Spain's prime minister defends grim first year

One year after winning power, Spain's Prime Minister Mariano Rajoy admitted Monday that his biting austerity programme has hurt many people. But the 57-year-old Galician said he had no choice. "It is true that the measures we are taking hurt a lot of people," Rajoy admitted in a news conference. "But they are absolutely crucial," he added. Rajoy said the challenges this year had not taken the government by surprise. "We knew 2012 would be bad, 2013 will be better and that in 2014 economic growth will return," he said in a joint news conference with visiting Brazilian Brasil President Dilma Rousseff. A year after Rajoy came to power promising to fix the economy and create jobs, Spain has entered a second year of recession and the unemployment rate is at 25 percent. Rajoy's Popular Party government is on a hotly protested campaign of spending cuts and tax increases to squeeze 102 billion euros out of the Spanish budget by 2014. In response, unions led a general strike on November 14 and hundreds of thousands of people poured into the streets of Madrid and other major cities, sporadically clashing with baton-wielding riot police. An outcry over soaring home owner evictions, linked to two recent suicides in the space of 15 days, led the government last week to declare a two-year halt to expulsions in the most extreme cases. Now, many analysts are counting down to the moment when they believe the prime minister will be forced to seek a sovereign rescue, too. To do so, Rajoy would have to submit to strict conditions in return for a European Central Bank promise to buy up Spanish bonds and curb the country's formidable debt-refinancing costs. As if that was not enough, the Spanish leader is fighting a rearguard action against independence stirrings in Catalonia, which has called snap elections for this Sunday.