Angela Merkel by Sebastian Niedlich

We have a little schizophrenia happening in Germany. On the one hand, they lead Europe in demanding that Spain ask for their bailout already. Michael Meister, a top aide to Angela Merkel and her Christian Democratic Union party, said that Spanish Prime Minister Mariano Rajoy “must spell out what the situation is,” and he warned that any bailout will come with strict conditions, or else the German parliament would reject it. Meister warned of a domino effect, with other troubled countries asking for bailouts without conditionality if Spain gets one.

At the same time, however, Germany wants to slow down the rush to bail out countries like Spain, for domestic political reasons:

Progress on two of the euro zone’s most pressing concerns—containing the crises in Greece and Spain—faces holdups up in Germany, where Chancellor Angela Merkel is reluctant to ask parliament to vote on measures that are likely to raise fierce opposition from within her own coalition.

Greece faces a funding shortfall that is likely to require more-generous financing from Germany and other euro-zone governments. But Ms. Merkel’s aides are searching for a way to close the shortfall without asking German lawmakers for more money.

Spain’s decision on whether to seek bond-market intervention by the European Central Bank, as financial markets are hoping, is also in limbo. That is partly because Germany has signaled that it doesn’t want Spain to make the move.

In either case, any request for fresh bailouts would likely spur a bruising and politically damaging fight in Germany’s lower house of parliament, the Bundestag. Such measures are likely to gain passage with the support of opposition parties. Still, the votes could split Ms. Merkel’s center-right coalition ahead of German national elections in fall 2013. A growing number of conservative back benchers are opposed to further taxpayer aid for other euro members, particularly for Greece, which many German conservatives view as throwing good money after bad.

It’s not going to be possible to avoid some parliamentary action on at least Greece until this time next year. As for Spain, Germany is correct that this pressure for them to request aid when there is no pressure in the financial markets will have negative consequences. Italy will become the focal point.

But we see here how domestic politics drives the responses to the European crisis. The German leadership has resisted a number of necessary steps for mostly political reasons. Spain doesn’t want to request their bailout out of fears that applying conditionality would break a campaign promise. Virtually every leader of a major European country has lost their re-election since the crisis, so these leaders are fighting against a more powerful foe anyway. But this has been a major part of the calculations.

Germany ultimately wants to bundle a series of bailouts together – Spain, Cyprus and perhaps Portugal and Slovenia – to get all the pain out at once and minimize the fallout. I don’t see that as a workable political strategy, as it threatens support for the program.

Meanwhile, the big story in Spain is that people can’t afford to feed themselves. And amidst all this talk of deficits and bond markets and financial projections a decade out, that’s the central tragedy, one that won’t be ameliorated by a bank bailout.