Germany wants Spain to stall bailout bid

Spain is ready to request a eurozone bailout for its public finances as early as next weekend but Germany has signalled that it should hold off, European officials said yesterday.

The news comes as financial markets and some other European partners are pressuring Madrid to seek a rescue programme that would trigger ECB buying of its bonds.

“The Spanish were a bit hesitant but now they are ready to request aid,” a senior European source said.

German finance minister Wolfgang Schaeuble has said Spain is taking all the right steps to overcome its fiscal problems and does not need a bailout, arguing that investors will recognise and reward Spanish reforms in due course.

Privately, several European diplomats and a senior German source said Chancellor Angela Merkel preferred to avoid putting more individual bailouts for distressed eurozone countries to her increasingly reluctant parliament.

“It doesn’t make sense to send looming decisions on Greece, Cyprus and possibly also Spain to the Bundestag one by one,” the senior German source said.

“Bundling these together makes sense, due to the substance and also politically.”

Participants said there were tense exchanges at a eurozone ministerial meeting in Cyprus in mid-September when Mr Schaeuble told his peers Berlin could not take another bailout for Spain to parliament so soon after approving up to €100bn to help Spanish banks in July.

A spokeswoman for Spain’s prime minister Mariano Rajoy said she was not aware of any veto from Germany for an aid request.

“What we are focused on is to get the decisions of the June summit on the banking union implemented. That would send a strong message of confidence to the markets,” she said.

European sources said EU economic and monetary affairs commissioner Olli Rehn was to deliver a message to Spanish leaders last night that Brussels wants them to apply for assistance soon and will not impose onerous conditions beyond the reforms and savings measures outlined by the Spanish government.

Mr Rehn met Mr Rajoy and economy minister Luis de Guindos in Madrid and said afterwards the conditions of any aid programme were well known to all eurozone governments.

The Spanish government has said it would enact 43 structural reforms over the next six months. Brussels said this goes beyond what the commission has asked and is an ambitious step forward.

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