Spain’s ex-PM reveals he blocked three bailouts

Spain's ex-prime minister Jose Luis Rodriguez Zapatero three times turned down offers of a bailout for his country at the height of the euro zone debt crisis, he says in a new book unveiled on Tuesday.

Spain's ex-PM reveals he blocked three bailouts
Former British PM Tony Blair, ally and close friend of Zapatero, will be attending the former Spanish PM's new book launch in Madrid on Thursday.Photo: Pierre Philippe Marcou

Zapatero's memoir "The Dilemma" recounts some of the most tense moments of the crisis that it was feared would break up the eurozone and led the then Socialist premier to call a snap election for November 2011.

From June 2010 to November 2011, "there were three times when the possibility of asking for financial aid was suggested to me more or less explicitly", Zapatero told a news conference to launch the book on Tuesday.

The first suggestion of financial help came in June 2010 from the then head of the International Monetary Fund, Dominique Strauss-Kahn.

The following month, the president of the European Central Bank at the time, Jean-Claude Trichet, repeated the hint.

Then in early November 2011, weeks before the snap election, German Chancellor Angela Merkel asked Zapatero at a G20 summit if he would accept a €50 billion($68 billion) precautionary credit line from the IMF.

"Each of the three times I said no," Zapatero said. "I said it because I was convinced that our capacity to finance ourselves through the treasury was still perfectly viable."

After a new conservative government took power in December 2011, expectations that Spain would turn to its eurozone partners for a full sovereign bailout peaked.

So far Spain has received rescue funds only for its banks – €41.3 billion ($56 billion) from a eurozone credit line set up in mid-2012.

"I had always understood that financial aid that comes with conditions attached is very negative for the future outlook and the recovery of the Spanish economy," Zapatero said.

The first of Spain's recessions in the crisis started in late 2008. It has just crawled out of the second, with timid growth in the third quarter of this year, according to official data.

Zapatero's book recalls the high tension at international meetings where Spain and Italy were pressured to ask for bailouts as financial markets panicked.

He writes that he was determined that Spain would not succumb to the pressure since his priority was to protect education and health services.

Both those sectors have since been hit by cuts by the conservative Popular Party, which won the snap election by a landslide. It aims to make €150 billion in savings to stabilise Spain's public finances.

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