Since taking office in November 2011, Mariano Rajoy’s government has done pretty much everything it can to alienate the Spanish public. Even before completing its maiden year in office, it had broken almost all of its key election pledges. Taxes would not be hiked, it had promised, but they soon were. Banks would never be bailed out with public funds, public spending on vital services would not be cut, unemployment would be a priority, the economy would improve, public hospitals would be safe in their hands… all turned out to be lies.

And that was just the first year. In the second year, things got really interesting when almost the entire senior rank and file of Rajoy’s government, including Rajoy himself, was implicated in the mother of all scandals, the Bárcenas affair.

Since then the government’s rap sheet has grown bigger and bigger. Among their myriad crimes, misdemeanours and transgressions, Rajoy’s top lieutenants have solicited bribes from property developers and consorted with smugglers and drug traffickers on luxury cruises; they have persecuted judges and pulled bankers out of jail; they have brought religion back into the classroom and resurrected the country’s long-dormant social and cultural divisions. And not a single minister has walked!

However, in the early summer of this year it seemed that, at long last, its sordid past had finally caught up with Mariano’s merry band of mercenaries. And this week was to be the week, as a number of Rajoy’s most senior, most trusted colleagues lined up to take the witness stand in the trial against Luis Bárcenas. Surely this time round, enough dirt would cling!

Whereas most other governments from most other civilized countries would have abandoned office a long time ago, with their heads bowed and their tails between their legs, the Rajoy government soldiers on. With the survival instinct of a cornered rat on a sinking ship, it will do whatever it takes to survive.

Tit for Tat

And that’s precisely what it did this week. In the most cynical and least subtle way imaginable, it sought to divert attention from proceedings in the Bárcenas case by engineering a new diplomatic crisis with the United Kingdom over its overseas colony Gibraltar.

Rarely has Samuel Johnson’s adage that “Patriotism is the last refuge of a scoundrel” seemed so apt.

Naturally, Her Majesty’s Government — one of the most adept and devious scoundrels of modern history — has milked the crisis for all it’s worth. To the usual patriotic fanfare it dispatched three war ships to Gibraltar, and even threatened to lodge a complaint with the European Commission about Spain’s decision to increase border controls and introduce a 50-euro fee to enter the colony.

Spain, meanwhile, has threatened to take its grievances to the United Nations and even join forces with Argentina over the Falkland Islands dispute.

The diplomatic crisis, which began with a dispute over fishing rights in Gibraltar (or as Spain claims, Spanish) territorial waters, risks aggravating already strained relations between Spain and the UK, two of Europe’s biggest economies. In May reports of Spanish hospitals refusing to treat British tourists without health insurance — in direct contravention of European law — provoked outrage in the UK. Rajoy’s government has also alienated many of its expat community, including thousands of British retirees with second homes in Spain, by demanding that they declare all their overseas assets.

One can perhaps understand Spain’s desperation to reduce spending and raise taxes — anything to keep the Troika off its back (see Greece) — but by targeting British expats and tourists, it risks doing untold damage to its tourist industry, one of the last-remaining sources of economic growth it has left.

That’s not to say, however, that the worsening tensions are all Spain’s doing or that Spain doesn’t have justifiable grievances vís á vís Gibraltar; after all, where there’s tit, there’s usually tat! In May this year, for example, the Daily Telegraph aroused right wing Spanish tempers when it published an unflattering editorial piece provocatively titled “Spain is Officially Insolvent, Get Your Money Out While You Still Can,” which, as you can imagine, hardly went down well south of the Pyrenees.

Just last week, the Daily Telegraph published a poll asking readers whether Gibraltar should belong to Britain or Spain. Once news of the poll went viral in Spain, a “digital armada” burst forth from the Iberian peninsular. The result was that over 10 times more Spaniards than Brits participated in the poll, giving a massive majority to the pro-Spain position.

It is testament to just how effective nationalism can be as a diversionary tactic — something that shrewd kings, queens and tyrants have known and exploited throughout European history. Franco himself frequently used Gibraltar and anglophobic sentiment as an effective rallying tool. And now Rajoy’s PP — whom many on the left view (not wholly unfairly) as Franco’s natural heirs — is following the same tired old script.

What’s more, in the coming months Rajoy’s government faces myriad threats and challenges, far beyond the legal implications of the Bárcenas case.

In September the Catalonian separatist movement is expected to hit the streets in bigger numbers than ever, to commemorate the 300th anniversary of its complete loss of independence to Spain (another direct consequence of the Treaty of Utrecht). There is also the forboding prospect of Rajoy eventually agreeing to apply the Troika’s latest round of austerity medicine (higher VAT and reduced salaries), along with the inevitable detrimental effects it will have on the country’s internal demand (lower), business closures (higher), unemployment (higher) and, ironically, tax revenues (lower).

And all the while, this beautiful, mad country, with its failed government of determined scoundrels, edges closer and closer toward failed statehood.

New York Times 1000 Spanish Politicians accused of Corruption

Judges here are now investigating about 1,000 officials ranging from small-town mayors like Ms. Pinilla to former cabinet ministers. Even the country’s conservative prime minister, Mariano Rajoy, has turned up on a list of his party’s stalwarts who were supposedly taking payments under the table.

Nor has the royal family been immune. King Juan Carlos’s son-in-law and daughter have been subpoenaed in a corruption inquiry that began with the investigation of officials in the Balearic Islands.

There are so many scandals that some newspapers have taken to organizing all but the biggest developments in a quick-list format, rather than writing whole articles.

Some experts believe there is still far more to come, the result in Spain of a political structure that puts huge power in the hands of local officials. Many of them can grant procurement contracts or rezone land with little or no consultation.

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