News / Europe

Spain Hesitates Over Bailout Request

Markets Wait as Spain Hesitates Over Bail-Out Requesti
|| 0:00:00
...    
🔇
X
October 05, 2012 11:06 PM
The Spanish government is deciding whether or not it needs emergency loans to help pay government debts, according to Deputy Economy Minister Fernando Jimenez. But as Selah Hennessy reports from London, most euro leaders and the financial markets hope the request will come soon.
Markets Wait as Spain Hesitates Over Bail-Out Request
Selah Hennessy
The Spanish government is analyzing its options before deciding on whether it needs a bailout, the Deputy Economy Minister Fernando Jimenez said Friday. But, most European leaders and the financial markets, are hoping the request will come sooner rather than later.  

This time last year all eyes were on Greece as Europe's economic weak link. But now the attention has shifted to Spain, the European Union's fourth largest economy. Many fear the country could default on its debts unless it gets a bailout from its euro neighbors.

The European Central Bank has offered to help struggling European economies by buying debt in the secondary sovereign bond markets.

That could help lower Spain's borrowing costs and might assure wary markets of stability among nations that use the euro currency. But first, Spain has to decide it wants to get the help.

Speaking in London, Spain's economy minister Luis de Guindos, admitted that Spain is in trouble.

"You are fully aware that we have a soaring debt crisis. Spain is the focus of attention about many of the problems that the eurozone is suffering. I would say even that the future of the battle of the euro is going to be waged in Spain," said de Guindos.

But de Guindos denied that his country needs a bailout. Many wonder if he is right.

Spain's economy plummeted when the local housing market bubble burst - leaving Spanish banks with over a billion dollars in bad loans.  

Now concerns are high that Spain is unable to keep the banks afloat while a gap in its national budget grows and the economic recession deepens.  Almost five million people are unemployed: One in four Spaniards out of work, the highest rate in the European Union.

But Iain Begg from the London School of Economics says Spain has reasons to avoid taking a bailout.

"Spain doesn't want to be put in a position of being told by Brussels how to run its economy so it's on a knife edge at the moment about whether it will seek a formal bail out," said Begg.

To make matters worse for the Spanish government, it is also facing internal dissent. The northern province of Catalonia, which represents one-fifth of the Spanish economy, is calling for independence after Spain rejected a demand to grant the region special fiscal powers.

Police clash with protestors during a demonstration against austerity measures announced by the Spanish government, at the parliament in Madrid, Spain, September 26, 2012.Police clash with protestors during a demonstration against austerity measures announced by the Spanish government, at the parliament in Madrid, Spain, September 26, 2012.
x
Police clash with protestors during a demonstration against austerity measures announced by the Spanish government, at the parliament in Madrid, Spain, September 26, 2012.
Police clash with protestors during a demonstration against austerity measures announced by the Spanish government, at the parliament in Madrid, Spain, September 26, 2012.
And in the capital, Madrid, mounting discontent over the stagnating economy and tough austerity has brought Spaniards out onto the streets in protest - with sometimes violent results. More demonstrations are expected in coming weeks.

Costas Lapavitsas from London's School of Oriental and African Studies recently wrote a book called "Crisis in the Eurozone," arguing that cash-strapped states should quit the euro. He says if Spain asks for a bailout it will be forced by Brussels to impose stringent austerity.

But Spain, he says, is already reeling from tough austerity and more of it will not do anything to improve the stagnating economy.

"Spain needs root and branch change. It needs a major investment strategy. It needs to do something about its productivity growth. It needs to do something about new sectors of the economy. It needs major economic transformation. It's not going about it the right way and not within the monetary union I'm afraid," said Lapavitsas.

With plenty of unknowns on the horizon, the European Council is set to meet later this month, when many hope some conclusive decisions will be made.

You May Like

For Lebanon-based Refugees, Desperation Fuels Perilous Passage

In a war that has caused an estimated three million people to flee Syria, efforts to make perilous sea journey in search of asylum expected to increase More

South African Brewer Tackles Climate Change

Mega-brewer SAB Miller sent delegates to climate summit in Peru, says it is one of many private companies taking their own steps to fight climate change More

Indonesia Reports Increase in Citizens Joining Islamic State

Officials say more than 350 of its citizens are now in Syria or Iraq to fight with Islamic State - 50 more than last month More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Will Pakistan School Shooting Galvanize Pakistan Against Extremism?i
X
Ayesha Tanzeem
December 17, 2014 11:54 AM
The attack on a military school in Pakistan’s northwest city of Peshawar left 141 dead, including 132 children. Strong statements of condemnation poured in from across the world. The country announced three days of mourning, and the leadership, both political and military, promised retribution. VOA's Ayesha Tanzeem looks at how likely the Pakistani government is to clamp down on all extremist groups.
Video

Video Will Pakistan School Shooting Galvanize Pakistan Against Extremism?

The attack on a military school in Pakistan’s northwest city of Peshawar left 141 dead, including 132 children. Strong statements of condemnation poured in from across the world. The country announced three days of mourning, and the leadership, both political and military, promised retribution. VOA's Ayesha Tanzeem looks at how likely the Pakistani government is to clamp down on all extremist groups.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video Turkey's Authoritarianism Dismays Western Allies

The Turkish government has been defiant in the face of criticism at home and abroad for its raids targeting opposition media. The European Union on Monday expressed dismay after President Recep Tayyip Erdogan lashed out at Brussels for criticizing his government's action. Turkey's bid to be considered for EU membership has been on hold while critics accuse the NATO ally of increasingly authoritarian rule. Zlatica Hoke reports.
Video

Video US-China Year in Review: Hong Kong to Climate Change

The United States is pushing for a code of conduct to resolve territorial disputes in the South China Sea as it works to improve commercial ties with Beijing. VOA State Department correspondent Scott Stearns reports on a year of U.S. policy toward China from Hong Kong to climate change.
Video

Video Japanese Leader’s Election Win Raises Potential for Conflict with Neighbors

Japan’s Prime Minister Shinzo Abe and his allies easily won a two-thirds majority in parliament Sunday, even though the country has slipped into recession under his conservative policies. VOA’s Brian Padden reports from Seoul, that the prime minister’s victory will empower him to continue economic reforms but also pursue a nationalist agenda that will likely increase tensions with Japan’s neighbors.
Video

Video Nuba Mountain Families Hide in Caves to Escape Aerial Bombings

Despite ongoing peace talks between Sudan's government and the rebel Sudan People’s Liberation Movement-North, or SPLM-N, daily aerial attacks continue in South Kordofan province’s Nuba Mountains. Adam Bailes was there and reports for VOA that government forces are targeting civilian areas, rather than military positions, with their daily bombardments.

All About America

AppleAndroid