THERE was fury across Spain yesterday after prime minister Mariano Rajoy hailed a eurozone ‘lifeline’ of up to 100 billion euros ($125 billion) to save the country’s stricken banks as a victory for Spain and for Europe.
Workers are angry that the rescue fund amounts to 21,000 euros of new debt for each person in the nation of 47 million where the average annual salary for those with work is about the same amount and the unemployment rate for those under 25 is 52 per cent.
Socialist Party leader Alfredo Perez Rubalcaba said: ‘The government is trying to make us believe that we’ve won the lottery, that the Three Kings of Orient have arrived, and that isn’t so.’
After an emergency video conference on Saturday, the 17 eurozone finance ministers said in a statement they were ‘willing to respond favourably’ to a Spanish plea for help.
Rajoy said yesterday: ‘I am very satisfied, I think we have taken a very decisive step. Yesterday, the credibility of the euro won, its future, and the European Union,’ adding: ‘It was not easy.’
He went on to warn that more jobs would go, saying ‘this year is going to be a bad one’ despite the bailout deal imposing no new austerity measures or restrictions on the broader economy.
The rescue loan for Spain was hailed by Germany, France, Japan and the United States as well as the IMF.
Eurozone ministers said they were confident Spain would honour commitments to cut the deficit and restructure the economy. ‘Progress in these areas will be closely and regularly reviewed,’ they said in the statement.
US Treasury Secretary Timothy Geithner said the announcement was ‘important for the health of Spain’s economy and as concrete steps on the path to financial union, which is vital to the resilience of the euro area.’
However, the Wall Street Journal cautioned: ‘Madrid’s fear has been that the moment it seeks assistance for its banks, its own debt will be stigmatised. If this happens, a much bigger bailout will be needed to cover the government’s own funding needs.
‘That would be sure to reignite doubts about the size of the eurozone’s bailout funds, capped at 750 billion euros. And that, in turn, could put the spotlight on other vulnerable eurozone countries, not least Italy.’
Ireland’s Finance Minister Brian Hayes said Spain’s bailout deal would help Ireland regain stability.
But a Sinn Féin spokesperson said it was clear that Spain got more favourable terms on its EU loan than the Irish government did.
He said: ‘Many people will ask why the Fine Gael-Labour coalition could not have secured the same terms.’
Writing in the Sunday Telegraph, George Osborne said that treating the ‘latest symptom’ would not be enough to ‘cure the underlying conditions’.
He stressed that ‘the next few months could determine the economic future of the whole European continent for the next decade and beyond.’