Key talks coming after massive Spain protest | News | DW | 20.07.2012
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Key talks coming after massive Spain protest

EU finance ministers are due to approve up to 100 billion euros in loans for Spanish banks. The conference call comes after a week of anti-austerity protests by the Spanish government.

Eurozone finance ministers are due to grant the Spanish banking sector billions in emergency aid from the bloc's temporary rescue fund Friday. If the ministers approve the loan during their scheduled afternoon teleconference, the Spanish government will receive the first installment of the rescue package to distribute among stricken lenders. The package could be worth up to 100 billion euros in total, though auditors have said that the entire fund might not be needed.

The meeting follows a week of anti-austerity protests throughout Spain and anti-bailout criticisms from EU politicians.

German Finance Minister Wolfgang Schäuble, who is schedule to attend Friday's meeting, sees Spain's situation as “exceptional”.

“We are helping the Spanish state against the financial markets' excessive nervousness and, in doing so, we are contributing to preserving the eurozone's overall financial stability,” Schäuble told the Bundestag on Thursday ahead of a vote where parliamentarians ultimately approved the loan package for Spain.

Spain has the fourth largest economy in the eurozone. The country's banks have suffered from a real estate bubble and unemployment has reached about 25 percent.

“Because of the weakness of some Spanish banks, the financial stability of the eurozone as a whole is threatened,” said Schäuble, adding that high interest rates were inhibiting the Spanish government from borrowing.

Germany, who has the largest economy in the eurozone, would therefore contribute more than any other country to Spain's rescue - up to 29 billion euros.

Because the temporary rescue fund cannot be funnelled directly to banks, the Spanish government would receive the eurozone loan. Schäuble has confidence that the ailing country can repay its debt, pointing to its recent austerity measures as proof.

"We have a strong interest in Spain continuing its fundamental economic reforms," he said.

Friday's meeting is schedule to take place around noon. The anticipated loans would be the first granted to Spain. The eurozone has already provided rescue funds for Greece, Ireland, and Portugal.

Spanish austerity measures incite massive protests

The Spanish government passed austerity measures earlier this week in anticipation of the European finance ministers' Friday meeting. Prime Minister Mariano Rajoy's government announced a cut of 65 billion euros that slashed salaries in the public sector, unemployment benefits and raised the sales tax.

Tens of thousands of people filled the streets for a week, escalating into a demonstration that stretched across 80 cities in Spain on Thursday evening. The police reportedly fired rubber bullets onto protestors in Madrid, injuring nearly forty people and arresting at least 15.

kms/msh (AP, dpa, Reuters, AFP)