Spain’s caretaker Prime Minister Pedro Sanchez looked set on Thursday to secure another term in office after sealing a controversial agreement with Catalan separatist party Junts per Catalunya.
The Socialists still have to agree a pact with the Basque party PNV but are confident that it is close, with Mr Sanchez likely to trigger an investiture debate for late next week.
The developments in Spain are important for Gibraltar because until a new government is sworn in, formal negotiations for a UK/ EU treaty on the Rock’s post-Brexit relations with the bloc remain on hold.
The Socialists, which have handled the treaty negotiations for Spain to date, have repeatedly signalled that they want the UK and EU to reach agreement on Gibraltar.
Without backing from Junts, Mr Sanchez was short of the votes he needs in the Spanish parliament to be sworn in as president after last July’s inconclusive general election.
The Partido Popular won the election but was also short of the majority needed to form government, even with the support of the far-right party Vox.
PP leader Alberto Nuñez Feijoo made a bid to form government but failed, opening the door for Mr Sanchez to stich together a coalition of left-leaning and separatist parties to secure another four-year term.
With the pact with Junts now sealed, Mr Sanchez is likely to seek investiture in a two-day debate in parliament next week, though the exact date had yet to be confirmed.
Mr Sanchez still needs to confirm the support of the Basque nationalist party PNV, which will likely to back him has said it needs to see the detail of the final deal.
The agreement with Junts includes the promise of a new law granting a blanket amnesty to people involved in the failed 2017 Catalan independence referendum, including the leader of Catalan party, Carles Puigdemont, who has been in self-imposed exile in Brussels since.
“Six years have passed [since the 2017 referendum] and the conflict is still unresolved,” PSOE MP Santos Cerdan told reporters in Brussels as he confirmed the deal.
“Our goal is to start a new chapter … where the errors of the past are no longer obstacles to overcome.”
Mr Puigdemont told a press conference in Brussels that the amnesty offered reparation for what he described as "political persecution" by Madrid, and a guarantee it would not be repeated.
The precise text of the draft law has not yet been published but the deal has already generated a storm of protest in Spain.
Opposition parties on the right have accused Mr Sanchez of undermining the rule of law for his own political gain.
PP leader Mr Feijoo accused Mr Sanchez of acting for “personal convenience, not collective harmony” and said his party would use all means available to oppose it.
"Sánchez is completely giving in to the blackmail of separatism, a full and unequivocal surrender that all Spaniards will pay for, with our taxes, our rights, and our dignity," Mr Feijoo said.
He called for an "institutional, legal, political, and social" response that "must go beyond the confines of political parties."
"We are facing a challenge to Spanish democracy that requires the reaction of Spanish democrats, regardless of ideology,” he said.
Santiago Abascal, the leader of the far-right party Vox, called for “permanent civil resistance” to what he described as “a coup d’Etat”.
There have already been numerous demonstrations in different cities around the country throughout the past week, some of them flaring into angry confrontations with police.
More are planned in the days ahead amid an increasingly-febrile landscape where a growing number of politicians – even those organising the protests – are urging calm over concerns of violent protest.
On Wednesday in the capital Madrid, Alejo Vidal-Quadras, 78, the former head of the PP in Catalonia and a founder of Vox, was shot in the face and hospitalised on Thursday. No arrests had yet been made.
The agreement between the Socialists and Junts could also come under scrutiny from Spain’s judiciary, and from within the European Union.
EU Commissioner of Justice Didier Reynders sent Spain’s government a request for more information on the deal this week.