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Spain's leader rejects tough bailout terms

Spain's leader, Mariano Rajoy, has said he will not agree to harsh bailout terms for funds. That promise, coupled with Rajoy's elusiveness over whether Spain will seek a bailout, may send nervous shivers through Europe.

Spain's Prime Minister, Mariano Rajoy, on Monday ruled out European bailout conditions that dictate public spending reductions and entail pensions cuts in his country.

"I could not accept that they tell us which are the concrete policies in which we have to cut or not cut," Spain's new leader said in his first televised interview since coming to office in December.

If there is one area I won't touch it is pensions," he said. Rajoy referred to Spain's pensioners as the "defenseless" and pledged to maintain pensions in next year's budget.

"We are not going to touch VAT any more," the 57-year-old statesman also said. Rajoy had been compelled to increase the top rate by three percent to 21 percent as part of measures to tackle Spain's public deficit.

Uncertainty over Spain's bailout plans

Rajoy's comments are also likely to fuel concern that Spain will try and delay a bailout or avoid one altogether.

"I am absolutely convinced that everyone will be reasonable but I insist that we haven't taken a decision," he said, in reference to the question of whether Spain will seek a European bailout.

"We still have not taken any decision because I think what we have to do now is see if it is necessary, for the moment the risk premium has come down a lot and so financing is easier," Rajoy added

"We are studying the situation. We are going to see if it suits us or not, if it is necessary or not, but I will always do what is in the public interest," the prime minister also said

The Spanish leader's interview comes a week after the European Central Bank promised to buy up government bonds to reduce the borrowing rates of struggling countries. In return they want bailout funds to be able to set tough conditions to those who make use of such assistance. 

sej/ccp (AFP, Reuters)