Mariano Rajoy, the Spanish prime minister, has said he is more determined than ever to avoid having to ask for a bailout – despite the insistence last week by ECB president, Mario Draghi, that it would be a condition of the central bank helping to keep down a country's borrowing costs.
"If there is one overriding priority for creating employment it's reducing the public deficit. That is far more important than what people like to call a bailout," Rajoy said in a televised interview on Monday night.
Draghi announced last week that the bank would buy unlimited quantities of sovereign debt to ensure eurozone governments retained access to funding, but he made it clear that there would be strings attached. However, Rajoy said he was not prepared to accept such conditions. "I couldn't accept anyone else telling us what our policies should be or where we have to make cuts," he said.
How this apparent intransigence is received in Brussels and Berlin remains to be seen, but Rajoy received some support for his stance on Tuesday during a visit to Madrid by the Finnish prime minister, Jyrki Katainen, who said a bailout could be avoided as long as the measures taken in Madrid were seen as credible.
Rajoy is at pains to show that he is in charge, that he is not the victim of circumstance and that he is making decisions of his own free will and not because they have been imposed on him. He appears to have decided that, if he has to make spending cuts and other unpopular decisions, then he will do it without ceding sovereignty the way the Greeks have been forced to do.
His intransigence is perhaps more a manifestation of an old-fashioned, though admirable, sense of honour. During the interview he was candid enough to admit that he had gone back on election promises not to raise income tax and VAT, an admission few politicians are prepared to make. "The fact is no one told me the deficit was €90bn [£72bn] and not the €60bn I was led to expect. If I'd had that €30bn things would have been different."
Rajoy also reiterated that he would not adopt any measures that would harm pensioners, while dodging the question of whether he would reform the pension system itself.
He insisted, as he has in the past, that no European leader has privately leaned on him to accept a bailout. Nor, he said, has he ever put pressure on the ECB to buy sovereign debt. Pressed on the issue, he said no decision had been taken, adding that he wanted to see what emerged from the next Council of Europe meeting on 18-19 October. This has been interpreted in Madrid to mean that no bailout will be announced before the regional elections, which are due on 21 October in his native Galicia and in the Basque Country. It appears unlikely Draghi was expecting to wait that long for a response.
