* Diaz could become Socialist leader, replacing Sanchez
* Supporters say she could end Spain's political impasse
* She would be first woman to lead a major Spanish party
* But unclear if can win enough support among split
By Julien Toyer
MADRID, Sept 30 A new actor is waiting in the
wings of Spain's nine-month-old political drama, with the
potential to bring it to a badly needed conclusion and break up
its male-dominated cast.
Susana Diaz, who leads a powerful faction of the Socialist
party, is being encouraged by her supporters to challenge party
leader Pedro Sanchez, who is under growing pressure to quit over
his handling of an unprecedented political deadlock.
If the 41-year-old plumber's daughter were to take the helm,
she would not only become the first woman to lead the Socialist
party since it was founded 137 years ago, but also to lead any
major Spanish political party.
Europe's fifth-largest economy has been without a fully
fledged government since December, when its 36 million voters
were called to the polls for the first of two inconclusive
elections, each ending in bickering and no sign of compromise.
The stalemate has paralysed decision-making and threatens to
hinder an economic rebound from recession. The prospect of a
third election is looming large - to the deep frustration of
Spaniards who are fast losing faith in their leaders' ability to
rise above party politics.
Against this backdrop, the stage is set for the first change
in leadership of Spain's main political forces since caretaker
Prime Minister Mariano Rajoy called the first election.
The Socialist party is pivotal to breaking the impasse
because it holds 85 out of the 350 seats in parliament's lower
house. It can allow Rajoy's conservative People's Party, which
won the most seats, to form a minority government by abstaining
in a confidence vote - something Sanchez has refused to do.
The party has torn itself in two; 17 rebels - led by Diaz,
according to party sources - resigned from the Socialists'
38-strong executive committee on Wednesday to try to unseat
Sanchez and avoid a third election that the party has virtually
no chance of winning.
Diaz, the chief of the Andalusia region - a Socialist
stronghold and Spain's most populous autonomous community -
already has a track record of reaching cross-party compromises
at local level and could take a different path.
She says she opposes a right-wing government, but her
supporters say she is more pragmatic than Sanchez whose
intransigence they blame for the party's slump in local
government elections this month.
"She is a female version of Felipe Gonzalez," said a
long-time party member who draws parallels with the way Gonzalez
took over a battered Socialist party in the late 1970s to make
it the biggest force of Spanish politics for more than a decade
by guiding it on a journey from the fringe to the centre-left.
Many of the most powerful figures in the party back Diaz but
it is unclear if she will eventually topple Sanchez, given
the party is divided and its grassroots, according to party
insiders and analysts, are largely siding with the current
In a much anticipated speech on Thursday, Diaz said the time
had come to heal the wounds of the party but she stopped short
of clarifying her own intentions.
"I'll be where the grassroots put me, at the top or at the
bottom," she said to the cheers of her supporters.
Were Diaz to end up leading the Socialists, she would face
the party's central dilemma: allow a conservative minority
government or force a third general election in a year.
The Socialists are split over which is the best course of
action, with many grassroots members opposed to allowing the
People's Party to govern again. Diaz's backers say she is the
only figure with enough political clout to make the call and
keep the party united at the same time.
"Although I can't see much of a difference between her and
Sanchez from an ideological point of view, she would bring a
different style and leadership," said Teneo Intelligence analyst
Antonio Barroso. "Her plan is probably to allow a minority
conservative government in exchange for Rajoy's departure."
Diaz has shown a readiness to take decisions that do not sit
well with the party's grassroots, just as Gonzalez did 30 years
ago when he steered Spain into NATO, her supporters say.
Last year, after an inconclusive local vote, she made a pact
with the centre-right Ciudadanos party to reach a parliamentary
majority and form a government - the first left-right coalition
of Spain's new splintered political landscape, and the kind of
deal that would be needed now nationally to break the impasse.
But her critics say Diaz, a career politician who has held
jobs in the local administration since 1999, lacks both the life
experience and national political know-how needed to run the
party - or the country.
"On two occasions she said she wanted to run the party and
then she balked. She doesn't scare anybody anymore. She has
become a bit of a bluff," said a senior Socialist member from
Sanchez's close entourage, speaking on condition of anonymity.
In the view of some opponents, she is also tainted by a
corruption scandal involving her party in Andalusia - though
there has been no suggestion that she did anything wrong.
Diaz, who landed on the frontline of national politics three
years ago when she replaced her long-time boss and mentor at the
top of the regional government, can count on influential
supporters inside the party to succeed in her bid.
She not only controls the most powerful of all Socialist
federations in Andalusia but is also backed by the heads of the
big Valencia, Extremadura and Castilla-La Mancha regions.
Former party chiefs Felipe Gonzalez - who has called for
Sanchez to go - and Jose Luis Rodriguez Zapatero are also on her
side, according to party sources.
Newspaper El Pais, an influential voice among Socialist
ranks, urged Sanchez to quit on Thursday and backed Diaz's
option of installing an interim management of the party until a
conference could pick a new leader.
Diaz has courted senior executives from Spain's top
companies who describe her as hard-working and direct. Some
would prefer to deal with her than Sanchez, according to people
familiar with their thinking.
"She has a real chance of controlling the party because she
has a good grip on the organisation, is backed by regions where
the Socialists have done well recently and by prominent figures,
including Felipe Gonzalez," said Teneo Intelligence's Barroso.
(Editing by Mark Bendeich and Pravin Char)