Gonzalez holds on but loses seats to right: Socialists confound polls and will try to form coalition

DESPITE a strong swing to the conservative People's Party (PP), Felipe Gonzalez's Socialist Workers' Party (PSOE) clung on as the largest single party in Spain's Congress in yesterday's general election. With more than 96 per cent of results in, the PSOE looked like winning up to 18 more seats than the PP of Jose Maria Aznar in the 350-seat lower house.

That meant a loss of 16 seats for the Socialists and a gain of 34 for the PP but it gave the PSOE significantly more seats than opinion polls had predicted. Several million voters who said they were undecided days before the election appear to have opted for the ruling party. King Juan Carlos is likely to ask Mr Gonzalez, when the new legislature meets on 29 June, to try to form a coalition. The question last night was whether he would flirt with the communist-led United Left (IU) or Basque and Catalan nationalists, all of whom slightly improved their representation.

Mr Aznar conceded defeat shortly before midnight. But it was perhaps the expressions on the faces of the two main protagonists that told the story. A smiling Mr Aznar pledged to fight on. 'The Socialists' hegemony is over. We have entered a new era,' he said before waving to supporters from his party's Madrid headquarters. 'Prime Minister, Prime Minister,' they chanted.

Mr Gonzalez, appearing somewhat embarrassed by his party's celebrations, had trouble forcing a smile and looked like he just wanted to get home. It was a far cry from the triumphant 40-year-old who swept to triumph in 1982. His demeanour lent credence to the theory that, even if he puts together a stable coalition, he will stand down in mid-term and try for Jacques Delors' job as EC President. Many tip ex-judge Baltasar Garzon, 37, elected yesterday as a deputy for Madrid, as his successor.

The communist-led IU looked like gaining one seat, for a total of 18, and immediately offered to 'assist' Mr Gonzalez, who before the elections had expressed strong doubts about joining the IU, headed by the communist leader Julio Anguita. Mr Anguita, recovering from a heart attack in a Barcelona hospital, was barred by doctors from following the results on television, but he is not the type to dilute his ideology because he is sick. Mr Anguita is fiercely opposed to European unity and would seriously cramp Mr Gonzalez's style on labour laws.

The regional nationalists in the Basque Country and Catalonia also appeared to have gained a seat or two each. Together, they looked like winning around 22 seats and both have said they would be prepared to join with either major party in a coalition if the conditions were right.

Attention began focusing on whether Mr Gonzalez, who has moved to the right over the years, would turn his back on the far left, the IU, and risk a deal with the Basques and Catalans. They have made no bones about the terms - a better deal for their regions, including total control of finances and their own 'state' banks.

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