Spanish Prime Minister Mariano Rajoy said interest rates on the loans will be considerably lower than the rate near 7 percent that Spain has been forced to pay recently on the international debt markets, a level that forced the other countries to seek bailouts.
It is not yet clear whether the money will come from the eurozone's current €440 billion ($550 billion) rescue fund, the European Financial Stability Facility, or its new €500 billion ($625 billion) European Stability Mechanism.
Spain had been resisting pressure to seek outside help for its banks, which have been overwhelmed by bad real estate loans. But leaders became increasingly concerned that any fallout from Greece's upcoming elections would rock markets, further hurting Spain's financial sector. The exact amount Spain needs won't be clear until outside accountants complete an audit of its banks by June 21.
Unlike the three other European countries that have received financial help — Ireland, Portugal and Greece — Spain did not have to agree to deeper cuts in its government budget to secure the help.
Working in Spain's favor is the fact that its public debts aren't especially high. They amounted to less than 69 percent of its gross domestic product at the end of 2011, lower than powerhouse Germany's 82 percent.
Spain has already agreed to government belt-tightening. More austerity likely would have pushed Spain, already suffering from near-25 percent unemployment, deeper into recession.
"You don't want an economy of that magnitude going down the tubes," says Daniel Drezner, a professor of international politics at Tufts University in Medford, Mass. Spain has the world's 13th-biggest economy, more than four times the size of Greece's. It is the fourth-largest economy in the Eurozone.
In recent weeks, jittery investors had demanded higher interest rates on Spanish bonds. If Spain had tried to borrow money in the bond market to rescue its banks, investors would have balked at providing it.
The rising fears come at a time when nearly half the countries that use the euro are in recession. At 11 percent, unemployment in the euro zone is at the highest level since the single currency was introduced in 1999.
Europe's weakest countries aren't all alike.
Spain and Ireland, like the United States, were crushed by a collapse in the housing market, which left their banks with huge losses on housing loans. The Irish government was forced to slash government spending to pay for a bank rescue. The austerity has pinched the economy; Irish unemployment exceeds 14 percent.
Greece ran up vast budget deficits it couldn't sustain and smothered its economy in regulations designed to protect favored industries.
Italy and Portugal are desperately in need of economic growth that will provide the tax revenues they need to pay their bills.
The Italian government of Prime Minister Mario Monti is committed to raising taxes, cutting spending, fighting tax evasion and promoting competition in many professions, from cab drivers to pharmacists. But the budget cuts threaten to undermine Italy's economy, which is already in recession. Under the terms of its earlier bailout, Portugal is making deep spending cuts, which have made its recession deeper and more painful.
The troubles in Europe also are causing economic problems for the United States and developing countries such as China and Brazil, which rely on Europeans to buy their exports. So the plan unveiled Saturday eases pressure on the United States and the rest of the world economy as well.
European economic troubles pinch U.S. businesses. U.S. companies send 22 percent of the goods they export to Europe and have more than $2 trillion invested in factories, offices and businesses there.
A bigger fear is that Europe's financial troubles could cross the Atlantic. When banks lose confidence in each other, they refuse to lend each other money. Credit dries up, depriving economies of the fuel they need to grow. A financial crunch can wreck the economies on both sides of the ocean as it did in 2008.
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