Spain's new government sworn in; economy minister questioned

Dec 22, 2011, 11:55 GMT

Madrid - A conservative government took office Thursday in Spain, but questions were raised about its ability to steer the country out of its deep economic crisis.

The choice of Luis de Guindos as economy minister came under criticism, because he had held a post at US investment bank Lehman Brothers, whose collapse played an important role in sparking the global crisis.

The 13 ministers were sworn in after being announced by Prime Minister Mariano Rajoy late Wednesday.

Rajoy's People's Party (PP) won an absolute majority in the November 20 elections, ousting then prime minister Jose Luis Rodriguez Zapatero's Socialists, who had come under fire for their handling of the economic crisis.

Rajoy divided the economy ministry into two, giving de Guindos, 51, and Finance Minister Cristobal Montoro, 61, key roles in stabilizing the economy and reassuring markets about Spain's solvency.

The opposition Socialists pointed to the past of de Guindos, who was responsible for Spain and Portugal at Lehman Brothers from 2006 until it collapsed in 2008.

But commentators also stressed the solid qualifications and experience of the former economy secretary of state, who has advised Rajoy in economic matters, as well as the international contacts he had acquired at Lehman Brothers.

The daily El Mundo predicted that de Guindos' appointment would calm markets. The yield for Spanish 10-year bonds remained virtually unchanged at 5.29 per cent on Thursday.

De Guindos will be tasked with carrying out financial reforms to strengthen and revive the economy, while Montoro - who was also given the public administration portfolio - will scale down the administration and pressure regions to cut spending.

Montoro already held the finance portfolio from 2000-04. The economy professor is credited with trimming the budget deficit and helping to take Spain into the euro.

The economy team will also indirectly include Foreign Minister Jose Manuel Garcia-Margallo, 67, a veteran European Parliament member who was expected to ease Spain's negotiations with the European Union through his contacts in Brussels.

There has been concern about Spain possibly needing an international bailout. The unemployment rate of more than 20 per cent is the EU's highest, the economy is not growing, and this year's budget deficit is expected to exceed the 6-per-cent target.

The 'strong woman' of the new government is Soraya Saenz de Santamaria, 40. Rajoy made the former PP parliamentary spokeswoman his deputy, while also appointing her minister for the prime minister's office and government spokeswoman.

Madrid's mayor, Alberto Ruiz-Gallardon, was named justice minister. His appointment will lead to the Spanish capital getting its first female mayor, Ana Botella, who belongs to the PP.