By Ben Harding
MADRID, April 7 (Reuters) - Spain's new economy minister has just two months to arrest ballooning unemployment and ease a worsening recession to help the ruling Socialists avoid a drubbing at the European elections in June.
Elena Salgado, 59, who on Tuesday was named Spain's first female economy minister, is seen as a loyal and hard working veteran who will inject much-needed vigour into a government facing the highest unemployment rate in the OECD.
She takes the reins from Pedro Solbes, dumped after two stints as finance minister stretching back to 1993, whose fiscal conservatism increasingly clashed with Prime Minister Jose Luis Rodriguez Zapatero's preference for greater public spending to ease the crisis.
Her appointment, leaked to media on Sunday, surprised political observers who had tipped Industry Minister Miguel Sebastian, or even one of Solbes' deputies, to take the economy portfolio.
She takes over the euro zone's fourth-largest economy at a time when the property sector which fuelled a decade-long boom is collapsing and Spain finds itself uncompetitive, with a heavily indebted private sector, and without obvious sources of vigorous future growth.
Opponents say Salgado, until now minister for public administration, has neither the heavyweight presence to tackle Spain's worst economic crisis in 50 years, nor the experience, although she did lead efforts to reform Spain's state pension system under former Socialist Prime Minister Felipe Gonzalez.
After increasingly public disagreements between Zapatero and Solbes, who has joked in public about wanting to quit, the opera-loving Salgado is expected to offer greater support to the prime minister's expansionary spending plans.
"We will have to wait to see if Salgado is up to providing the new ideas demanded by companies, or is just an attempt by Zapatero to install ministers who accept his plans to increase public spending and costs," right-leaning business newspaper Expansion wrote in an editorial on Monday.
Critics also pointed out that her promotion, alongside other members of the 1982-1996 Socialist administration, represents a return of the old guard who served under Gonzalez.
Former employees say Salgado, born in Spain's wind-swept northern region of Galicia, is an exacting boss who gained a reputation as a tough opponent in negotiations with autonomous regions.
As health minister from 2004-2007 she championed a partial ban on public smoking -- though loopholes mean smokers continue to prop up Spanish bars -- and criticised fast food restaurants for the size of their hamburgers.
Her efforts to tighten regulations on alcohol advertising however flopped after a fight with Spain's wine-makers.
Salgado, who holds an engineering degree and masters in business administration, also has experience in private business, holding top managerial roles in private companies -- particularly telecoms -- from 1997-2004. She also led the industry ministry's small and medium business studies unit during the Gonzalez government.