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La Mancha becomes battleground in political rift over regions' debts

Outgoing Socialist government suspends handover meetings with Popular Party after "complete bankruptcy" claim

Regional government spending has become the new sticking point in Spain's strained political climate, just two weeks after the ruling Socialist party took a beating in local and regional elections, reflecting widespread anger at its handling of the economic crisis and casting doubts over its ability to rule effectively until next year's general elections.

After the opposition Popular Party (PP), which now controls most regional governments, sounded the alarm over the state of Castilla-La Mancha's finances following 30 years of Socialist rule, the central administration struck back with similar accusations.

Deputy Prime Minister Alfredo Perez Rubalcaba - who will also in all likelihood be the Socialist candidate to next year's general elections -on Sunday said the PP preaches austerity yet spends four times as much as the Socialists in the regional governments under its control. Rubalcaba asked PP leader Mariano Rajoy "to set an example in order to be credible."

Although the face-off over regional spending is nationwide, it can be seen at its bitterest in Castilla-La Mancha. The PP, which will take over later this month, accuses the outgoing government of owing two billion euros to providers and racking up over seven billion euros in debt. The conservative party's number two man in the region, Vicente Tirado, described the situation as one of "complete bankruptcy" and warned that there isn't enough money to pay next month's wages for the 70,000 public workers in the region. María Luisa Araújo Chamorro, the regional finance commissioner, denied the claim and said that civil servant checks are guaranteed indefinitely.

The outgoing government of premier José María Barreda also accused the PP of "disloyalty" and suspended the meetings to pave the way for the handover of power. It also noted that it has not given the PP any financial data yet, meaning that its claims are just estimates. The conservatives reacted by warning that once in power they will close between 50 and 75 percent of 95 public agencies that they claim employ 3,000 people simply because of their Socialist connections.

The La Mancha government, however, argued it had already closed almost half of the 24 public companies it says it has on its books.

Rubalcaba on Sunday said that the PP "is justifying what it plans to do based on what it has found, and that is bad, irresponsible politics. If they want to make cuts, let them just say it, rather than find excuses for it."

Barreda's administration admits that in April the regional deficit stood at 640 million euros, a whopping 290 million euros more than at the close of the first quarter and four tenths of a point higher than the annual ceiling of 1.3 percent for the regions.

Regional spending is becoming increasingly relevant after a year in which the central administration did most of the cost-cutting. Because of the country's decentralized structure and the fact that regional savings banks (cajas) are viewed as the weakest link in Spain's lending system, international observers will be keeping a close eye on how well regions do at reducing their deficits.