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. Members of Congress may have an interest in considering the dimensions and dynamics of current issues in U.S.-Spain or U.S.-European relations, or with regard to NATO, in the course of oversight or legislative activities, or in the context of direct interactions with Spanish legislators and officials. The Congressional Friends of Spain Caucus is a bipartisan group of Members of Congress who seek to enhance U.S.-Spain relations and promote political, economic, and social ties between the two countries. The U.S.-Spain Council brings together U.S. and Spanish leaders to promote economic, educational, and cultural ties. Since the council was founded in 1996, five of the six chairmen have been Members of the U.S. Senate. 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). Rajoy's leadership was damaged by the outcome of a scandal in which Spain's High Court convicted senior PP figures on corruption charges in May 2018 and found that the party benefitted from a scheme involving kickbacks for public contracts. The changeover was the first time in Spain's history that a prime minister had been removed by a vote of no confidence and the first time a prime minister took office without winning an election. 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. Given this fragile political situation, some observers question whether the Sánchez government will last until the end of the four-year parliamentary term. Barring an early election, the next general election is due to occur in July 2020. Rajoy had begun his second term as prime minister in October 2016 at the head of a minority government, following a 10-month political deadlock in which two general elections (held in December 2015 and June 2016) did not produce a majority government. After winning an absolute majority in the 2011 election, the PP came in first place in both the 2015 and 2016 votes but fell far short of a parliamentary majority. The PP won 137 seats in the 2016 election, with 33% of the vote. The Socialists came in second place with 85 seats (23% of the vote). Unidos P odemos ("United We Can"), an electoral alliance of left-wing parties including Podemos , a new anti-establishment party that grew out of Spain's anti-austerity protest movement, won 71 seats (21% of the vote). Another new party, Ciudadanos ("Citizens"), a centrist party that made anti-corruption one of its main campaign themes, won 32 seats (13% of the vote). More broadly, the emergence of P odemos and Ciudadanos as significant political actors indicates a decided shift in a political system long dominated by the PP and PSOE. Between the 2011 and 2016 elections, widespread public discontent was driven by economic conditions and austerity policies, and many observers grew deeply concerned about the social impacts of high unemployment, including youth unemployment that spiked above 50%, as well as cuts to health and education spending (see below). Large public demonstrations and protest movements conveyed an angry backlash against the financial sector and politicians' management of the economy. The public view of the country's politicians has been further soured by a series of corruption allegations, including the scandal involving leading figures in the PP. 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. Although Spain's economic conditions remain difficult, there have been signs of considerable improvement over the past three to four years. Spain is the world's 14 th -largest economy and the 4 th -largest economy in the Eurozone. Prior to 2008, Spain experienced more than a decade of strong economic growth relying largely on a housing and construction boom and fueled by private sector access to cheap credit. The credit and real estate bubbles collapsed in 2009, however, and the Spanish economy contracted sharply and entered a prolonged recession that lasted until 2014. The government budget deficit jumped from 4.5% of gross domestic product (GDP) in 2008 to 10.5% in 2012, and public debt has increased from about 40% of GDP in 2008 to more than 95% of GDP. Unemployment has increased dramatically since 2008, peaking at 26% in 2013 and remaining at about 15%. Spain became a focal point of the wider Eurozone crisis in 2012, facing heavy market pressure in the form of high borrowing costs and receiving €41 billion (about $48 billion) in emergency loans from its Eurozone partners to stabilize Spanish banks. The PP took office in 2011 with an emphasis on budgetary austerity, while implementing structural reforms to increase competitiveness and labor market flexibility. The Rajoy government remained committed to austerity as necessary to reduce the country's deficit and regain the confidence of financial markets and undertook measures including cutting spending on education and health care, reducing unemployment benefits and pensions, selling state-owned properties, and increasing the value-added tax. 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. Analysts assert that Spain's austerity and reform efforts have been relatively effective in that the country's budget deficit has decreased to an expected 2.7% of GDP this year and the country's borrowing costs appear to have stabilized at a manageable level. The PP-led government loosened fiscal policy in the 2018 budget by increasing public pensions and spending on social benefits and public investments, as well as cutting income taxes. The Spanish state consists of 19 provincial territories referred to as "self-governing communities" or "autonomous communities." Two Spanish regions in particular, Catalonia and the Basque region, maintain a distinctive cultural identity, and politics in these regions features the strong presence of nationalist independence movements. The Basque region is in north-central Spain, on the Bay of Biscay near the border with France. The separatist terrorist group Basque Fatherland and Liberty (ETA) waged a violent campaign against the central government starting in the 1960s, killing approximately 800 people. In recent years, ETA was weakened by arrests of key leaders and declared a cease-fire in 2011. All Basque nationalist parties now appear to have renounced violence in favor of pursuing independence through politics. In April 2017, ETA moved to formally disarm, handing over the locations of eight weapons caches to French authorities. Catalonia is in northeast Spain, on the Mediterranean Sea and the border with France, and includes Barcelona, Spain's second-largest city. With a population of approximately 7.45 million, Catalonia has about 15% of Spain's population. It is one of Spain's wealthiest regions, accounting for approximately one-fifth of the country's GDP, generating approximately one-quarter of its exports, and receiving approximately one-quarter of its foreign investment. It is also one of the most indebted regions, with the regional debt-to-GDP ratio tripling since 2009, to 35%. In Catalonia, the independence movement has been additionally fueled by an economic argument that Catalans unfairly support the country's other regions because they pay more in taxes than they receive back in state spending. The Spanish government adamantly disputes this argument, maintaining that Catalonia pays the same percentage of taxes as it contributes to Spain's GDP and receives a share of public spending proportional to its population. On October 1, 2017, the regional government of Catalonia attempted to hold a unilateral referendum on independence. The referendum was the third vote in three years declared by pro-independence leaders as a plebiscite on Catalan independence. In a similar effort in November 2014, with turnout below 40%, about 80% of those who voted (approximately 1.6 million people) answered that they wanted Catalonia to be an independent state. With the referendum nonbinding in nature and no organized campaign against independence, the relatively low turnout suggested that many of those opposed to independence did not participate. Catalan leaders subsequently sought to portray the result of the September 2015 election for the regional Catalan parliament, in which a coalition of separatist parties won a combined majority of seats (72 out of 135) despite receiving less than 50% of the popular vote, as an endorsement of plans to proclaim independence within 18 months. The government of Spain has strongly opposed the organization of independence referendums in Catalonia, condemning them as illegal. Spain's courts have supported this view, ruling such referendums unconstitutional. The Spanish Constitution makes no provision for provincial territories to legally separate from the state. The document states that, "The constitution is based on the indissoluble unity of the Spanish nation, the common and indivisible homeland of all Spaniards; it recognizes and guarantees the right to autonomy of the nationalities and regions of which it is composed, and the solidarity among them all." Spanish authorities assert that the central government cannot therefore agree to allow a legally binding independence referendum (as was the case with the 2014 Scottish independence referendum in the UK, for example), because such an agreement would in itself be illegal and unconstitutional.