Under-fire Rajoy wins Merkel backing on economy

PUBLISHED : Tuesday, 05 February, 2013, 12:49am
UPDATED : Tuesday, 05 February, 2013, 12:53am

Spanish Prime Minister Mariano Rajoy, under fire at home over corruption allegations, won praise on Monday from German Chancellor Angela Merkel over his handling of Spain’s recession-mired economy.

Speaking after a regular meeting of the two governments, Merkel said: “I have the impression that the whole government in Spain, including the prime minister, is working to get unemployment down, get structural reforms working and give Spain back the strength it deserves.”

“I am convinced that the Spanish government and Mariano Rajoy as prime minister will be able to solve these problems and Germany will support him with all the strength we have,” added the chancellor, when asked whether the affair had undermined her confidence in his leadership.

Rajoy faced persistent questioning over the corruption scandal in Spain but reiterated that the allegations against him were “absolutely false”.

The prime minister is facing calls to resign after Spain’s centre-left newspaper El Pais published account ledgers purportedly showing that donations were channelled into secret payments to Rajoy and other top party officials, mostly from construction companies.

Our policy is one of reform and we are convinced that we are trying to get Spain out of its worst-ever crisis ... The whole thing is absolutely false

The report has sparked daily protests by hundreds of demonstrators outside of the right-leaning party’s headquarters in Madrid as well as in other locations across the country at a time when the unemployment rate stands at a record 26 per cent.

Ledgers kept by one of the former party treasurers cited by the newspaper, Luis Barcenas, apparently showed payments including 25,200 euros (US$34,000) a year to Rajoy between 1997 and 2008.

Rajoy vehemently denied the allegations and vowed to carry on at the head of a “strong” government to tackle what he said was “the gravest crisis in Spanish history.”

“Our policy is one of reform and we are convinced that we are trying to get Spain out of its worst-ever crisis,” he said.

“The whole thing is absolutely false,” he added.

The scandal drove Madrid share prices down more than three per cent in late afternoon trading on Monday.

Spain’s ruling Popular Party said on Monday it would take legal action against anyone who published or leaked information implicating its executives, including Prime Minister Mariano Rajoy, in a case of alleged corruption.

The Popular Party will launch lawsuits against “anyone or any group of people who have accused the Popular Party or its management structure of illegal or irregular actions,” one of the party’s secretaries, Carlos Floriano, told reporters.

The lawsuits will target “all those who leaked” the allegations as well as “those who published them”, he added without specifying who would be cited in any legal action taken by the party.

Barcenas was already under investigation in connection with a separate corruption case, with reports that he had millions of euros in a Swiss bank account.

Rajoy said that case had nothing to do with the party and that it had never had foreign bank accounts.