Spain's Finance Minister Luis de Guindos (photo archive). (Efe)
Ángel Collado / Agencies 06/22/2012 (06:00 AM CET)
Spain's Finance Minister Luis De Guindos confirmed on Friday that the Spanish government will send the formal request to its European partners for financial aid to recapitalize the banking sector "immediately."
There has been pressure from Europe on Spain to send in the formal request as soon as possible and at the latest on Monday. On Thursday night, at the closure of a meeting with the Eurogroup in Luxembourg, De Guindos said it will be sent "in the next few days."
On Friday, however, he said "once I arrive to Madrid, it will be prepared and sent immediately."
Rajoy has been pushing the limit
Spain’s Prime Minister Mariano Rajoy has kept pushing the limit with the European institutions and the International Monetary Fund until the very end to achieve the most favorable conditions for the credit line to the Spanish banks.
Two independent auditors presented the total sum needed for the troubled entities in the banking sector on Thursday, but the government has waited to formally requested the financial aid promised by Europe. It has also been reluctant to give in to the suggestions by the IMF to increase taxes at this moment.
Today Friday, the prime minister will meet with German Chancellor Angela Merkel, French President François Hollande and Italian Prime Minister Mario Monti.
The meeting is considered being of great importance for the future of the euro, given that it will prepare for the European summit on June 28 and 29.
Rajoy is likely to keep insisting on a change in the economic policies for the whole Eurozone that includes the establishment of a fiscal and financial union and the introduction of more measures for growth.
In the negotiations, Rajoy has argued for the importance of respecting formalities and tranquility when taking decisions regarding “the financial assistance that our partners offer us.”
Party members worry he goes too far
Rajoy enjoys displaying calm, and opacity, when there are tensions around him, according to his staff.
What is new, however, is that some of the party members in leading positions of his centre-right Popular party, who have taken him for timid, begin to consider that he may have become too daring when standing up against the international economic institutions such as the IMF and those in Berlin and Brussels.
According to sources in the party, Rajoy has kept pushing the limit to even include Italy in the group of troubled countries, despite the high levels of the Spanish risk premium.
Change from Zapatero’s foreign policy
The prime minister is changing the direction taken by former Prime Minister José Luis Rodríguez Zapatero, who adapted to the interests of Germany and France in the European political spheres. Rajoy instead rather brings back the tradition of José María Aznar, prime minister between 1996 and 2004, who created alliances with other EU countries in order to respect Spain’s interests.
For Aznar, these moves worked, but there is doubt in some circles of PP whether Rajoy will have the strength.
They admit that he is the only one with access to all the information, including official information and that of his personal conversations with Merkel, Monti and José Manuel Durao Barroso, the president of the European Commission.
As he keeps it to himself, they prefer to trust that he knows enough to take these risks.
Rajoy’s message on rescue
The prime minister has insisted on his message from June 9, when Europe agreed to provide help to Spain’s banks, saying the rescue of the Spanish banking sector is a credit line for the troubled entities that will not affect the deficit and that will be without conditions for the country’s economy and budget as a whole. Also, it will be given to a low interest rate and a long amortization period.
Rajoy gave the order ‘to hang on’ while markets punished Spain for the lack of details about the financial aid. He has also ignored all the recommendations from outside after that.
Finance Minister Luis de Guindos explained Rajoy’s firm position to the Eurogroup on Thursday, saying the aid will not be requested yet based on the numbers presented by the independent consultants. On Friday, however, he said it will happen "immediately."
This article was translated and edited by Stina Lunden.
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