Spanish Prime Minister Mariano Rajoy has Europe on tenterhooks over whether and when he will apply for a government bailout—a step that would set the stage for a first, critical test of the eurozone's new crisis-fighting arrangements.
Mr Rajoy has domestic political reasons for delaying a potentially humiliating aid request. He faces a series of elections in key regions: the Basque Country and Galicia—Mr Rajoy's home region and a conservative stronghold—on October 21, then in Catalonia on November 25, a poll that may turn into a quasi-referendum for Catalan independence.
Mr Rajoy spelled out his concerns, saying that only "unanimous" clearance by all countries would do. "There are three conditions: first, we must really need it; second, that we know for certain that everyone will approve it, and I mean everyone; and third, that the conditions attached are reasonable", Mr Rajoy said. Moreover, though Spanish borrowing costs have climbed in recent weeks, they are not yet so high to compel Madrid to seek urgent aid.
Spain's announcement that the banks' actual capital needs are below €60 billion hasn't changed Berlin's reluctance to face parliament, one of the European officials said. Now that the Spanish banks' actual capital needs are known, he said the German government also wants to allow some time for the recapitalisation news to settle and see if that alone is enough to keep market pressure at bay. Some analysts say, however, that Spain won't be able to hang on indefinitely—not least because of its heavy needs for funding in the coming months. The government has €20 billion in bond redemptions it has to repay at the end of October, a date that some analysts have seen as the likely trigger for an aid request.
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