European Stability Mechanism

In attempts to ease its mushrooming financial pains, Spain unveiled new austerity measures today (Wednesday) that aim to reduce 65 billion euros ($80 billion) from the public deficit by 2014.

The move is part of an agreement Spain's Prime Minister Mariano Rajoy made when he accepted a Eurozone bailout for his country's ailing banking system. Rajoy surrendered to mounting pressure to at least make an effort to avoid a full state bailout.

"We have very little room to choose. I pledged to cut taxes and now I'm raising them. But the circumstances have changed and I have to accept them," Rajoy told the national parliament.

As protests erupted from anti-austerity crowds that gathered in Madrid, Rajoy explained plans to roll back social welfare protections and immediately raise taxes so that he could secure emergency aid and placate jittery investors.

Rajoy announced higher taxes and cuts to unemployment benefits, union pay, and civil service perks.

Amid boos and heckling, Rajoy told the parliament, "These measures are not pleasant, but they are necessary. Our public spending exceeds our income by tens of billion euros."

The moves highlight how Rajoy and Spain are at the mercy of the EU"s tough bailout provisions if the government hopes to get any more money for its struggling banks.

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