Discontent spreads among allies of Spanish PM

MADRID (Reuters) - Spain's Prime Minister Jose Luis Rodriguez Zapatero is under attack from some of his own left-wing allies, who accuse him of a haphazard response to the economic crisis and of surrounding himself with yes-men.

A former economy minister who served under Felipe Gonzalez, the last Socialist prime minister before Zapatero, has joined his old boss in criticizing the current head of government.

"Zapatero's mistake is to concentrate political power in himself, which implicitly devalues the role of the rest of the government," said Carlos Solchaga, in an interview with the Spanish edition of Vanity Fair out on Monday.

With the conservative opposition leaking credibility due to a corruption investigation, some of the most damaging criticism of Zapatero is now coming from the left, including the country's leading daily newspaper El Pais, which fell out with the government after a dispute over soccer broadcasting rights.

Solchaga expressed sympathy for Pedro Solbes, who left as economy minister in April after disagreements over spending plans as the government battled the worst recession in decades.

"Whenever there was a disagreement about economic policy between the prime minister and the economy minister, Zapatero always prevailed," said Solchaga, adding that he would not have put up with that situation as long as Solbes did.

In May, former prime minister Gonzalez also gave public voice to misgivings amongst the older guard of the Socialist Party about whether Zapatero is up to the job, saying: "The government could be doing a lot more about the crisis."

Government critics are dismayed by what they see as Zapatero's habit of making policy on the hoof. A prime example came in the lead-up to the 2010 budget, when the government said it would boost income tax, only to then drop the idea.

While there is a left-wing consensus supporting the broad sweep of government policy, which includes a massive public works program that will push the fiscal deficit this year close to 10 percent of GDP, there is concern that little is being done to prepare for the day the stimulus is withdrawn.

A GOOD CRISIS?

Solchaga suggested the government cut unemployment benefits and criticized its close alliance with the unions, based on Zapatero's promise to ignore business calls to modify rules making it expensive to hire and fire workers.

In private during the summer, one of Zapatero's former senior officials was scathing about the prime minister's ability to tackle the changes Spain requires to take forward an economy that was long dependent on an unsustainable housing boom.

"That boy has no idea," said the former colleague.

Yet, despite rumblings from within Socialist ranks, the 49-year-old prime minister probably considers himself to have had a good crisis.

Opinion polls only show the Socialists a handful of percentage points behind the conservative Popular Party, despite an economic contraction set to cut output by 4 percent this year and the fact that unemployment has doubled from pre-crisis levels to 18 percent.

The relatively close poll standings, which give the government ample time to regroup before elections not due until 2012, are largely due to a drawn-out scandal over Popular Party officials receiving presents from companies seeking contracts.

History professor Charles Powell of CEU San Pablo University thinks Zapatero has a good chance of winning the next election.

"My bet is still on them, actually, rather than the Popular Party," said Powell.

For the moment, Zapatero is pushing ahead with a liberalizing social agenda, including a move to make abortion more readily available, which could please left-leaning voters who might otherwise be angered by the wilting economy.

"I think people think he's quite a useless prime minister but quite a good candidate, funnily enough," said Powell.

(Editing by Mark Trevelyan)