ASSESSMENTS

EU Periphery Focuses on Spain's Next Economic Move

Sep 18, 2012 | 10:01 GMT

Spanish Prime Minister Mariano Rajoy (L) and Italian Prime Minister Mario Monti on Feb. 23

FILIPPO MONTEFORTE/AFP/Getty Images

Summary

Spain will be at the core of the European financial crisis in the coming weeks. Madrid is discussing the details of its banking bailout and could formally request an agreement for the European Stability Mechanism and European Central Bank to buy Spanish bonds. Italy is closely following the situation in Spain — Rome could ask for similar assistance from the European Central Bank in the future. Ireland also is interested in the terms of Spain's bank bailout because Dublin wants favorable terms for its bailout if Madrid is able to gain concessions in the process.

Countries in the eurozone's periphery will determine their actions based on Spain's moves. Meanwhile, Germany will require any agreement with Spain to include strict conditions of fiscal discipline.

Italy and Ireland are watching Madrid's negotiations with the European Union regarding bonds and a bank bailout....

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