Brussels rescue roadmap for Spain still pending clearance


Pressure is mounting on the Spanish government to ask for a rescue package the sooner the better. It is widely felt that the wait-and-see strategy feeds into increasing uncertainty likely to end up in a new crisis.

Being forced to wear the life-jacket following an emergency situation would lead to much harsher conditions than the ones being imposed today. This seems the most plausible scenario as hopes of reining budgetary imbalances fade away. Spain could soon become the target of renewed market pressure.

While rushing for help might defuse those potential dangers, both Germany and the ECB are inviting Spain to buy some time till the new intervention scheme is fully accepted by all capitals. They fear that exposing it now to national Parliaments’ ratification might raise new hurdles jeopardizing the whole plan.

Should markets feel the big bazooka to lack enough ammunition, the ensuing turmoil might lead to utter collapse.

Is there a chance one single country might block the salvaging scheme proposed by the ECB? Not likely, and yet it seems safer not to bet on it. The mere possibility to face cut downs would weaken the powerful firewall every one takes for granted. It seems wiser to wait till the new scheme gets full clearance in the October Summit to avoid nasty surprises.

The announcement by Madrid it is actively engaged in talks with Brussels over the conditions attached to a potential rescue seems the right path to follow. It signals a keen interest in calling for help, while refraining to do so until a final green light is cast on the new intervention scheme. It also helps to identify the scope of the homework to be undertaken in exchange.

No one asks for a loan without knowing in advance its clauses.

The Spanish government is right in conducting its approach to rescue in such a prudent way. Trying to make a rush for it might backfire leading to a fiasco both for Spain and the Euro.

About the Author

JP Marin Arrese
Juan Pedro Marín Arrese is a Madrid-based economic analyst and observer. He regularly publishes articles in the Spanish leading financial newspaper 'Expansión'.

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