Spain's EU Bank Bailout Sets a Risky Precedent

Monday, 11 Jun 2012 02:19 PM

In convincing EU officials over the weekend to approve a 100 billion euro ($125 billion) bailout, Spanish officials succeeded in using the threat of a Spanish economic collapse to secure aid for its troubled banking sector on its own terms. The aid will come without stringent austerity measures or structural reforms. The deal will also allow the EU to shore up the Spanish economy ahead of critical upcoming elections in Athens which could lead to Greece pulling out of the EU. But there are downsides as well. The loan to Spain will deplete Europe's bailout funds, and maybe more importantly: The terms of the bailout will set a dangerous precedent, making it harder for Europe to impose restrictions on countries that may require bailouts in the future.

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Monday, 11 Jun 2012 02:19 PM
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