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The conservative government of Mariano Rajoy fights to repel the bitter austerity imposed on other PIIGS by the IMF, EU and ECB.
BRUSSELS, Belgium — Spain's budget minister was adamant: "The Men in Black will not be coming!"
Madrid's sci-fi fans can relax however. Cristobal Montoro's radio announcement on Tuesday was not directed at Will Smith and Tommy Lee Jones.
Los hombres de negro that his government is trying to keep out of Spain, are the dreaded international finance officials who have been dictating austerity terms to Greece, Ireland and Portugal, in return for bailout billions needed to keep their economies afloat.
Spain is determined to avoid a similar humiliation, but it urgently needs money from somewhere to fill a black hole in its banking sector, which is estimated at up to 100 billion euros.
There's an increasing fear that without help quick, Spain risks going the way of Greece.
That prospect is a worldwide worry, because Spain is the world's 12th-largest economy, and if it implodes the impact on global markets would be catastrophic.
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Hence the flurry of phone calls by US President Barack Obama and other world leaders to their European counterparts over the past few days with one clear demand: get your acts together.
“We are kind of running out of runway here, in terms of the structure of the euro zone,” Canadian Prime Minister Stephen Harper told Canada’s CBC late Tuesday.
“In terms of addressing some of these problems, we do need to see the broader game plan. We just can’t say, ‘Let’s wait until the Greek election.’ We cannot have a Greek election determining the future of the global economy," groaned Harper. "That’s not fair to anybody.”
Harper, Obama and other leaders are looking for the Europeans to come forth with concrete measures for tackling the problems in Spain and Greece when they meet at a summit of the G20 economic powers, June 18-19 in Los Cabos, Mexico.
Spain's problems are manifold. In the mid-2000s it enjoyed the mother of all housing booms — vastly outpacing its counterpart stateside. At one point it was estimated there was more construction going on there than in rest of the European Union combined.
When the bubble burst in 2008, banks, companies and private citizens found themselves lumbered with huge debts. Construction contracted, ushering in an economic slowdown and job-market hemorrhage. Spain now has Europe's highest unemployment, at 24 percent.
The government’s budget deficit topped 8 percent of GDP last year — far exceeding the euro zone’s 3 percent limit. And the economy is forecast to languish in recession until at least the end of 2013. Against that backdrop, Madrid is finding it increasingly difficult to raise money on international markets.
The rates it has to pay on 10-year bonds have been edging close to 7 percent, the level that obliged Portugal and Ireland to seek bailouts.
"The door of the markets is not open to Spain," Montoro acknowledged in his interview with Onda Cera radio which intensified speculation that Spain is on the brink of requesting assistance.
What Spain is looking for is direct European Union support for its banks, without having to file a government bailout request that would mean submitting to the demands of those "Men in Black" from the International Monetary Fund, European Central Bank and European Commission.
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Germany has, until now, insisted that Spain must make a formal request for bailout funding, with all that entails, without any backdoor deal to save its banks. However as the crisis intensifies, there are signs that Chancellor Angela Merkel may be prepared to compromise.
A report Wednesday in the daily Suddeutsche Zeitung said Berlin might go along with a deal that would funnel money to a Spanish bank restructuring body. The money would come from the European Stability Mechanism, a 500 billion euro reserve due to be activated by the EU next month as an emergency backstop for cash-strapped governments.
If the report is correct, Spain would agree to a further restructuring of its financial sector in return for the money, but would not have to yield to the kind of Greek-style, externally-imposed austerity measures.
Talk of such a deal produced some easing of market pressure on Spain Wednesday, with its 10-year bond rate dropping to 6.22 by midday, a hopeful sign ahead of a planned sale of 2 billion euros in government bonds on Thursday. The Spanish government says it will decide on how to support its banks after the results of two audits of its financial sector due later this month.
Germany received a reminder of the dangers of the spreading crisis Wednesday when the ratings agency Moody's downgraded six of the country's banks — including the second largest Commerzbank — citing euro-zone risks.
Meanwhile, the EU is working on a package of longer-term measures for a "banking union" that would give European regulators more powers to oversee the banking sector, wind down failed banks and possibly set up a Europe-wide system to guarantee bank deposits.
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Such a plan is likely to be discussed at an EU summit at the end of the month, although it would likely take years to put in place, even if British and German opposition can be overcome. So it would do little to ease Spain's plight.
Despite the urgency in Spain, the summit may well be forced to re-focus on Greece. If the elections there on June 17 produce a victory for parties opposed to the bailout conditions, EU leaders will have to decide whether to cut off funding. That would push Greece into bankruptcy and out of the euro zone.
It also looks increasingly likely that a decision will be needed soon on a bailout for Cyprus, whose economy is being dragged down by exposure to Greece. Complicating matters, Cyprus is due to take over the EU's rotating presidency on July 1.
Spain may not want the "Men in Black," but European leaders might well be grateful for anybody with a flashing device capable of wiping out all memory of what's been happening over the past four years.