In Spain and Italy, Corruption Scandals Threaten Stability

Corruption scandals are weakening the governments of Italy and Spain — home to the third- and fourth-largest economies in the eurozone, respectively. On Aug. 1, Spanish Prime Minister Mariano Rajoy was forced to go before Spain's parliament to defend his role in a growing scandal involving irregular financing of his ruling Popular Party. The same day, Italy's Supreme Court upheld the prison sentence handed down in October to former Prime Minister Silvio Berlusconi over his conviction for tax fraud.

The controversies have unfolded at a time when both countries are struggling to exit Europe's recession and are beset with record-high levels of unemployment. While the current Italian and Spanish governments will remain in power for the time being, the resulting loss of voter trust in mainstream political parties and state institutions will continue to hinder each country's efforts to revive economic growth.