Chasing Centrist Support, Spanish Leader Seeks Cuts

TRUE to the promise he made after voters gave him an unprecedented fourth straight victory last month, Spanish President Felipe Gonzalez this week named a new government with "reform" and "independence" written all over it.

The uncertainty Spain faces in coming months is whether this new direction will also deliver the stability Mr. Gonzalez needs to address his country's challenges - including the worst economic crisis in its 16 years as a democracy.

The government unveiled on Tuesday puts Gonzalez's trusted vice president, Narcis Serra, in charge of the economy. It places the Finance Ministry and a new "presidential" ministry in charge of communications and relations with parliament in the hands of nonpolitical technocrats with proven negotiating skills.

These three posts will be crucial as Gonzalez formulates and then battles to sell to political parties, unions, and the public the two things he will need for even medium-term survival: an austere 1994 budget, set to be debated this fall, and a "social pact for employment" to address the country's 22 percent unemployment. Gonzalez promised in a speech last week to deliver the pact; it could be revealed as early as September. (Spain's troubled economy, Page 8.)

Gonzalez lost the assurance of parliamentary approval for his programs, which he has operated with for 11 years, when his Socialists lost their absolute majority in June 6 elections. After the ballot, Gonzalez said he had "heard" the voters and promised "change within change."

Most telling of Gonzalez's new direction is that, while his new government includes six political independents - including three women - it completely shuts out the left wing of his own Socialist Party (PSOE).

"This is a low-profile government of independents and technocrats" who are more focused on their jobs than on politics," says Ramon Cotarelo, a political scientist at the University of Madrid. "It is a divorce from the left wing."

That step will sit well with the country's Catalan and Basque nationalists, who refused Gonzalez's offer to join a broad coalition government, but whose parliamentary support Gonzalez will still require in order to pass legislation. How it is received by the Socialists' left wing, led by PSOE vice-secretary Alfonso Guerra, will be another determining element in Spain's stability.

"His own party could mean trouble ahead for Gonzalez," says Mr. Cotarelo, noting that a showdown over the Socialists' direction is likely to come at the next party congress, expected early next year. But Cotarelo adds that only once in 11 years of Socialist rule has a party member even abstained from supporting Gonzalez. "It has remained a very disciplined party," he adds.

What seems clear from the government Gonzalez assembled is that he remains determined to draw the nationalists into his fold - perhaps after the new budget and "social pact" give proof that Gonzalez is serious about cutting deficit spending and reforming its costly labor market. "I see this as a provisional government that can be changed without problems as soon as the nationalists are ready to come in," Cotarelo says.

Gonzalez has proved his balancing skills before, but some observers doubt whether he can survive the battles ahead from a minority position. "In six months Gonzalez is in trouble," says Phillipe Moreau-Defarges, European specialist with the French Institute for International Relations. "And it could be much deeper trouble than anything we now expect."

That thinking is in line with those in Spain who believe that Gonzalez's fourth term could end up much shorter than the four years for which he was elected.