Rajoy, Monti, press Europe for help

June 13, 2012 at 3:36 PM
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MADRID, June 13 (UPI) -- Prime ministers in Spain and Italy defended their financial strategies Wednesday with each calling on Europe to do more to end the financial crisis.

Spanish Prime Minister Mariano Rajoy told members of Parliament he was waging a war to defend the euro.

"That is the battle we have to wage in Europe. I am waging it," he said.

Rajoy defended the $125 billion bank bailout plan in Madrid and revealed a letter he had written to European Union leaders calling for backing for the European Central Bank to support the bond market by buying debt, The New York Times reported.

In Italy, speaking to members of the lower house of Parliament, Prime Minister Mario Monti called on Europe's leaders to formulate a strategy with "a credible emphasis on growth."

Monti also called for establishment of a euro bond, a measure Germany opposes.

Meanwhile, German Chancellor Angela Merkel for the first time called the eurozone crisis a "disaster."

Her finance minister Wolfgan Schauble sounded more optimistic, saying, "Italy must steadfastly continue on the road that Mario Monti's government has laid out."

"If it does that, there will be no danger," he said.

Schauble said Spain was "on the right path."

"It doesn't need a rescue plan," he said. "Spain has a specific problem with a part of its banking sector and I am sure it will be solved."

Rajoy has said the $125 billion in loans, which would add an estimated 20 percent to Spain's national debt, were the responsibility of the struggling banks, not Spain itself. But he has refused to debate the bailout terms in Parliament until after a European Union leaders summit in Brussels June 28-29.

Based on that, opposition lawmakers planned to make the most of a weekly question-and-answer session Wednesday to press for new details, said Rodriguez, whose Socialist Workers' Party is Spain's largest opposition party.

The session's format, permitting about 2 minutes for an answer, would likely limit what lawmakers could learn, she acknowledged.

Spain's borrowing costs hit a eurozone high of 6.72 percent for 10-year government bonds Tuesday, up from 6.52 percent Monday, amid evaporating investor confidence the bank bailout won't solve Spain's worsening broader problems.

Spain is the eurozone's fourth-largest economy.

"The crisis is deteriorating at an ever-increasing pace," Citigroup Inc. Senior Strategist Mark Schofield told the Financial Times. "Investors are increasingly pricing in either of the two tail risks -- full eurozone break-up or fiscal union."

Merkel said Tuesday she supported European banking regulation, but said she would not support a region-wide banking union.

Her government says such a plan would likely burden Germany with joint liability for other countries' debts.

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