Posted Monday, June 11, 2012, at 8:26 AM
Above is the text message Spanish Prime Minister Rajoy allegedly sent to Finance Minister Guindos before the latter went in for a last round of negotiations on the terms of a bailout for Spain's banks. He's urging Spain to hold out for a good deal. "We're the number four power in Europe," it says. "Spain is not Uganda."
This is the problem the German government is going to have as the eurozone crisis moves up the food chain. Countries like Estonia are happy to be involved in the European project as a way of showing their arrival on the world stage and to try to ward off the Russians. Spain is hard to boss around. Italy is even harder. If things come to a head beween Germany and France, it turns out that the way the EU works (by design!) is that France has all the nuclear bombs and Germany is day-to-day dependent on French electricity exports. But that's extreme. We're just talking about Spain. But the point is that while the Germans do have the power to just wash their hands of Spain, its mismanaged caja banks, its poorly designed version of fiscal federalism, and its unorthodox working hours, it is difficult to boss Spain around. Even with Greece the limits of bossing around are getting reached.