Deputy PM: Washington and Madrid “coordinated” on euro zone crisis

Sáenz de Santamaría’s US visit not a bailout meeting, says government

Antonio Caño
US Treasury Secretary Geithner greets Sáenz de Santamaría.
US Treasury Secretary Geithner greets Sáenz de Santamaría.RUBÉN GAMARRA (EFE)

The Spanish government is working “in the same direction and in a coordinated manner” with its US counterpart on a solution to the euro-zone crisis, and particularly on cleaning up the Spanish banking system, which is causing significant international concern.

So said Deputy Prime Minister Soraya Sáenz de Santamaría after meeting in Washington DC with US Secretary of the Treasury Timothy Geithner and International Monetary Fund (IMF) Managing Director Christine Lagarde.

Sáenz de Santamaría’s presence in the US capital was followed with interest and prompted rumors about a potential IMF and EU bailout of Spain. But following her meeting with the Spanish government representative, Lagarde stated her organization has not been asked by Spain for a bailout and that the IMF was doing no work in connection with financial support for Spain.

The visit coincided with a particularly difficult moment for Spain in the international markets, although the Spanish representative said the meeting had been scheduled weeks earlier and bore no direct relation to Spain’s situation.

The IMF chief also denied a report published in The Wall Street Journal to the effect that her organization has already issued instructions for a bailout of Spain.

But this matter was certainly uppermost on the agenda at the meeting. Santamaría said Geithner had told her he “shares the diagnosis” of the situation of the Spanish and European economy, and that he is ready to work with the Spanish government to find a solution to the crisis.

Although Sáenz de Santamaría would not be more specific, in statements to the press outside the US Department of the Treasury she explained the US was very interested in the capitalization of Spanish banks and supports the possibility for troubled lenders to directly request assistance from European institutions without the need for government bailouts. That, however, would require a change to European legislation.

The deputy prime minister also said she conveyed to Geithner the efforts made by the Spanish people to reduce the deficit and adopt structural reforms.

In recent weeks, the US Administration has taken on a bigger role in the search for a way out of Europe’s problems, considering its negative effects on the US economy. On Wednesday, President Barack Obama spoke on the phone with German Chancellor Angela Merkel, French President François Hollande and Italian Prime Minister Mario Monti, with the Spanish crisis as the backdrop.

A week earlier, at the NATO summit in Chicago, Obama had called for an urgent recapitalization of the European financial system and measures to encourage consumption and economic growth in Spain.

Obama, whose first mandate was marked by economic stimulus policies that were contrary to the adjustment measures adopted by most European countries, said he is interested in encouraging economic growth in Europe so the crisis does not end up dragging the United States and other major economies down. The president knows he faces the danger of November elections in the middle of a global economic downturn.

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