Spain's Rajoy to seek German backing for a bailout

Tue Sep 4, 2012 10:33am EDT
 
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By Fiona Ortiz

MADRID (Reuters) - Prime Minister Mariano Rajoy's eight months in power have been tumultuous from the start but September and October may be even tougher, with the Spanish leader assailed on all sides.

Internationally he is caught between diverging pressures from Germany and France, and at home he faces protests over spending cuts sought by the euro zone's big powers.

France wants Rajoy to request an international bailout to prop up Spanish finances and stop the debt crisis deepening.

But he is unwilling to ask for aid until he is sure of support from euro zone paymaster Germany which he will seek on Thursday at a meeting with Chancellor Angela Merkel.

"The worst thing that could happen is Spain asks for aid and Germany blocks it," said a senior European diplomat.

Last week Rajoy met French President Francois Hollande who nudged him to ask for help before October to give European leaders time to consider it before an October 19-19 summit.

But Rajoy told Hollande he was getting mixed messages from Germany, according to a source who was briefed on the meeting.

Berlin wants more details of the problems in Spanish banks, including the results of an audit by global accounting firms due later this month, and regions, which will get 45 billion euros from Spain's central government this year, before backing a bailout.   Continued...

 
Spain's Prime Minister Mariano Rajoy gestures during a joint news conference with France's President Francois Hollande (not pictured) after their meeting at the Moncloa Palace in Madrid August 30, 2012. REUTERS/Juan Medina