News Column

No Decision Yet on Eurozone Bailout

October 2, 2012

Spain has not yet taken a decision on whether to seek financial assistance from the eurozone in order to keep its borrowing costs in check, sources at Prime Minister Mariano Rajoy's People's Party told the EFE news agency Tuesday.

Rajoy was still considering the eventual consequences of such a move, the sources said - contradicting reports that Spain was preparing to seek a rescue next weekend.

The government has reportedly come under pressure from some of its European partners and from analysts to seek a rescue programme that would involve the European Central Bank buying its bonds.

Spain has made no such request so far, but the European Commission was ready to act if it did, European Economic and Monetary Affairs Commissioner Olli Rehn said during a visit to Madrid on Monday.

Spain was believed to be hesitating, because it feared that some eurozone countries like Germany or Finland could block the aid.

Rajoy's conservative government is also concerned that the eurozone could impose more unpopular austerity measures on Spain. The government may want to wait until regional elections are over in the north-western region of Galicia and in the Basque region on October 21, analysts said.

The eurozone has previously pledged a separate bailout worth up to 100 billion euros (130 billion dollars) for Spain's troubled banking sector. The government, however, does not expect the banks to need more than about 40 billion euros.

The trade union confederations CCOO and UGT meanwhile said they were considering a general strike against the government's austerity policies in November.

The strike could be staged together with trade unions in "at least" the southern European countries, CCOO leader Ignacio Fernandez Toxo said. He said Spanish unions had already contacted their Portuguese counterparts about such a possibility.

Rajoy has already faced widespread protests, including a general strike in March, against his cuts in social spending.

Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH