The spotlight is once again on Slovenia. Olli Rehn, the European commission’s economic chief is unhappy with economic progress in Slovenia and is threatening to put the country into an “excessive imbalances procedure” by the end of the month.

The problem is, Spain is in a similar “excessive imbalance” state prompting an unnamed eurozone official to state “As Spain Goes, So Goes Slovenia”.

Please consider Brussels trains its sights on Slovenia.

The European Commission is being pushed to take a tougher line with Slovenia amid mounting concerns that infighting is hampering the country’s ability to overhaul its banking sector and avoid becoming the next rescue target in the eurozone crisis.

According to two senior eurozone officials, concerns have focused on “non-cooperation” between Slovenia’s finance ministry and central bank, which is responsible for supervising the financial sector. One of the officials said the central bank was being “obstructionist” towards the new government’s clean-up efforts.

The central bank’s role could prove particularly problematic because the three largest Slovenian banks – most in need of a rescue – are state owned, raising questions about the supervisor’s ability to evaluate their needs impartially. “T

Concerns about Spain, however, are hampering the commission’s decision. Madrid was formally warned about its economic imbalances last month and some believe it may not be possible to impose new controls on Slovenia without doing the same for Spain – a move that commission officials worry might spark wider market unease.

“As Spain goes, so goes Slovenia,” a senior eurozone official said. The country has a governance problem of major proportions,” the official added.

Backwards Statement

The senior official has things backwards. Here is the correct statement “As Slovenia Goes, So Goes Spain”. And Slovenia is going the same way Cyprus, Ireland, Greece, and Portugal went.

There is no hope for Slovenia or Spain, at least inside the eurozone.

Mike “Mish” Shedlock