The Catalans demand the right to hold a referendum on independence, something the PP, the Socialists and Ciudadanos bitterly oppose. While Podemos is also opposed to Spain's richest province breaking free of the country, it supports the right of the Catalans to vote on the issue. Catalonia was conquered in 1715 during the War of the Spanish Succession, and Madrid has oppressed the Catalans' language and culture ever since.
The Catalan issue is an important one for Spain, but the PSOE could have shelved its opposition to a referendum and made common cause with Podemos, the Catalans and the independents. Instead, Sanchez formed a pact with Ciudadanos and asked Podemos to join the alliance.
For Podemos, that would have been a poison pill. A major reason why Podemos is the number one party in Catalonia is because it supports the right of Catalans to hold a referendum. If it had joined with the Socialists and Ciudadanos it would have alienated a significant part of its base.
It is possible that's what Sanchez had in mind, reasoning that Podemos' refusal to join with the Socialists and Ciudadanos would hurt it with voters. Sanchez gambled that another election would see the Socialists expand at the expense of Podemos and give it enough seats to form a government.
That was a serious misjudgment. The June 26 election saw PSOE lose five more seats and turn in its worst ever performance. Ciudadanos also lost seats. While Podemos lost votes -- at least 1 million -- it retained the same number of deputies. The only winner was the Popular Party, which poached eight seats from Ciudadanos for an increase of 14. However, once again no party won enough seats to form a government.
The current crisis is the fallout from the June election. Rajoy, claiming the PP had "won" the election, formed an alliance with Ciudadanos and asked the PSOE to either support him or abstain from voting and allow him to form a minority government. Sanchez refused, convinced that allowing Rajoy to form a government would be a boon to Podemos and the end of the Socialists.
There is a good deal of precedent for that conclusion. The Greek Socialist Party formed a grand coalition with the right and was subsequently decimated by the leftwing Syriza Party. The German Social Democratic Party's alliance with the conservative Christian Democratic Union has seen the once mighty organization slip below 20 percent in the polls. England's Liberal Democratic Party was destroyed by its alliance with the Conservatives.
The ostensible reason Sanchez was forced out was that he led the Socialists to two straight defeats in national elections and oversaw the beating the PSOE took in recent local elections in the Basque region and Galicia. But the decline of the Socialists predated Sanchez. The party has been bleeding supporters for over a decade, a process that accelerated after it abandoned its social and economic programs in 2010 and oversaw a mean-spirited austerity regime.
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