Spanish PM Rajoy challenges the European central bank and Germany
Spain will consider seeking extra aid from Europe on top of a 100 billion Euro rescue of its financial sector but does not see any need for new conditions, Prime Minister Mariano Rajoy said in an interview published in European newspapers.
Rajoy said he wanted to see details of the European Central Bank's (ECB) program to buy debt of Euro-zone countries with high borrowing costs before deciding whether to proceed with a request.
“If I believe it is good for Europe as a whole, for the Euro, and for Spain, I will do it, and if not, not,” Spanish daily ABC quoted him as saying, regarding seeking more aid for Spain.
ECB board member Joerg Asmussen last week said the ECB should only buy sovereign bonds of troubled Euro zone states if the IMF was involved in setting conditions.
Spain is already struggling to implement austerity measures to reduce its debt burden and rescue banks hit by a collapse in property prices and Rajoy is reluctant to undertake any more for fear of being caught in a recessionary spiral.
But Germany fears the bond buying plan to help Spain and other indebted Euro zone countries lower their borrowing costs will expose it to too much risk, leaving the ECB with a delicate negotiating task.
German central bank Chief Jens Weidmann was reported on Friday to have threatened to resign over the bond-buying plan. He has declined to comment on the report. ECB President Mario Draghi is trying to hammer out a deal before an ECB policy meeting on September 6.
Rajoy's comments came ahead of a scheduled visit by German Chancellor Angela Merkel later this week to the Spanish capital and as a Spanish request for a European rescue package is seen as increasingly inevitable.
“The looming challenge is to resolve the problems of the Euro instability and to advance European integration,” he told French newspaper le Journal du Dimanche. “I sense that Merkel is ready to take it on.”
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