Jig obviously wants to have the baby and keep it. The American cannot understand the physical and psychological changes that take place in a woman when she becomes pregnant, and she can't explain her feelings to him. She becomes resigned to having the abortion because she realizes the man is adamant against it. He doesn't want to accept the responsibility of fatherhood. It is evident that they are not married. The only feaible way to keep the baby would be for them to get married, in which case he would have to be the breadwinnner and would have to get some kind of regular job. Since they are living in Spain, a poor country, he might have to take his new family back to the U.S. It would mean giving up his vagabond lifestyle. She does not believe he would marry her or let her have the baby, although he keeps telling her he won't insist on the abortion if she is dead set against it.
Abortions were dangerous. We don't know what sort of facilities were available to Jig in Madrid. It might have been less of a problem there in spite of the fact that it was probably against the law. They are probably living in Europe because it was much cheaper than in the U.S. in the 1920's, which was why so many footloose Americans flocked over there after World War II. Also, Prohibition was only in effect in the U.S.
Jig probably realizes that their love affair is over regardless of what she does. The man is selfish. He doesn't love her sufficiently. She is disillusioned about him and about life in general. Everything ends up tasting like licorice.