Spain's Rajoy forms new EU-looking government

Spain's leader Mariano Rajoy, who kicks off a second term after months of political paralysis, formed a new cabinet on Nov. 3 that looks set to maintain controversial economic reforms and cement EU ties.

At the helm of a minority conservative government with little parliamentary support, Rajoy faces a daunting task as Spain grapples with separatism in Catalonia, seeks to consolidate its economic recovery and reduce its deficit under EU scrutiny.

Foreign Minister Jose Manuel Garcia-Margallo, a stalwart of Rajoy's Popular Party (PP), left government and was replaced by Alfonso Dastis, 61, until now Spain's permanent representative to the European Union.

An experienced diplomat, Dastis was already in Brussels in 2012 when the EU decided to rescue Spain's financial sector at the height of the crisis, thus avoiding a full sovereign debt bailout.

In a move likely to reassure the markets, Economy Minister Luis de Guindos remained in his post, according to a government statement.

The 56-year-old helped lift the country out of the economic crisis with sweeping spending cuts that met with criticism and mass protests.

He has stressed that more efforts will be required to reduce Spain's deficit as required by Brussels.

Labor Minister Fatima Banez, who oversaw the implementation of much-criticized labor reforms, also remains in her post.

The PP credits the reforms for helping reduce unemployment, which came close to 27 percent in 2013 and now stands at 18.9 percent - still the second highest rate in the European Union after Greece.

The reforms reduced the amount of compensation companies must pay workers they fire and created a new open-ended contract with a one-year trial period.

But the...