Spain’s economic rescue squad takes power

Spain swore in a new conservative government Thursday, hailed as an economic rescue squad to roll out urgent reforms.

Prime Minister Mariano Rajoy named 13 loyal disciples to his cabinet, with a former executive of the ruined US bank Lehman Brothers, Luis de Guindos, in the key post of economy minister.

The 13 swore loyalty to King Juan Carlos in a televised ceremony at his Zarzuela palace on Thursday morning and were then due to disperse to their new ministries.

De Guindos and the other ministers, with notable backgrounds in economic and European affairs, must spearhead efforts to get five million unemployed back to work and reassure investors that Spain is not a weak link in the eurozone.

“The government team Mariano Rajoy has chosen is consistent with Spain’s urgent needs… employment and the need to generate international confidence in the midst of this dramatic panorama,” said Antonio Nunez of IESE business school in Madrid.

De Guindos, 51, was Lehman Brothers’ executive chairman for Spain and Portugal from 2006 until its collapse in 2008, which heralded the start of the worst of the global financial crisis.

He “might lack in credibility because of his position as former president of Lehman Brothers Spain,” but the former junior economy minister has “ample experience in the government”, IESE said in an analysis.

Leading centre-left daily El Pais saw De Guindos as a technocrat in “a government of friends and loyalists” of Rajoy.

Financial daily El Economista said Rajoy was “looking for reliability and experience, counting on a technical team of liberal tendencies” economically.

Economics professor Cristobal Montoro takes charge of the Treasury, notably tasked with helping to tighten spending by Spain’s regional authorities to cut the overall deficit, a major concern for financial markets.

With unemployment at 21.5 percent and warnings of a fresh recession looming, Rajoy has vowed to pass rapid budgetary, labour and banking reforms.

He has promised to deepen the spending cuts that have already hit hospitals and schools in some regions and have brought thousands on to the streets in protest.

The new leader also wants Spain to take an strong role alongside other countries in efforts to stabilise the eurozone, shaken in recent months by market fears over the debts of certain members.

His new Foreign Minister Jose Manuel Garcia Margallo, 67, is a member of the European Parliament, as was Agriculture Minister Miguel Arias.

One of four women in the cabinet and its youngest member, 40-year-old Soraya Saenz de Santamaria, accumulated three posts: deputy prime minister, government spokeswoman and minister for relations with parliament.

The right-leaning newspaper El Mundo said she had assumed “unprecedented power”.

Rajoy has said he will slash Spain’s deficit by 16.5 billion ($21.7 billion) in 2012, through sweeping cuts, with only pensions escaping the knife.

Rajoy has vowed to stick to Spain’s targets to cut the deficit to 4.4 percent of gross domestic product in 2012 and 3.0 percent — the EU limit — in 2013.

As well as Spain’s budget deficit, he must also solve its huge unemployment problem and has vowed to clean up its banks.

Conservative daily ABC warned the task ahead would be arduous.

“It is a government prepared for an unprecedented crisis and which, with a smaller budget than any other, must apply the most thankless policies ever,” the paper said.