No relief for Spain yet

"Did the European Summit [of June 28-29] serve a purpose?" wonders Joaquín Estefanía, leader writer for Spanish daily El País, while the Finance Ministers of the Eurogroup are meeting in Brussels to discuss the aid terms for Spanish banks —

The European summit ten days ago was based on a certain conviction that advances had been made towards more Europe, an airy programme for growth in the Eurozone and an agreement to recapitalise Spanish banks that does not require increasing the imbalance of public finances. [But] nothing is clear in the light of what has happened since.

Although it decided to lower its key interest rate to 0.75% on July 5, the European Central Bank (ECB), going against expectations, has not begun buying sovereign debt of those countries in difficulty. "This resulted in immediate attacks on Spanish and Italian sovereign debt, up to a level at which continued financing is unsustainable," warns Estefanía. On July 9, the ten-year market rate on Spanish bonds soared to 7% with Italian sovereign debt close behind at 6%.

Estefanía deplores that a month after the ministers agreed to supply up to 100 billion euros to recapitalise Spanish banks —

... nothing has been signed: not the amount, nor the interest rate, nor the lending period nor the conditions of the loan. Now, it is believed that the European Council accepted the bank bailout on the condition that it be delayed, it will become effective once the ECB takes over the role of banking supervisor for the Eurozone and this will not be possible before 2013 – or even 2014.