Like courtiers dancing a pavane, Mariano Rajoy, Spain’s prime minister, and his government are moving towards an international financial rescue as slowly as the music permits. The performance possesses a certain air of mournful inevitability.
Mr Rajoy, balancing domestic political calculations with the imperative need to stabilise Spain’s economy and banking system, appears disinclined to follow Greece, Ireland and Portugal into the iron clamp of foreign creditors.
Neither bankers in Madrid nor large numbers of ordinary Spaniards believe, however, that Mr Rajoy will be able to defy fate for long.
Factors that extend beyond mere national pride explain his reluctance to make a prompt and public request for aid. The immediate pressures eased two weeks ago when the European Central Bank offered to make unlimited purchases of shorter-term government bonds, triggering a plunge in Spanish borrowing costs.
Mr Rajoy has all but acknowledged that he sees little point in applying for assistance unless Spain’s sovereign debt yields rise again. An important test will take place on Thursday when Spain plans to sell €4.5bn of 10-year and three-year bonds.
Berlin, too, appears reluctant to see Spain make an early request for eurozone aid that would require the approval of an increasingly restive Bundestag.
From the ECB’s point of view, however, Spain should use the breathing space gained by the bond purchase plan to prepare an aid request – even if it is for a limited “precautionary programme”, or credit line, rather than a comprehensive macroeconomic instruction kit such as that devised for Greece.
Bankers in Madrid say Mr Rajoy would be wise to apply for aid soon, when market conditions are relatively benign, rather than after sentiment turns against Spain once more and creditors will impose stiffer terms.
A second consideration is that the Basque Country and Galicia, two of Spain’s autonomous regions, will hold elections on October 21. Tempted by the thought that his government might profit from withholding unpopular news before an election, Mr Rajoy delayed announcing his 2012 budget in March until after a regional ballot in Andalucia.
The gambit failed. His Partido Popular, the centre-right party which won a landslide victory last year in Spain’s national election, failed to oust the Socialists from their southern stronghold. Financial markets punished Mr Rajoy for playing politics with the budget and drove up the cost of Spanish debt.
Opinion is divided on whether Mr Rajoy learnt any lessons from this debacle. According to some PP strategists, the approaching elections will not influence one whit the timing of an aid request. Others describe the elections as an element in the government’s thinking, but not the decisive one.
In Galicia, Mr Rajoy’s political allies are stoical. Alberto Núñez Feijóo, the PP regional premier, knows an early aid request will hardly improve his re-election prospects. But in the end Mr Rajoy, though a native Galician, has bigger sturgeon to salt.
Rising regional tensions in Catalonia form part of the picture, too. If he accepts international assistance, Mr Rajoy will want to distribute the burden of extra fiscal measures equitably across Spain. But Catalonia’s leaders are pressing for a different outcome: more control over their own taxes.
The impasse, complicated by a Catalan request for €5bn in liquidity assistance from Madrid, makes it no easier for Mr Rajoy to reach a decision.
Nor, at national level, does the posturing of the opposition Socialists, who held power when Spain’s property and construction industry bubble burst.
Alfredo Pérez Rubalcaba, their leader, says he opposes a rescue because “it will affect the Spain brand” and citizens “cannot make more sacrifices”. The implication is that the Socialists will seize upon a rescue to tar Mr Rajoy with the brush of national humiliation and suffering.
Mr Rajoy has one last reason for delay. In June Spain and its eurozone partners agreed an assistance programme of up to €100bn for restructuring and recapitalising its banks. Yet not a cent has arrived.
On September 28, however, an externally conducted “stress test” of Spanish banks to determine their capital needs will be complete. After that, it may not be long before Mr Rajoy dances the last steps of his pavane.