Thursday

23rd Feb 2017

Merkel denies pressuring Spain on bailout

  • Merkel and Zapatero: 'She greeted me pleasantly and almost without any introduction put forward a proposal' (Photo: consilium.europa.eu)

German Chancellor Angela Merkel has "no memory" of allegedly pressuring Spain on taking a bailout in 2011, her spokesman Steffen Seibert said on Friday (6 December).

Former Spanish Prime Minister Jose Rodriguez Zapatero last week published a book called "The Dilemma" about his last years in office, recalling how Merkel, as well as the heads of the European Central Bank (ECB) and the International Monetary Fund (IMF) approached him during 2010-2011 to ask his country to take a bailout.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

He says he refused each time.

On Merkel, he gave a detailed account of a 2011 meeting in Cannes, where France was hosting a "G20" meeting of the world's richest countries.

"She greeted me pleasantly and almost without any introduction put forward a proposal about which we had not had any indication," Zapatero writes, as translated by Reuters.

"Merkel asked me if I was willing to ask for a preventive credit line of €50 billion from the IMF, while another €85 billion would go to Italy. My response was also direct and clear: 'No'."

Merkel and then French President Nicolas Sarkozy at the same event pressured former Greek leader, George Papandreou, not to hold a referendum on the austerity measures accompanying the second Greek bailout.

Papandreou soon after stepped down, citing extreme pressure from EU leaders to reach a political deal with the opposition on the second rescue package.

Zapatero also resigned a month later, saying he did not want his low approval rating to damage his party in upcoming elections.

In his book, Zapatero also publishes a confidential letter from former ECB chief Jean-Claude Trichet dating back to 5 August 2011.

It outlines a series of reforms which were later implemented by the centre-right Spanish government of Mariano Rajoy.

The ECB at the time helped out Spain, as well as Italy, by buying up "significant" amounts of government bonds. This helped push down Rome and Madrid's borrowing costs, which were soaring not only due to their own economic slump, but also due to contagion from Greece.

While he was in office, Zapatero consistently denied the existence of Trichet's letter.

Asked about the publication of the Trichet letter, ECB chief Mario Draghi on Thursday declined to comment on "internal matters" in Spain.

Back when Draghi was the head of the Italian central bank, he co-signed a similar Trichet letter urging Italy's former leader, Silvio Berlusconi, to make reforms in return for ECB help.

In the end, Spain avoided a full-blown bailout, but did require financial assistance from the eurozone for its troubled banking sector.

Zapatero says that if he had caved in to Merkel and agreed to a state rescue, Spain would be worse off than it is today.

As for Italy, its then finance minister Giulio Tremonti in 2011 said he could "think of better ways to commit suicide" than agreeing to an EU bailout.

Rome avoided a rescue, but Berlusconi, like Zapatero, stepped down.

Meanwhile, its crushing debt and sluggish economy required cheap loans from the ECB and the promise of unlimited intervention on bond markets if needed.

MEPs set to approve Canada trade deal

The European Parliament is expected to give the green light to the EU-Canada free trade agreement, which would start being implemented in April.

France's Macron issues Brexit warning

The centrist presidential candidate tells talented Britons to come to France and warns against giving the UK "undue advantages" after Brexit, in a speech in London.

French police raid Le Pen's party office

Officers raid the National Front headquarters near Paris over allegations that leader Marine Le Pen used fake EU parliament contracts to pay her personal staff.

News in Brief

  1. Belgian nuclear plant made 'significant progress' on safety
  2. Report: Commission gauging EU support for Poland sanctions
  3. Irish PM expected to quit amid police scandal
  4. After Brexit vote, 100,000 UK firms registered in Ireland
  5. Bayrou to support Macron in French presidential election
  6. British by-election tests Ukip strength after Brexit
  7. Romanian parliament buries controversial corruption decree
  8. Dozens drown off Libyan coast

Stakeholders' Highlights

  1. QS World MBA TourMeet with Leading International Business Schools in Paris on March 4th
  2. Malta EU 2017Economic Governance: Agreement Reached on Structural Reform Support Programme for Member States
  3. Socialists & DemocratsWomen Have to Work Ten Years Longer to Match Lifetime Earnings of Men
  4. Counter BalanceTrans-Adriatic Pipeline Is a Major Risk for Banks, Warns New Analysis
  5. Martens CentreEU and US Migration Policies Compared: Join the Debate on February 28th
  6. Swedish EnterprisesTechnology and Data Flows - Shaping the Society of Tomorrow
  7. UNICEFNearly 1.4 Million Children at Risk of Death as Famine Looms Across Africa and Yemen
  8. Malta EU 2017End of Roaming Fees: Council Reaches Agreement on Wholesale Caps
  9. Nordic Council of MinistersNordic Innovation House Opens in New York to Help Startups Access US Market
  10. Centre Maurits CoppietersMinorities and Migrations
  11. Salzburg Global SeminarThe Child in the City: Health, Parks and Play
  12. UNICEFNumber of Ukrainian Children Needing Aid Nearly Doubles to 1 Million Over the Past Year