	Introduction and Issues for Congress

Many U.S. officials and Members of Congress consider Spain to be an important U.S. ally and one of the closest U.S. partners in Europe. Political developments in Spain, cooperation between the United States and Spain on security issues and counterterrorism, and U.S.-Spain economic ties are possible topics of continuing interest during the 115 th Congress. Domestic Overview

		Political Dynamics

The government of Spain is led by Prime Minister Pedro Sánchez of the center-left Socialist Workers' Party (PSOE). Sánchez became prime minister in June 2018 after launching a parliamentary vote of no confidence that defeated the previous government led by Mariano Rajoy of the center-right Popular Party (PP). Prime Minister Sánchez leads a minority government which holds less than one-quarter of the seats in the Congress of Deputies. His government relies on support from left-wing party Podemos and regional nationalist parties from Catalonia and the Basque region to maintain viability and secure the votes needed for passing legislation. The Economy

The global financial crisis and recession of 2008-2009 hit Spain especially hard. The crisis has had a lasting impact on the Spanish economy, and the country's economic challenges have been a central issue over the past decade. Unemployment has increased dramatically since 2008, peaking at 26% in 2013 and remaining at about 15%. Since 2015, the economy has experienced a period of relatively strong recovery, with average annual growth of 3.2% over the period 2015-2017, and 2.7% growth expected for 2018. With a population of approximately 7.45 million, Catalonia has about 15% of Spain's population. The Spanish central government (with the support of main opposition parties) subsequently received permission from the Spanish Senate to trigger Article 155 of the Spanish Constitution, dissolving the regional government and assembly of Catalonia on October 28, and taking direct control of the regional police force. The head of Catalonia's regional government, Carles Puigdemont, and four other former regional ministers subsequently fled to Brussels in an attempt to appeal to EU leaders and avoid arrest on charges of rebellion and misuse of public funds, offenses that could carry a sentence of up to 30 years in prison. On November 8, 2017, Spain's constitutional court annulled the Catalan parliament's independence declaration. In recent years, Spanish police have conducted raids to dismantle jihadist recruiting networks active in Ceuta and Melilla, Spanish enclaves located on the north coast of Africa, as well as in Madrid. In 2015, the Spanish Parliament adopted legislation backed by the PP and PSOE to strengthen counterterrorism laws and police powers in response to the foreign fighter threat. Relations with the United States

The United States and Spain have close links in many areas, including extensive cultural ties. Spain has been a member of NATO since 1982. Defense Relations

Spain plays a significant role in U.S. defense strategy with regard to Europe and Africa. In 2011, the United States, Spain, and NATO announced that four U.S. Aegis BMD-capable ships (Arleigh Burke-class destroyers equipped with the Aegis Ballistic Missile Defense system) would be based at Rota as part of the European Phased Adaptive Approach (EPAA) for missile defense in Europe. Following the 2012 terrorist attack against the U.S. diplomatic facility in Benghazi, Libya, the United States deployed 500 U.S. Marines to Morón in 2013 to serve as a rapid reaction force protecting U.S. interests and personnel in North Africa. Deployments include more than 600 soldiers to the United Nations peacekeeping mission in Lebanon, 473 to the international coalition ( Inherent Resolve ) countering the Islamic State in Iraq and Syria, and 336 (including a mechanized infantry company) with the multinational battlegroup stationed in Latvia as part of NATO's Enhanced Forward Presence mission. Economic Ties

The U.S.-Spain economic relationship is large and mutually beneficial. Spain's FDI in the United States has increased every year since 2002, and the value of Spanish assets invested in the United States has increased nearly five-fold over the past decade. Approximately 1,100 U.S. firms operate subsidiaries and branches in Spain (including, for example, Apple, General Electric, General Motors, Ford, and AT&T). In 2016, U.S. affiliates employed more than 181,500 people in Spain and Spanish affiliates accounted for more than 83,000 jobs in the United States.
The United States and Spain have extensive cultural ties and a mutually beneficial economic relationship, and the two countries cooperate closely on numerous diplomatic and security issues. Spain has been a member of NATO since 1982 and a member of the European Union (EU) since 1986. Given its role as a close U.S. ally and partner, developments in Spain and its relations with the United States are of continuing interest to the U.S. Congress.
Domestic Political and Economic Issues
The government of Spain is led by Prime Minister Pedro Sánchez of the center-left Socialist Workers' Party (PSOE). Sánchez became prime minister at the head of a minority government in June 2018, after a parliamentary vote of no confidence against Prime Minister Mariano Rajoy of the center-right Popular Party (PP). Rajoy, who had led the government since 2011, was damaged by a corruption scandal involving senior PP figures. Holding less than a quarter of the seats in parliament, the Sánchez government relies on support from the left-wing party Podemos and several regional parties.
Economic conditions, austerity policies, and corruption scandals have fueled public backlash against Spain's political establishment in recent years. This dynamic fractured Spain's two-party system, dominated for more than 30 years by the PP and the PSOE, with the emergence of two new parties, Ciudadanos and Podemos.
Over the past several years, Spain's economy has experienced a relatively strong recovery, with growth averaging more than 3% annually, a decreasing government budget deficit, and stabilized financial conditions. The global financial crisis of 2008-2009 plunged Spain into a prolonged recession and has had a lasting impact on the country. Unemployment has decreased to 15% after peaking at 26% in 2013.
Catalonia Crisis
A crisis over Catalan independence efforts has been the predominant issue in Spain since late 2017. Spain's central government invoked Article 155 of the Spanish Constitution to dissolve the regional assembly and executive and take direct control of the region after the Catalan parliament held an illegal vote for independence in October 2017. The issue remains deadlocked after separatist parties retained a majority of seats in the regional parliament following a new regional election in December 2017. Spain has charged 13 separatist leaders with rebellion and misuse of public funds, offenses that could carry a lengthy prison sentence. Catalonia accounts for about 15% of Spain's population and one-fifth of its economy.
Counterterrorism
The United States and Spain cooperate closely on counterterrorism issues. Spanish authorities have dismantled numerous recruiting networks over the past several years, many of them based in Ceuta and Melilla, Spanish enclaves on the north coast of Africa. In 2015, the Spanish Parliament adopted new legislation to strengthen counterterrorism laws and police powers in response to the foreign fighter threat.
U.S.-Spain Defense Relations
Spain plays an important role in U.S. defense strategy for Europe and Africa. Four U.S. destroyers equipped with the Aegis Ballistic Missile Defense system are based at Rota naval base, and Morón air base is the headquarters for a rapid reaction force of U.S. Marines that protects U.S. interests and personnel in North Africa.
Spanish armed forces participate in numerous international peacekeeping and security operations, including the United Nations peacekeeping mission in Lebanon, the international coalition countering the Islamic State in Iraq and Syria, NATO's Enhanced Forward Presence mission in Latvia, EU and NATO maritime security missions, and EU operations in the Sahel region.
Spain's defense spending was cut during the economic crisis but has been increasing since 2015. With the acquisition of new Eurofighter combat aircraft nearly complete, additional spending is focused largely on planned naval acquisitions.
U.S.-Spain Economic Relations
Investment flows between the United States and Spain totaled more than $105 billion in 2016, and Spanish foreign direct investment in the United States has increased every year since 2002. Annual U.S.-Spain trade in goods and services totals nearly $40 billion. Approximately 1,100 U.S. firms operate subsidiaries and branches in Spain. Affiliates of Spanish companies account for approximately 83,000 jobs in the United States.