Unlike earlier bailouts for Greece, Portugal and Ireland, the proposed Spanish rescue would require few austerity measures beyond reforms already agreed with the EU, and could even dispense with the close monitoring by international lenders that has proved contentious in Athens and Dublin.
EU support would instead be contingent on increased external oversight and accelerated restructuring of the Spanish financial sector to address lingering concerns about political interference and cronyism in the cajas, the regional savings banks that loaded up on questionable real estate loans during the housing bubble.
European officials said they were willing to consider a less intrusive monitoring system for Spain because Mariano Rajoy, prime minister, introduced a series of reforms and austerity measures earlier this year. “There may be better means of recapitalising banks than through a full programme … especially as the Spanish government is doing all the right things in structural terms”, said one senior official involved in the talks.
The most significant remaining stumbling block, officials said, is Mr Rajoy’s unwillingness to accept an aid programme after insisting for months it was not needed. Madrid is also worried about stigmatising all its banks.
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