Spain has ordered a 5 percent cut in pay for public sector workers this year and a pay freeze next year. The bold, early cuts follow the European Union and International Monetary Fund's trillion-dollar European bailout package and is an effort by the Spanish government to avoid the protests and debt crisis suffered in Greece. Pension increases and infrastructure projects have also been placed on hold.

The country is under intense international pressure to get its finances in order; the European Commission and President Obama have both chimed in on the situation. Graham Mather of European Policy Forum notes getting the international community involved is an effective way to keep things moving. "It's a good idea for President Obama to pick up the phone, whether its the Spanish government with its deficit, whether it was Angela Merkel in Germany not moving fast enough over Greece," he said. "I think it helps if our American colleagues get involved."

Global markets are cheering the move. The Nikkei in particular benefited as it rose to a one-week high. Mather says it's not surprising that investors are relieved, as fears of a European debt default seem to be easing. "The consequences of a major failure in Greece or another of the at-risk countries would have been absolutely disastrous for global markets.

Europe countries have raised concerned over the European Commission's steps to take increasing control over the national budgets of member states. Capitals worry about the formation of a "United States of Europe," with Spain especially concerned about the danger of becoming a European protectorate.