Spain's EU bank rescue fund is not quite as Mariano Rajoy has been selling

As Rajoy sells the deal as a victory, the fact is that there will be controls from Europe which can turn off the tap at any time.Mariano Rajoy in the Moncloa on Sunday Despite the claims made on Sunday by the Spanish Prime Minister, Mariano Rajoy that the European financial rescue of the Spanish banks was a triumph, and his denial that it was intervention, the International Press don’t see it quite the same way. They have criticised Rajoy for selling the rescue of the banks as a victory, and say the Spaniards will pay for the rescue. The Guardian and the Financial Times don’t think the aid to the banks will solve Spain’s problems. The Guardian says that Rajoy has embarked on a campaign to present the accord as a national victory, with Spain getting a cheap loan and without the European partners asking for anything in return, over and above the payment of the interests’. But the paper says that far from being a line of credit for banks as Rajoy says, ‘the Spanish tax payers will in the end have to pay for it’. In other words the EU country with the highest unemployment will spend decades repaying a debt taken on to rescue the irresponsible savings banks, ‘generally directed by useless managers’. What is becoming clear is that the ‘troika’ will be keeping a close eye on the rescue, and indeed there are reports today from Vice President of the European Commission, Joaqúin Almunia, that Spain will be under a series of obligations, despite Rajoy’s attempts to deny that. The European Commission has made it clear today that if Rajoy fails to meet the Stability Pact, the credit tap will be turned off. German Finance Minister, Wolfgang Schäuble, has confirmed that the European Union, European Central Bank and the International Monetary Fund will control the use of the money. ‘They are the men in black’, he said. He did admit however that the control will be limited to the restructuring of the financial sector. ‘Money is never given for free, they want to know what you are doing with it’, he said. Nobel Prize winner, Joseph Stiglitz, who was advisor to Bill Clinton, has forecast that the plan will not work. He thinks that Rajoy will be obliged to ask for help from the same banks which he is now strengthening. The IBEX 35 Stock Market index opened up 5%, and the Risk Premium fell to 470 points, although with an interest still at 6%.