Germany’s Schaeuble Cautions Spain Against Aid Bid
“I’m not in the camp that says ‘take the money,’” Schaeuble, 69, said in an interview in Berlin when asked about moves to press Prime Minister Mariano Rajoy’s government to seek more aid. Spain “would be daft” to ask for a bailout on top of the 100 billion euros ($130 billion) for its banks if it didn’t need it, he said.
European finance ministers gathering for a two-day meeting beginning in Cyprus today are at odds over Spain, as Rajoy stalls on whether to request more aid from euro-area rescue funds and win European Central Bank help to lower government borrowing costs. France is pressing Spain to seek more help to contain the euro-area crisis three years after it emerged in Greece, three people familiar with the negotiations said this week.
“Spain will have to make its own decision,” French Finance Minister Pierre Moscovici told reporters in Athens yesterday in response to a question on a possible Spanish bailout request. “But all tools are available to it if it needs them.”
To qualify for ECB help, Spain would have to negotiate a credit line or full loan program from the taxpayer-financed rescue fund, and the question of which option to take is set to dominate the meeting in Nicosia, Cyprus. A fight is brewing over the conditions imposed -- budget cuts and economic reforms -- with Rajoy saying Spain has already done enough to deserve the help.
“I don’t share the view of those who say Spain is so much a focus of speculation in the financial markets that we should advise the Spaniards to do anything different from what they’re doing,” Schaeuble said in the interview yesterday in the Finance Ministry in the German capital. “I’m one of those who says we should do everything possible to convince the markets that this speculation against Spain is without any basis in reality.”
Spanish officials said this week their country may not need a second bailout because the ECB’s Sept. 6 announcement that it was prepared to buy government bonds has already cut borrowing costs.
“We are working with the governments and of course with the German government,” with a common goal “to recover economic growth in Europe,” Spanish Budget Minister Cristobal Montoro told reporters in Madrid ]yesterday when asked about Germany’s stance on a rescue. “Our desire and intention is to return again to being a reliable partner in Europe that doesn’t ask for anything.”
One element fell into place two days ago as Germany’s top constitutional court rejected bids to block ratification of the euro region’s 500 billion-euro permanent rescue fund. German President Joachim Gauck signed the bill into law yesterday.
Schaeuble denied that the German court’s decision had limited the ECB’s power to buy bonds, saying that the central bank’s mandate does that already. “There is no doubt” the ECB is holding to its independent mandate and there is no reason to assume it will overstep that, he said.
The finance ministers’ meeting will also take a first look at proposals to make the ECB the center of a bank-supervision system, part of German-backed moves to create tighter economic and ultimately political union in Europe.
Schaeuble said that while it’s impractical for the ECB to have oversight of all 6,000 banks in Europe as has been proposed, he sees “no fundamental differences.”
At the same time, “we have a massive interest in and have always demanded that there’s an efficient system of European banking oversight,” he said. “We have to find a reasonable way to do this” with the European Commission.
Related News and Information: Top German Stories: TOPG European Debt Crisis: EXT4 European crisis monitor: CRIS
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