MADRID (Reuters) - Prime Minister Mariano Rajoy tried on Sunday to deflect withering criticism for his handling of Spain’s debt crisis, saying the country had avoided a full rescue for its state debt due to his economic reforms and steps to cut the budget deficit.
At a news conference, Rajoy avoided calling Saturday’s euro zone decision to lend Spain up to 100 billion euros for shoring up its troubled banks “a rescue”, referring repeatedly only to “what happened yesterday”.
Rajoy emphasised measures taken by his centre-right government to tackle the banks’ problems since it came to power late last year, rather than the fact that Spain has become the fourth euro zone country to seek international aid in the three-year-old debt crisis.
“If we had not done what we’ve done in the past five months, what would have been on the table yesterday would have been an intervention in Spain,” Rajoy said at the news conference in the large hall usually reserved for receiving heads of state.
Traditional and social media battered Rajoy for not showing his face on Saturday and leaving Economy Minister Luis de Guindos to announce the bailout, and for denying that it was a rescue.
Leading Spanish dailies all proclaimed a “Rescue” in their banner headlines. “(The government) struggles not to use the word ‘rescue’ and seeks euphemisms,” said El Pais.
Analysts say Rajoy is avoiding the term “rescue” because it implies the kind of humiliating conditions and surveillance by European officials that Ireland, Greece and Portugal have endured in their bailouts.
He insists that Spain asked for the credit line for the banks, which are in deep trouble due to a burst property bubble and recession, adding that it has very limited conditions and is all part of his grand plan for reviving the economy.
“Getting a 100 billion (euros) credit line is not such an easy thing to achieve,” Rajoy said.
His comments on Sunday speech drew derision from Spaniards who were incredulous that the prime minister had stuck with his plans to fly to Poland later on Sunday to watch Spain play Italy at the European football Championship.
“And who is going to pay the interest on these credit lines (for the banks)?” said Pedro Arranz, a primary school teacher who watched Rajoy on a television in the waiting room at a local hospital, along with 30 other people.
Rajoy said the interest payments on the credit lines for Spanish banks would not go toward the public deficit. But that was a contradiction of what de Guindos said a day earlier.
The funds will be channeled to Spain’s bank rescue fund, the FROB, and will count as public debt, and the interest payments would go on to deficit, de Guindos said.
Antonio Barroso, political analyst with Eurasia Group, said that by maintaining his weekend agenda and avoiding the term ‘rescue’, Rajoy is trying to paint the aid as just another step in the government’s programme to repair the economy.
“The government is trying to convey an image of normality, trying to show that this is not something extraordinary,” Barroso said.
Rajoy has been applauded in Europe for steep cost-cutting to bring down the country’s high deficit, and for a series of reforms to improve economic competitiveness, such as cutting statutory severance pay.
But the economy has slid into recession since he took office in December, unemployment has remained stubbornly high at more than 24 percent, and the country’s borrowing costs have soared, which pushed the government into seeking external aid for banks.
The leaders of Ireland and Portugal did not last long in office after their countries took bailouts, while Greece’s George Papandreou was also eventually forced out after his country’s rescue.
Rajoy said the European credit line was part of his wider plan to clean up the banking sector and put the country back on track to economic growth and jobs creation.
The Socialists, the main opposition party, said on Sunday that they doubted the aid would come without hefty conditions and called on Rajoy to appear before parliament to explain the rescue.
“The government is trying to make us believe we won the lottery,” Socialist leader Alfredo Perez Rubalcaba said during a news conference.
Immediately after de Guindos announced the aid package on Saturday the trending topics on Twitter were #rajoycobarde (rajoycoward) and #rescate (rescue). On Sunday the top trending topic was #PreguntaParaRajoy (question for Rajoy).
“When are they going to rescue the unemployed? And the people evicted by the banks?” tweeted one person.
De Guindos emphasised that the aid comes with lighter conditions than earlier rescue packages for Greece, Portugal and Ireland, because it will not require Spain to make deeper spending cuts or economic reforms.
Additional reporting by Sarah White; Writing by Fiona Ortiz; editing by David Stamp