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LONDON (Reuters) - Spain vowed to press on with its bid for the 2020 Olympics despite an economic crisis that threatened to engulf its economy and said it was not about to follow Italy and abandon its bid.
The Madrid government is bidding for the third successive time for the Games though the economic climate could not be less favorable and the euro zone debt crisis has already claimed one victim with Rome pulling out earlier this year.
Tokyo and Istanbul are the other two candidates.
Spain's increasingly desperate struggle to put its finances in order has seen its borrowing costs soar to levels that are not manageable indefinitely, reflecting a growing belief that it will need a sovereign bailout the euro zone can barely afford.
"This is a time when the economy is not good, not only in Spain but around the world," Madrid Mayor Ana Botella said on Thursday ahead of the official opening of the London 2012 Games.
"The Games need to respect reduced levels of investment. We have to be careful how we use public funds."
Spain have experienced a golden run of recent sporting results with their soccer team adding the European title to their 2010 World Cup while tennis player Rafa Nadal won his record seventh Roland Garros title last month.
But more and more Spaniards are questioning the multi-million-euro expense of going ahead with the bid as an economic crisis shrinks budgets for public services like hospitals and schools and people are increasingly asked to make sacrifices.
Various groups, including Spain's Indignados, whose sit-ins in squares last year helped to inspire the worldwide "Occupy" protest movement, say they are opposed to the Olympics.
While few formal protests have taken place, critics expect a growing chorus of public and political opposition to the bid as spending cuts bite and the Games bid progresses.
The Government, however, was adamant it already had much of the infrastructure in place to host the largest multi-sport event in the world and for the huge influx of visitors, saying this would lessen the burden on its citizens already facing tough austerity measures.
"We are not talking about huge investments here," said Spain's State Secretary for Sport Miguel Cardenal, who admitted the country's belt tightening was "certainly painful" for the population.
"But we will pursue this project," he said. "The government has no doubt whatsoever and is fully behind the bid."
While Madrid officials are confident the Games would trigger growth and create jobs, the International Olympic Committee, which will elect the winning city in September 2013, will need to be convinced the Spanish capital's preparations would be trouble-free.
Madrid has won praise for the technical aspects of their previous bids with the sports-mad nation planning to invest only in the bare necessities, having done much of the groundwork in their two failed attempts for the 2012 and 2016 Games with 85 percent of needed venues already in place.
"It is true we have a complicated economic situation," bid leader Alejandro Blanco said on Thursday when asked by Reuters if the candidacy was under growing pressure due to the country's spiraling debt problems.
"But like any athlete we want to keep on pushing and win. Italian Prime Minister Mario Monti had his own take on this matter (when he pulled the plug on the Rome bid).
"But Madrid is different because the bulk of investment has been made and the residual investment is less than the return we will have from the Games."
Despite their optimism, the Spanish capital need only look at London for evidence of the multi-billion pricetag of staging the Games soaring in the seven-year period it takes for the city to prepare.
London pumped in 9.3 billion pounds ($14.76 billion) of public money into the project. It had originally projected a cost of just over two billion when it won the bid in 2005.
The Olympics are also by no means a financial panacea as data on Wednesday revealed the British economy shrank more than expected in the second quarter of 2012.
The British government is also holding a series of business summits during the Games that it hopes will generate an additional one billion pounds of revenue for British companies.
Spain had cushioned itself by securing well over half its annual debt needs in the first six months of the year when market conditions were more benign, but that advantage has evaporated as its funding requirements for the rest of the year have grown.
Late last week the government also said it expected the economy to remain in recession well into next year, while the autonomous region of Valencia became the first to ask Madrid for aid to pay debt obligations it cannot meet. Others are expected to follow.
Spain's northeastern region of Catalonia, responsible for a fifth of the country's economic output, said it had financing needs to meet while its access to markets was shut, but had not decided yet whether to tap a state liquidity line.
Catalonia's Barcelona hosted the 1992 Olympics.
$1 = 0.6463 British pounds Editing by Greg Stutchbury