospective PSOE–Podemos coalition government in order to ease relations between the two parties. Podemos also accepted a three-way negotiation with C's, although PSOE and Podemos still differed in their visions of the role Rivera's party should take. While Podemos still refused to enter or support any government in which C's was directly involved, they accepted that they could work together on given issues. PSOE, for its part, maintained its wish for a "broad spectrum government" with the support of all three parties, though still without clarifying what kind of government was being sought or if all three parties would be part of it. The three parties agreed to hold a meeting on 7 April to start government formation talks, to which Iglesias would attend himself.
The run up to the three-way meeting was not trouble-free. C's repeatedly threatened PSOE with ending their alliance if they tried to negotiate with Podemos on their own. C's further distanced itself from PSOE after abstaining during a vote in Congress held on 5 April, involving the paralysis of the LOMCE, a point which was included within the PSOE–C's pact. Both PSOE and Podemos, among others, had voted favourably to the law's paralysis, leading Pablo Iglesias to highlight the similarities between his party and PSOE and comment on the latter's differences with C's. On the day leading up to the meeting, a tough confrontation between Iglesias and Rivera during a Congress plenary showed evidence of tense relations between the two parties. Subsequently, C's also demanded entry into a PSOE-led government—after having repeatedly denied this possibility in the past—and demanded that Podemos support them in return for nothing. Iglesias noted, in reference to C's reaction, that "it is difficult to agree with intolerant people".
After the three-way meeting on 7 April, negotiations came to a standstill. PSOE and C's tried to persuade Podemos to subscribe to their accord, while Podemos made a series of concessions for a joint government with PSOE but not on the basis of the PSOE–C's document. C's stated after the meeting that an agreement with Podemos was "impossible and unworkable", while PSOE said that they would not renounce their alliance with Rivera, pointing to the differences between Podemos and C's as the main obstacle for reaching common ground. The next day, Pablo Iglesias revealed that C's had refused Podemos' concessions, being unwilling to accept anything other than "minor changes" to their accord with PSOE, as well as to any kind of Podemos' involvement within the government. Iglesias said that Sánchez had been effectively "kidnapped" by Rivera's party and was unable to negotiate on his own, announcing that Podemos would put the PSOE–C's pact up to its membership vote on 14–16 April, voicing his opposition to it and placing the responsibility for a new election on PSOE. The next day, during a party rally in Catalonia, Iglesias and Echenique were cheered with shouts of "we don't want a pact!" by party supporters. PSOE discarded any further talks with Podemos on 11 April, based on a "mistrust" of Iglesias and seeing any agreement as impossible.

Grand coalition scenario

In the wake of the three-way negotiation failure, political pundits noted how a PP–PSOE grand coalition was the only option left, despite the high improbability of such a formula. Mariano Rajoy insisted on his proposal of a grand coalition led by himself while rejecting the PSOE–C's accord. Regarding C's involvement in such a prospective coalition, Rajoy noted on the party's arithmetic irrelevance, with contacts between PP and C's having remained cold-tempered following Rivera's alliance with the PSOE and the harsh Rajoy–Rivera parliamentary duel during Sánchez's investiture debate. Sánchez opened himself open to entering talks with the PP after breaking up negotiations with Podemos, but rejected repealing his pact with C's and stated that the PSOE would "never" support a PP-led government. The PP expected the PSOE to "make a move" before talks could start, meaning that they would wait until Sánchez explicitly accepted meeting with them to negotiate a government before making any offer. PP leaders even suggested that Sánchez was not the best PSOE "interlocutor" and called for him to step aside so that another person could negotiate with Rajoy and stop "the recreation, theaters and games". Some sources pointed, however, that Rajoy was willing to have Sánchez as his deputy in a grand coalition scenario. The PSOE answered negatively, stating that "Mr. Rajoy can save for himself any offer, if he had planned in making one".
On its part, C's leaders congratulated themselves for preventing "a populist government in Spain"—in reference to a possible entry of Podemos into any prospective cabinet—with party leader Albert Rivera reiterating on 11 April his idea for "an accord between the main constitutionalist parties". They returned to their previous position of "exploring" a possible pact with the PP. C's did not discard the possibility of supporting a PP candidate different than Rajoy, who was, on Rivera's view, "not able to lead an executive free from corruption and blackmail", commenting on Rajoy's ties to former PP personalities Luis Bárcenas and Rita Barberá—then under investigation for massive fraud and money laundering. Rivera also commented that his pact with the PSOE would be "void" in the event a new election was called for 26 June. It was reported that Rajoy thought that the possibility of a grand coalition would be a feasible outcome after a new election, thinking that the PSOE would not risk going into a third electoral call. This meant that the PP was willing to risk an election on June 26 if they did not achieve a favourable government alliance.
Industry Minister José Manuel Soria's resignation on 15 April as a result of the Panama Papers scandal only aggravated the PP political position—already besieged by corruption scandals—with the party giving up on any possibility of understanding with any other parties as the schism between the PP and all other political actors widened.

Road to a new election

On 12 April, King Felipe VI announced a new and final round of talks for 25–26 April as a last-ditch effort to check whether a candidate was able to muster enough support to be elected. If no candidate emerged from the talks on 26 April, the King would let the deadline of 2 May expire, dissolve the Cortes Generales and call a fresh election for 26 June.
Meanwhile, Podemos' referendum among party members aroused interest as it was seen as critical for any PSOE-led government to be formed before the 2 May deadline. Party leaders expected to use the vote as a way to try to pressure the PSOE into coming to terms with them, but the unexpectedly high turnout in the 14–16 April period attracted media attention as it exceeded the one obtained in the 27 February PSOE referendum and even Podemos' turnout records in similar internal votes. The vote resulted in Podemos' membership massively rejecting the PSOE–C's pact and supporting a PSOE–Podemos–Compromís–IU alliance, as proposed by Podemos' leadership.
Socialist leaders rejected Podemos' referendum outcome and announced they would not break their pact with C's, yet they would not try to reach any agreement with the PP either. Both PSOE and Podemos called for each other to yield to the other's demands to avoid triggering a fresh election. On 21 April, C's leader Albert Rivera called for PP and PSOE leaders to step back and support an independent candidate as Prime Minister. Rajoy replied by suggesting Rivera to "do it first himself"—in reference to him stepping back—while also announcing he would note the King on his own lack of support to be elected while censoring Sánchez for rejecting his offer for a grand coalition. Economy Minister Luis de Guindos was recorded on 22 April saying to Eurogroup president Jeroen Dijsselbloem that a new election was all but certain, with the PP hoping that, even if a similar result to December was obtained, "common sense would prevail" and the PSOE would reluctantly agree to an alliance with them. On 24 April, Rajoy remarked that his party was "ready" for a new electoral campaign and blamed both PSOE and C's for an election repeat, with both "having made impossible".
From 20 April, media outlets reported that Podemos and IU were undergoing negotiations for a joint list aimed at displacing the PSOE to third place ahead of a new election. Juan Carlos Monedero, one of Podemos' founders, proposed that both parties should come together under the "Podemos En Común" formula. Figures from both parties denied that any agreement had been reached and stated that they "would not do anything until was sure", yet confirmed that unofficial talks had begun. During a party rally on 24 April, Pablo Iglesias stated that his party was not fearful of an eventual June election, and called for "reaching out" with IU—commenting on the possibility of an alliance between both parties—while attacking both the PSOE–C's pact and the prospects of a PP–PSOE grand coalition.

Deadline

On 25 April, the talks turned into a mere process to certify the failure of negotiations and the triggering of a new election on 26 June—with parties unwilling to come to terms with each other to form a workable coalition. President of the Congress Patxi López had triggered the Cortes' dissolution protocols already from the day the King announced the final round of talks, with the dissolution decree having been prepared since 22 April and setting the convening of the newly elected Cortes for 20 July.
On 26 April, Compromís made a 30-point offer for a left-wing government with PSOE, Podemos and IU. The PSOE accepted most of the points but turned down the offer for a coalition, suggesting instead a two-year cabinet headed by Sánchez and including independents. Compromís leader Mònica Oltra—one of the main promoters of a Valencian-style inspired coalition agreement—was reported replying to the PSOE counter-offer by saying that "this is insulting", commenting on how the PSOE was trying to buy them into supporting a minority Sánchez cabinet "having just 90 deputies" and despite them offering "a perfectly acceptable pact" to "all parties committed to change". C's ruled out "getting into last-hour trouble" and showed opposition to both parties' moves, Rivera commenting on Compromís' proposals that "three pages on governing Spain for four years between six different parties" were "not even worth looking at".
Pedro Sánchez conceded that he "could not and should not submit for investiture" and acknowledged that Spain was "doomed to a new election", blaming both PP and Podemos for it. Pablo Iglesias said he would have accepted Compromís' offer and that his party "had made enough concessions already", blaming Sánchez for his "unwillingness to negotiate". Rajoy argued that it was "better" to have a new election rather than seeing any of Sánchez's government attempts succeed. Later that day, Patxi López announced that, as a result of the failed round of talks, the King was not tasking any candidate with the formation of a government and, in consequence, the Cortes would be dissolved on 2 May.
On 30 April, C's announced that its accord with the PSOE was "timed out" as a result of a new election being called, and that it "won't be in force anymore" once the Cortes were dissolved. Voices within the PSOE urged the party to "abandon" the accord with C's once it had been proven as fruitless and counterproductive to the party on the eve of a new election call.
With the deadline of 2 May being reached, the 11th Spanish Legislature—the shortest in democracy—came to a close, with the Cortes Generales being dissolved by King Felipe VI the following day.

June 2016 election

The June 2016 election resulted in a strengthened PP, which gained 14 seats, with the PSOE and C's losing a total of 13. The newly-formed Unidos Podemos alliance failed to materialise its second placed projection at the polls, remaining in third place nationally while retaining the same 71 seats obtained by both Podemos and IU separately in 2015. Overall, the parliamentary deadlock remained, as neither bloc could gather an absolute majority of seats.
While the PP's growth allowed for the PP–C's bloc to gain strength—climbing from 163 to 169—whereas the PSOE–Podemos–IU bloc was reduced from 161 to 156, the PSOE remained in the same critical position as before, as C's alone was not decisive if all other parties voted against a likely Rajoy investiture.

Second formation round (June–October 2016)

Post-election developments

Election aftermath

expected he could resume office and hoped that a government could be formed quickly, adding that "It would be nonsense to lose time for several more months". Rajoy sought coalition negotiations with PSOE and C's, aiming for "a stable government", but the PSOE ruled out forming a coalition with the PP. As a hypothetical PP and C's alliance would still be short of an absolute majority, they needed to seek further support from regional parties if PSOE's rejection was to materialise.
Complications arose when C's leader, Albert Rivera, stressed his will to form a coalition government together with PP and PSOE and ruled out any pact that involved regional nationalist parties such as the PNV, CDC/PDeCAT and ERC. Rivera had earlier maintained his party's decision to vote against Rajoy, suggesting that the PP offer alternative names instead. On 4 July, Rivera acknowledged his failure in trying to form a joint PP–PSOE–C's government due to the Socialists rejecting the offer and Rajoy's refusal to stand aside and announced that his party would "go to opposition, with the PP having to rule in minority with PSOE's abstention".
Voices within the PSOE ruled out trying to lead government negotiations again after the election results had left any potential PSOE–Unidos Podemos alliance well short of a majority. Instead, it was suggested that, in order to prevent a third election, the party should abstain in Rajoy's investiture. Among those supporting the option of the PSOE letting the PP rule in minority was former Prime Minister Felipe González, who nonetheless rejected a grand coalition between both parties and stated that the PSOE had to "take its place as a responsible opposition" and focus on "rebuilding its own project as an alternative". Members from the incumbent PSOE leadership stated their party's stance would be to vote against Rajoy's investiture, disregarding González's statements. Meanwhile, Rajoy tried to court the Socialists by offering to reach "at least a minimal agreement" in which it would be essential to agree on the State Budget for 2017, also pointing out that "Spain cannot afford the elections to be repeated again, it would be a blunder of extraordinary proportions".

First round of talks

On 5 July, the PP started probing political parties in search of support for Rajoy's investiture. CC representatives did not rule out supporting a Rajoy-led cabinet after the meeting and revealed that, unlike the previous negotiation period, Rajoy was now determined to stand for investiture, hoping to get elected with PSOE's abstention after several prospective failed votes. Concurrently, the PNV offered to support a future Rajoy government in exchange for devolution and recognition of Spain's national diversity, as well as rehabilitation and reintegration of ETA prisoners; such moves would mean drastic changes in PP policy. After a meeting with Rajoy held on 6 July to discuss its offer, PNV representatives stated they were "absolutely away" from the PP so as to support Rajoy's investiture, assuring they would vote against him unless a "change of attitude" was perceived.
On 9 July, Pedro Sánchez announced the PSOE would vote against Rajoy's investiture. Unidos Podemos sought to ease the chances for the formation of an alternative government to Rajoy with PSOE's support but this possibility was rejected by Sánchez, who preferred to go into opposition. Several PSOE leaders proposed that other parties participate in a "joint abstention" at Rajoy's investiture, appealing to the "collective responsibility of all parties" for the institutional impasse, in order to prevent a third general election but, at the same time, trying to prevent the PSOE from bearing the brunt of the responsibility of easing Rajoy's investiture. Alberto Garzón from Unidos Podemos quickly dismissed this proposal as "cowardice" and asked instead for a left-of-centre government "to revert austerity policies". As Rajoy clashed with PSOE's harsher-than-expected stance towards him, he set his scheduled meeting with Pedro Sánchez for 13 July. Rajoy warned the Socialists that either they gave up and allowed for a PP minority government to be formed or a third election would be the only way out.
C's and Unidos Podemos leaders Albert Rivera and Pablo Iglesias met Rajoy on 12 July as part of the interim Prime Minister's ongoing round of talks. Rivera left a window open to abstaining in Rajoy's investiture—now scheduled for late July–early August—asking nothing in return, as an attempt to pressure the PSOE into doing likewise and allowing for a government to be formed. This would mean a change in the party's main election pledge not to allow Rajoy to remain in office. The PP praised the "constructive" tone and "good climate" of the meeting. The next day, C's confirmed its change of position and announced it would vote against Rajoy in the first round of investiture, but that it would abstain in the second round in which Rajoy would only require of a simple majority to be elected. On the other hand, Iglesias noted Rajoy on Podemos' political project incompatibility with PP's and that he should expect nothing but Unidos Podemos' frontal opposition to his investiture. In the subsequent press conference, Iglesias took the opportunity to urge Sánchez to take the initiative and try to form an alternative government himself with his support, claiming that PSOE had to choose between Rajoy, a leftist alternative or a new election.

Formateur Mariano Rajoy (PP)

Rajoy's acceptance

On 28 July, the King tasked Mariano Rajoy with forming a government, with Rajoy accepting the mandate. Rajoy, however, left a window open to not going to investiture himself if he was not able to gather enough parliamentary support, a move which raised concerns on whether such a possibility was constitutionally acceptable the King's mandate had been formally accepted. PSOE and nationalist parties PDC and PNV, being in the spotlight because of their role as potential allies of a possible PP government, all three announced their intention to oppose Rajoy's investiture. C's leader Albert Rivera maintained his party's position of abstaining and urged Pedro Sánchez to do the same to unlock the situation, but initially refused to negotiate with Rajoy for his full support. However, as time passed and it became increasingly obvious the PSOE would vote against Rajoy, Rivera changed his stance and announced on 9 August that he would be willing to negotiate supporting Rajoy—thus finally dropping his previous stance of not supporting a government headed by Rajoy himself—in exchange for six conditions:
  1. Separation from public office of those accused of political corruption
  2. Removal of immunities for public officers
  3. Electoral reform
  4. Suppression of pardons for political corruption
  5. A two-term limit for the Prime Minister
  6. A parliamentary committee to investigate the alleged PP corruption scandals
Additionally, Rivera demanded that the investiture vote date be set, as Rajoy had planned to delay such a date while waiting for events to unfold. Earlier, PP officials had stated that they were willing to offer "anything" but Rajoy's position to C's in exchange for their support in Rajoy's investiture and welcomed Rivera's new advance. Rajoy himself stated that his party would study Rivera's conditions and would give an answer after a meeting of the PP executive committee the following week.
On 17 August, Rajoy announced his willingness to hold negotiations with C's but initially ignored Rivera's conditions, instead setting a meeting between the two leaders the following day to discuss them and which resulted in both of them agreeing to start negotiations. Rajoy, however, warned that even with the hypothetical support from both C's and CC—with which the PP had maintained talks—the 170 votes they would gather would not be enough to overcome the expected negative votes—180—from all other parties combined, and pointed out that he was still waiting for the PSOE to make a move. Failure in the investiture, he said, would result in a third election which his party would wish to avoid but that it did not discard. That day, the date for the investiture was finally set: the debate would be held on 30 August, with subsequent votes scheduled for 31 August and 2 September. This would mean that, in the event of failure in such a vote, time would start to run and the date for a new election would be automatically set for Christmas Day, 25 December 2016. Both PP and C's tried to use this fact to increase political pressure on PSOE leader Pedro Sánchez, calling for him to choose "whether he wanted people to go out to vote on 25 December or to choose a responsible abstention that allows government formation".

Negotiations and PP–C's pact

Negotiations between PP and C's started on 22 August with early advances, but the PP's initial aim to try to persuade C's into a government coalition failed after disagreements in labor and economy matters. C's came under criticism after it transpired that both it and PP were redefining the crime of political corruption by limiting it to cases of illegal personal enrichment or irregular funding, in what was seen as a change in position and a major concession by Rivera's party at a time when many PP members were involved in plenty of corruption scandals and the party itself under judicial investigation. On 24 August, C's members recognized that negotiations were tough and that they were "worried" because they perceived a "lack of political will to undertake reforms". By the next day, C's announced they were giving the PP an ultimatum of 48 hours to reach an agreement as negotiations had reached a standstill and pressured the PP to commit itself to concrete reforms and to specify spending figures. From that point, negotiations between the two parties resumed, even if "insufficient at times" according to C's.
By 28 August, a fully-fledged deal had been struck between PP and C's, with separate negotiations between PP and CC resulting in the latter agreeing to lend its support in Rajoy's investiture. The PP–C's accord, which was limited only to the investiture, contained 150 programmatic measures to be applied on the condition that Rajoy was re-elected as Prime Minister. Among the key measures were:
  1. Social measures, including the equalization and extension of parental leaves, a guaranteed salary commitment for families with lower incomes, increased spending on Education, Health and Dependency and a €5.68 billion plan against child poverty
  2. Recovery of lost money through the 2012 fiscal amnesty by raising the tax payment from the final 3% to the initially scheduled 10%—resulting in a predicted gain worth €2.8 billion
  3. A new labour reform that provides for three types of contracts: one indefinite, one "of increasing protection" for coverage of fixed-term jobs and another for employees "in training"
  4. Depoliticization of the judiciary through the direct election of 12 out of 20 members in the CGPJ by judges and magistrates
  5. Reduce spending for both provincial deputations and the Senate
  6. An unspecified reform of the electoral municipal law to directly elect mayors
  7. A compromise not to raise PIT, a lowering of culture VAT limited to live entertainment, a reform of the corporate tax to remove deductions to large companies and removal of the 'Sun Tax', applied to systems that used batteries to store the sun's power
It also included 100 measures that were already present in the defunct PSOE–C's agreement in an attempt to soften the Socialists' stance, to little avail, as Sánchez's position remained the same.
After the agreement was signed, Podemos heavily criticized it and accused Rivera of "selling himself out for free" to Rajoy, claiming the PP was using C's to "plug their holes". On the other hand, the PNV assured their stance would be that of a "nonnegotiable no" to Rajoy even after the expected Basque regional election scheduled for 25 September; whereas the PDC saw the signed accord as "anti-Catalan" and maintained its opposition, warning both PP and C's that they still lacked the votes to pass the investiture. Despite knowing he would not have the votes to become Prime Minister unless the PSOE abstained, Rajoy stated he would "keep trying" even after his to-be-failed first investiture attempt.

Investiture attempt: 30 August – 2 September

's investiture session started on 30 August at 16:00 UTC with Rajoy's speech, followed on 31 August, as in March, by speeches from all other parties' spokespersons. The first round of voting was scheduled for later that day, with a second and final round of voting scheduled, if necessary, for 2 September.
Pedro Sánchez maintained he would vote against Rajoy's investiture in a debate which, nonetheless, revolved on the rift opened within the Socialist Party as to whether its stance should remain so after Rajoy's failed investiture attempt. Several PSOE deputies had already asked the previous day for a debate to take place within the party after 2 September to discuss their position and possible alternatives. In a reversal of roles from Sánchez's failed investiture in March, the PSOE leader wanted to convey a harsh stance to Rajoy by reassuring he would never allow the formation of a Rajoy-led cabinet without clarifying whether he would try to explore an alternative himself. Rajoy mockingly undervalued Sánchez's reasons to vote against him by stating that he had "already understood all parts of the 'no' and therefore did not need to try to argue case", before asking Sánchez to just "let him govern" after having gathered 170 votes for his investiture and dismissing as unworkable any possible alternative government to his.
Pablo Iglesias and Unidos Podemos members heavily criticized Rajoy and the PP–C's accord, pointing out that they did not believe in the PP's alleged attempts to fight against political corruption because they were "corruption itself". Iglesias called out for Sánchez to "make up his mind" and to agree to explore on the possibility of a joint government "despite the enormous differences, grievances and mutual mistrust between PSOE and Podemos", but also told him that "if personal bet is on a third election, should openly say so" and that "We won't be bought off nor will give in to the pressures of the powerful and their employees". Iglesias also told Sánchez that Podemos would be a "trustworthy partner against the PP", pointing out how Sánchez's former ally—C's—had abandoned him to support Rajoy.
Albert Rivera made a defense of his pact with the PP but tried to convey the impression that it was a result of convenience—arguing that it was needed to try to unlock the parliamentary deadlock—rather than out of genuine political affinity. Furthermore, Rivera pointed to Rajoy that he "still did not trust him", because "his treasurers and his party are accused ", but that he would rather "demand, enforce and oversee what those who have to govern do" and called out for Sánchez to not being an obstacle for the country's governability, inviting him to "enforce laws from opposition". Neither Rivera nor Rajoy did an enthusiastic defense of their accord, with Rajoy even claiming that it would "not pass into history", rather defending it out of the need to have a fully functional government as sooner as possible.
After the debate was over the first round of voting was held, in which an absolute majority of those casting a ballot voted against Rajoy's candidacy. The first round required of an absolute majority to succeed but the gathering of 180 votes against him meant that the second round—in which only more affirmative than negative votes were required—was bound for failure as well. This turned Rajoy into the second candidate ever to lose the first round of voting in an investiture—the first being Sánchez—and the first caretaker Prime Minister to suffer a defeat by an absolute majority of votes in an investiture ballot. This defeat also meant that the deadline for a government to be formed was set for 31 October, after which the Cortes Generales would be automatically dissolved.
Finally, with 180 deputies voting against and 170 voting in favour in the second vote, Rajoy's investiture attempt was defeated on 2 September. PP and C's clashed after Rivera chose to end their accord and suggested that the PP should propose "another, more electable candidate" instead of Rajoy, with both parties breaking up amid mutual recriminations on the investiture's failure and the pact's continuity. Meanwhile, Pedro Sánchez, during his speech, left the door open to try to lead an alternative government but in such an ambiguous way that, immediately after the vote, raised concerns among journalists and political parties—including his own—on what his actual intentions were.
After the failed investiture, the parties refrained from any new negotiation attempts until after the Basque and Galician elections scheduled for 25 September, with the King not summoning the parties for a new round of talks until after that date in order to not interfere with the electoral campaigns.

PSOE crisis

Causes
The internal situation within the PSOE had been at a standstill for months. Criticism of Secretary General Pedro Sánchez for his hardline stance on Rajoy's investiture, said to be a contributing factor to the political deadlock, had been kept at bay by the PSOE's performance in the 2015 and 2016 general elections. Threats from Sánchez's critics to hold him to account for a hypothetical party collapse in both elections had narrowly failed to materialize. However, the poor party showing in the Basque and Galician regional elections held on 25 September 2016 prompted dissenters—led by Susana Díaz—to call for Sánchez's immediate resignation the next day.
Sánchez refused to step down and announced his plan to hold a party primary election in October, daring his critics to challenge him in a back-me-or-sack-me vote, a move which further enraged his opponents. Seeking to "help" Sánchez in the face of the dissenters' plans, which would jeopardise a possible PSOE–Podemos investiture pact, Podemos joined the dispute by withdrawing its support for regional governments in Castile-La Mancha and Extremadura led by critics of Sánchez—leaving the party with a minority in both regions—and threatening to do the same in Aragon. In the meantime, Mariano Rajoy was said to be "waiting for the PSOE to kill off Sánchez" in the hopes that a new party leadership could lead them to reconsider their abstention in a subsequent round of voting.
On 27 September, signs of a breakdown in party discipline became evident, with Susana Díaz publicly hinting for the first time at the possibility of becoming leader of the PSOE and a majority within the party's parliamentary group in the Congress of Deputies voicing their opposition to Sánchez's plans. Former Socialist Prime Minister Felipe González added to the pressure by declaring that he felt "cheated" by Sánchez. This was followed by the resignation of 17 members from the party's executive committee on 28 September in order to trigger Sánchez's own resignation. Sánchez refused to acknowledge his ouster and remained in his position, with critics responding that Sánchez no longer had "any legitimacy to take decisions in the party's name" and urging him to "acknowledge party rules".
Sánchez's ouster
The PSOE descended into chaos as Sánchez barricaded himself within the party's headquarters in Madrid and accused rebels of "staging a coup", whereas his opponents proclaimed that they were now in control and demanded a caretaker committee to lead the party in the interim. Susana Díaz criticized Sánchez's record as party leader, accused him of seeking a congress "out of personal interest" and offered herself to unite the party as she sought to have the congress held "in due course", after the political deadlock in Spain had been resolved. As rebels refused to recognize Sánchez's leadership, pro-Sánchez 'officialists' struggled to keep control of the parliamentary party in the Congress of Deputies, with just half the 84 PSOE deputies remaining loyal to Sánchez and the rest siding with his critics. The party was said to be at the brink of splitting into two if no peaceful solution to the conflict could be found quickly.
Chaos ensued within the federal committee meeting on 1 October as disagreements between the two factions on the assembly's agenda and voting census delayed its start by several hours. Sánchez repeatedly blocked Díaz's attempts to hold a vote on his position as the two sides failed to agree on the committee's purpose. Sánchez tried to force a secret ballot on his proposal for a party congress, but it was suspended after critics claimed the ballot box was "hidden" and unsupervised, accusing Sánchez of vote rigging. This action was said to have cost Sánchez support among his allies, and in a subsequent voting on Sánchez's proposal—this time by a show of hands—he lost it by 132 to 107, prompting him to resign as PSOE leader and allowing Díaz's supporters to take over a now shattered party.
Reactions and aftermath
Members from the People's Party members refused to get involved in the PSOE crisis and said they would not "comment on other parties' issues", only calling for the party to "solve its problems soon" so it could put an end to the political deadlock. In contrast, Podemos leaders openly accused PSOE rebels of committing "fraud" by attempting to remove Sánchez through "undemocratic means", with the ultimate goal of ending the deadlock by helping Rajoy to get re-elected. Podemos' Secretary General Pablo Iglesias described the PSOE's turmoil as "the most important crisis since the end of the Civil War, in the most important Spanish party of the past century". Leaders from Citizens commented that the PSOE had to "take this opportunity" to "allow for a PP government checked from opposition".
Reactions to Pedro Sánchez's resignation were mixed. Pablo Iglesias commented that "supporters of a PP government have imposed themselves on PSOE" and called for opponents to the ouster to rally behind Podemos as the only remaining leftist alternative in Spain to a Rajoy government. C's leader Albert Rivera praised Susana Díaz's move and called for the PSOE to "help form a government". Sánchez's ouster was reported as being "the most turbulent event" in the party's history, with some regarding the whole event as "shameful". With the rebel faction taking over the party, political relations with Podemos were expected to become strained, as rebels considered an abstention in a potential forthcoming vote on Rajoy's investiture. However, the party's fracture spelt doom of any possibility at an alternative government to PP and left the PSOE at the mercy of Mariano Rajoy, who subsequently began to push for conditions in exchange for avoiding a third election which PSOE could not afford in its current state.
Split on investiture
was appointed to chair the caretaker committee that would lead the party in the ensuing months. He acknowledged that the PSOE had to decide whether to abstain on Rajoy's investiture or cause a third election to be held, aware that a revolt could break out within the party's parliamentary group if they opted to allow Rajoy to rule. Despite threats from the Socialists' Party of Catalonia —PSOE's sister party in Catalonia—to break the party line, Fernández maintained that deputies would not be allowed a free vote. Other PSOE deputies sided with the PSC, refusing to be held responsible for the formation of a new PP government, but Susana Díaz's PSOE–A called for the parliamentary group to vote as a block according to the decision taken in a new federal committee scheduled for 23 October, suggesting MPs refusing to "abide by the federal committee's decision" should resign their seats.
As opinion polls conducted after the party crisis indicated a fall in support for PSOE, advocates of abstention argued that the question was no longer whether Rajoy would become Prime Minister again, but whether he would be elected now or after a third election, expected to result in a landslide win for the PP. The party's caretaker leadership were confident of being able to win the vote in favour of abstention, but concerned that this move would likely widen divisions within the party. Finally, the PSOE federal committee voted on 23 October to abstain, without conditions, when Congress considered Rajoy's candidacy for a second time, allowing the formation of a Rajoy minority government. Party members subsequently clashed on how this decision could be implemented in terms of party discipline, with some deputies declaring that they would not abide by the committee's decision regardless of the outcome. King Felipe VI scheduled a new round of talks for 24 and 25 October, ahead of the 31 October deadline, with a new investiture hearing set for 26–29 October upon confirmation that Rajoy had sufficient support to win the vote.
Calls from some PSOE members for Fernández to allow a "minimum abstention" of just eleven MPs were rejected by the party's interim leadership, as a growing dispute between PSOE and PSC over the issue endangered the electoral alliance between the two parties, with Socialist leaders threatening rebels with outright expulsion from the parliamentary group. As a result of these threats of retaliation, a number of other deputies spoke out to condemn any reprisals against conscience voters, and expressed their willingness to break party discipline in solidarity with the PSC. By 25 October, a total of 18 MPs had indicated that they were willing to rebel regardless of consequences, with a further three considering it "because of the threats made by the management committee's spokespeople". The PSC formally ratified their intention to vote against Rajoy's investiture later that day, to which the PSOE replied by warning that such a decision would represent a "unilateral breach" of the relationship between the two parties.

Investiture attempt: 26–29 October

A new investiture session began on 26 October at 18:00 UTC with a speech from Mariano Rajoy in the Congress of Deputies, to be followed on 27 October by responses from the other parties, a first round of voting later that day and, if necessary, a second round scheduled for 29 October. Rajoy's speech praised PSOE's new stance on his investiture and called on them to maintain their "responsibility" into the future, looking forward to further agreement between the two parties, to ensure stability and prevent the newly-formed legislature from being short-lived. Antonio Hernando, PSOE's spokesperson in Congress, now speaking on behalf of the party after Sánchez's dismissal, justified their impending abstention by citing the country's need for a government after months of deadlock. However, Hernando reiterated that his party still did not trust Rajoy, promising to provide a strong opposition to his policies regardless.
Pablo Iglesias harshly condemned PSOE's decision to allow a PP government, suggesting that it heralded the effective end of the two-party system that had dominated Spanish politics since the adoption of the 1978 Constitution, and accused Rajoy of having sacrificed turnismo—in reference to the historical rotation of PP and PSOE in power—by "bumping off" PSOE and relegating it to a mere PP crutch in order to save himself and his party. Iglesias also declared Unidos Podemos to be the main force of opposition against an alleged "triple alliance" of PP, PSOE and C's that supported Rajoy. Subsequently, Rajoy and Iglesias clashed in a heated debate described by journalists as "the most passionate dialectical exchange" of the investiture, some claiming Rajoy had effectively acknowledged Iglesias as Leader of the Opposition over a "knocked out" PSOE. Despite having announced the end of his pact with PP during the previous investiture attempt in early September, Albert Rivera pledged to repeat his party's affirmative vote for Mariano Rajoy's investiture in exchange for reforms, and to put an end to the political deadlock, also condemning Iglesias' support for street protests against PSOE's abstention.
The debate was also notable for being the first public appearance of Pedro Sánchez since his resignation as PSOE Secretary General, as he kept his seat in Congress and attended the investiture session "to hear candidate Mariano Rajoy". Asked about his stance in the two rounds of voting, he confirmed he would vote 'no' in Thursday's ballot—in which PSOE was expected to oppose Rajoy—but refused to state his intentions for Saturday's ballot, in which his party would abstain. Sánchez and his supporters within the Socialist parliamentary group did not applaud Hernando's speech, describing it as "disappointing" and "wild". Following Iglesias' speech, some of those critical of PSOE's new direction commented that Podemos now represented the opposition, and predicted that it would be difficult for the Socialist Party to regain credibility.
Mariano Rajoy lost the first ballot on Thursday, 27 October by 180 to 170, as expected, with PSOE voting 'no' to his candidacy. Their abstention would have been inconsequential, as the first ballot required an absolute majority to succeed, which Rajoy could not command. Attention then turned to Saturday's second and final ballot in which PSOE was expected to abstain, albeit with defections likely. Of particular interest were the extent of PSOE's parliamentary schism and Pedro Sánchez's final voting position, with close aides suggesting that he would not abstain, and discussing instead whether he would cast a negative vote or resign his seat right away. A visibly emotional Sánchez finally announced his resignation as an MP a few hours ahead of the scheduled second ballot, arguing that he could neither abstain—and thus break his electoral pledge of opposing a PP government—or, as former PSOE leader, set a bad precedent by disobeying the decision of the highest party governing body, the federal committee. At the same time, he also hinted at the possibility of standing in a future party leadership election.
On 29 October, Mariano Rajoy succeeded in his investiture attempt with the support of 170 MPs to 111 against and 68 abstentions, thus ending the 10-month political deadlock. 15 PSOE MPs chose to break the party line and vote against Rajoy in spite of the possible consequences threatened by the party's interim leadership. During the investiture hearing, thousands gathered outside Congress to protest against what they described as a "coup", shouting slogans against both PP and PSOE, with some protestors describing the new government as "illegitimate". Rajoy repeated his demand for "a government able to govern", calling for those parties facilitating his election—PSOE and C's—to ensure the parliamentary stability of his cabinet. Meanwhile, Iglesias once again attacked the Socialists for their "capitulation" and claimed "the hegemony of opposition" for Unidos Podemos and its allies.

Aftermath

Spain's 314-day political stalemate ended with Mariano Rajoy's election as Prime Minister, after a period which saw some of the most dramatic political upheaval since the country's return to democracy: two inconclusive general elections, two failed investiture attempts, Podemos and United Left teaming up together, Pedro Sánchez's ouster as Spanish Socialist Workers' Party leader and his party torn apart by internal strife as it allowed the formation of a right-wing government for the first time in its history.
After government formation, in an exclusive interview for laSexta's Salvados news show, Pedro Sánchez publicly accused his party's apparatus—led by Susana Díaz—and "financial powers", including media outlet El País, of having coerced him into avoiding a left-wing pact with Podemos and nationalist parties throughout the entire government formation process, revealing they triggered the internal revolt within PSOE to oust him once he considered a serious attempt at forming such a government and after repeatedly opposing to allow a PP government to form.