Spain inches towards full bailout
Spanish prime minister Mariano Rajoy inched closer today to asking for an EU bailout for his country, but said he needed first to know what conditions would be attached and what form the rescue would take.
His comments, at his first post-cabinet meeting news conference since taking office last December, came a day after the European Central Bank signalled it was preparing to buy Spanish and Italian bonds but only after EU bailout funds were triggered and countries had asked for help.
A source said separately that Spain would not decide whether to apply for several weeks.
Buying bonds and providing aid would all be designed to bring down what have been prohibitive borrowing costs in the indebted countries.
Mr Rajoy said he was ready to do what is best for Spain, going far further than he did yesterday when, during a press appearance with Italian prime minister Mario Monti, Mr Rajoy three times declined to say whether he would seek the aid.
"I will do, as I always do, what I believe to be in the best interest of the Spanish people," Mr Rajoy said today.
"We still don't know what these measures are," he said, reference to a comment by ECB president Mario Draghi that the bank was examining non-conventional measures to defend the euro.
"What I want to know is what these measures are, what they mean and whether they are appropriate and, in light of the circumstances, we will make a decision, but I have still not taken any decision," he said.
A source familiar with Mr Rajoy's thinking confirmed this possibility was actively looked at and that Rajoy was ready to bear the political cost of a request.
In a letter to Herman Van Rompuy today, Mr Rajoy urged the president of the European Council to work towards creating a euro zone-wide banking and fiscal union as soon as possible.
He said he believed that the outline for a single supervisory system for the banking sector should be ready before the end of this year.
Mr Rajoy added he believed granting the European Stability Mechanism (ESM), the permanent bailout fund, a banking licence that would allow it to tap almost unlimited funds from the European Central Bank (ECB).
ECB president Mario Draghi yesterday said the fund was barred by European law from tapping the central bank for funding.
"In any case, whatever mechanism is put into place should be an umbrella mechanism, one that is applied equally to all the countries that meet its requirements," Mr Rajoy said in the letter.