The Spanish government announced new austerity plans squeezing next years budget for some 40 billion euros. It also came out with the results of an independent bank stress test to show international markets that Madrid can control its finances. Seven banks are in need of 59 billion euros to shore up their capital – somewhat less than expected.
The leader of the northeastern region of Catalonia, Artur Mas, called for early elections and the Catalan parliament agreed to hold a referendum on independence from the rest of Spain by the end of the next electoral term.
Thousands of protesters – students, employed, unemployed, pensioners and children – gathered on Plaza Neptuno in Madrid three nights last week to rally against the Spanish government’s many austerity measures. The most radical protesters clashed with police on different occasions leading to dozens of injured and detained.
Meanwhile, the Spanish President Mariano Rajoy was in New York to speak at the United Nations General Assembly, among other things, he called for the decolonisation of Gibraltar. A Spanish tourist caught him on camera walking down Sixth Avenue smoking a cigar.
The picture has refuelled complaints from many in Spain that Rajoy lacks the touch and determination needed to deal with the crisis his country is facing and the hardship many of his citizens are going through. One newspaper commentary read that “Rajoy doesn’t get wet neither in the shower”. In Spanish, to get wet is a synonym for committing oneself to something – to get involved.
The markets are speculating on when Rajoy’s government will ask for a partial bailout from the European Central Bank, which is widely expected. Although the last few austerity cuts have signalled that Spain is getting in line with the economic conditions a rescue would entail, the call for a rescue is deferred. Rajoy once said that there “is no hurry” for such a bailout.
Maybe the request will come after the regional elections in the Basque Country and in Galicia on October 21st, as the stigma of an intervened country could have an effect on the ballots in the two regions (it wouldn’t be the first time. Rajoy waited for the regional elections in Andalucia in March before his government published its first austerity plans). It is also argued that the Spanish government is negotiating “reasonable conditions” that comes with a bailout.
Not taking a decision is always the worst decision and the longer Rajoy hesitates to take the bull by the horn, the more painful it will be. For Rajoy and his party, for the Spanish people, and for Europe.