MADRID: Spain’s opposition Socialist party may set the former defence minister Carme Chacon on the path to becoming the country’s first female prime minister at a nail-bitingly close contest for a new leader .

Chacon is in a two-way contest with the former deputy prime minister Alfredo Perez Rubalcaba to take over a party in tatters after a rout at elections in November.

Although both candidates worked closely with the former prime minister Jose Luis Rodriguez Zapatero, Chacon is seen as closest to the man who governed Spain for eight years until December.

Zapatero has publicly declared himself neutral in the fight between the two career politicians, but is privately reported to back Chacon.

Rubalcaba, 60, has the open support of Felipe Gonzalez, who was prime minister from 1982 to 1996. The wily veteran also has the backing of Patxi Lopez, the popular Basque regional prime minister, and of many party veterans.

Chacon, a 40-year-old Catalan who studied part of her law degree at Manchester University in the UK, has called on the party’s women to back her and appears to have the support of a younger generation of Socialists.

Her team are sure they have won enough pledged votes from delegates who have started gathering in the southern city of Seville for her to win. “She is going to get it,” one of her team said.

But Rubalcaba’s side also claims to be narrowly ahead in the battle for a majority of the 956 votes at the conference, with a block of up to 100 undecided delegates set to be key.

There is little difference, politically, between the two candidates. Both have veered further left since they were ejected from government in November, but neither belongs to the more rebellious wing of a party that competes for leftwing votes with the communist-led United Left coalition.

Higher taxes on the wealthy and support for the Tobin tax on financial transactions is mixed with a call for Spain to slow its austerity drive to prevent an even deeper fall into recession.

Spain’s political system is mostly a two-party affair, with either the Socialists or the conservative People’s party (PP) of the current prime minister, Mariano Rajoy, running the government since 1982.

Whoever wins the post of secretary general can expect to challenge Rajoy for the prime minister’s job at the next elections, which are due in late 2015 or early 2016.

They can also expect to preside over a fractious party that is bitter about losing power in Madrid as well as in many regional governments and town halls.

The first major electoral challenge will be a vote for the regional parliament in the traditional socialist stronghold of southern Andalucia in March. Opinion polls there show the party in danger of losing to Rajoy’s PP.

The task of turning around the Socialist vote is immense. It received its lowest overall vote since 1977 at the November general election, with just 110 MPs in the 350-seat parliament. Voters punished it for the economic crisis, massive unemployment and for Zapatero’s 2010 U-turn on the economy. Rubalcaba was the candidate for prime minister at that election and Chacon campaigners point to his inability to stave off disaster.

Zapatero imposed austerity, raised the retirement age, froze pensions and cut civil service pay in May 2010 as bond markets put massive pressure on Spain’s sovereign debt after the collapse of Greece and neighbouring Portugal.

It is still unclear how much the two candidates can distance themselves from Zapatero - especially as both were cabinet ministers when he performed his policy turnabout.

As opposition leader, they will shadow Rajoy, who has already performed his own U-turn by raising taxes as part of his attempt to cut back a budget deficit of more than 8% last year. With unemployment at 23% and still growing, many Socialists believe Rajoy will soon become vulnerable.

Spain has just entered the second phase of a double-dip recession, with the International Monetary Fund predicting the economy will shrink 1. cent this year. Many economists see the recession stretching into 2013, and Rajoy’s embrace of greater austerity will also see more job losses.

The prime minister was recently caught on camera privately admitting that his planned reforms to the labour market, to be announced next week, would provoke a general strike.

Chacon’s popularity leapt in 2008 when, aged 37 and seven months pregnant, she was appointed as Spain’s first female defence minister by Zapatero. His second-term cabinet, with nine women to eight men, was Europe’s first majority-female cabinet.

By arrangement with the Guardian