Spain ready for bailout, Germany says 'wait': sources
By Julien Toyer ,ReutersMadrid -- Spain is ready to request a eurozone bailout for its public finances as early as next weekend but Germany has signaled that it should hold off, European officials said on Monday.
October 3, 2012, 12:06 am TWN
The latest twist in the eurozone's three-year-old sovereign debt crisis comes as financial markets and some other European partners are pressuring Madrid to seek a rescue program that would trigger European Central Bank buying of its bonds.
“The Spanish were a bit hesitant but now they are ready to request aid,” a senior European source said. Three other senior eurozone sources confirmed the shift in the Spanish position, all speaking on condition of anonymity because they were not authorized to discuss the matter.
German Finance Minister Wolfgang Schaeuble has said Spain is taking all the right steps to overcome its fiscal problems and does not need a bailout, arguing that investors will recognize and reward Spanish reforms in due course.
Privately, several European diplomats and a senior German source said Chancellor Angela Merkel preferred to avoid putting more individual bailouts for distressed eurozone countries to her increasingly reluctant parliament.
“It doesn't make sense to send looming decisions on Greece, Cyprus and possibly also Spain to the Bundestag one by one,” the senior German source said. “Bundling these together makes sense, due to the substance and also politically.”
Participants said there were tense exchanges at a eurozone ministerial meeting in Cyprus in mid-September when Schaeuble told his peers Berlin could not take another bailout for Spain to parliament so soon after lawmakers approved up to 100 billion euros (US$129 billion) to help Spanish banks in July.
Asked about the reports that Germany was urging Spain to wait, a German government spokesman told Reuters: “Every country decides for itself. Germany isn't pushing in one direction or the other.”
A spokeswoman for Spain's Prime Minister Mariano Rajoy said she was not aware of any veto from Germany for an aid request.
“What we are focused on is to get the decisions of the June summit on the banking union implemented. That would send a strong message of confidence to the markets,” she said, referring to an EU decision to centralize oversight of the biggest banks to avoid a repeat of a crisis that has some of its roots in the banking system.
European sources said EU Economic and Monetary Affairs Commissioner Olli Rehn was to deliver a message to Spanish leaders on Monday that Brussels wants them to apply for assistance soon and will not impose onerous conditions beyond the reforms and savings measures outlined by the Spanish government.
Brussels is keen to avoid another paroxysm of the debt crisis by getting support to Spain before it is on the brink of being forced out of the bond market, at the risk of contagion spreading to Italy and other eurozone states.