Traverse City Record-Eagle

Business

August 9, 2012

Stereotypes threaten E.U. unity

It seems like its the north vs. the south

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BRUSSELS (AP) — Maybe the problem is those southerners lolling in the Mediterranean sun who overspent and tax-dodged their way to ruin. Or maybe it's the northerners, rigid beyond reason, so gloomy in their own lives that they're determined to see the southerners suffer.

Such, at least, are the resentful stereotypes that are increasingly jumping from pub conversation and tabloid pages into the mainstream political discourse.

It's all a sign that a psychological fissure between northern and southern countries in the European Union is deepening under the strain of the financial crisis. Analysts say the rift threatens Europe's currency union every bit as much as interest rates and deficits.

"National resentments in Europe are rising to dramatic levels," said Vincent Forest, a London-based economist with the Economist Intelligence Unit. "By taking so much time in solving the economic crisis, the Europeans are creating a political and social crisis."

The 17 countries that use the euro have been struggling for the past three years with the problem of debt: Some countries can't cope while others have plenty of demands about how best to manage it. Economies across the region face deepening recessions. Spain and Italy, the two chief trouble spots, are threatened with a financial collapse that could tear the 13-year-old currency union apart and rock the global economy.

Fears are mounting that Spain may be the next to seek a bailout, following Ireland, Greece, Portugal and Cyprus. Italy faces the daunting task of keeping a handle on its huge debt load while fighting a recession.

In Greece, which has been in recession for five years, Germany is seen as the unbending force that has insisted on a diet of ever-increasing budget cuts that have thrown more and more Greeks out of work. Politicians and journalists have even alluded to the Third Reich — the Nazi regime — fueling public anger against the Germans.

In Italy, cartoonists have made German Chancellor Angela Merkel the subject of vulgar humor. And on Monday, the respected La Stampa newspaper ran an article that used a derogatory term for Germans. The article cited an adage that says that Germans love Italians but don't admire them, while Italians admire Germans but don't love them.

Of all the euro countries, the Germans have been the most insistent on enforcing austerity, warning of the "moral hazard" of bailing out countries that have not suffered enough for their sins — and therefore may be tempted to lapse again.

German condescension toward southern culture is not limited to the economy.

In January, the influential German weekly Der Spiegel ran a commentary on the capsized Concordia cruise liner, whose Italian captain is being investigated for manslaughter and abandoning ship while passengers were still aboard.

"Does it surprise you that the captain was Italian?" the columnist wrote, asking readers if they could imagine a German or British captain abandoning ship.

The column sparked outrage in Italy.

German attitudes toward European unity have a special historical significance. The prime motive for working toward a united Europe was a desire to contain Germany after the two world wars. A generation ago, West Germans were great champions of unity because it gave them a respectability — the ability to say "We are Europeans" — that had been squandered.

But now it is primarily Germany that is blocking the idea of the eurozone pooling resources to issue joint debt — "Eurobonds" — which would deepen European integration while easing the crisis.

German citizens opposed to more help for Greece are quick to jump on the fact that the government fudged its budget figures, playing on stereotypes of Mediterranean dishonesty.

Putting up more money "would be the biggest mistake Germany could make," said Andreas Fey, a railway worker from Frankfurt who stopped to talk in front of the European Central Bank headquarters. "They ran up deficits and debts upon debts, made a complete mess, and then lied about it, faked the books. I would stop it immediately, and throw them out."

Spain will shortly begin to receive a bailout loan of up to (euro) 100 billion from the other countries in the eurozone for its banking sector. The loan has come with strict government spending and tax conditions. Germany is seen as the main author of these conditions. Antonio Alvarez, a civil servant in Madrid, said he had already seen a poster calling for a boycott of German goods.

"Further down the road, if things get worse, there may be problems between people from different countries in Europe," he said.

He says that Merkel is punishing Spain unfairly.

"I am not sure if she has something against Spain or Spaniards," he said. "But I think she is tightening the screws too much on the government and against the Spanish people."

For all the stridency, there are people in Europe trying to act as conciliators.

French President Francois Hollande, whose country stretches from the English Channel to the Mediterranean, is pressing for some relaxation of the austerity being forced on countries receiving bailout loans.

And Luxembourg Prime Minister Jean-Claude Juncker, who is also president of the Eurogroup of finance ministers warned Monday in an interview on German TV of the dangers of the current tone of conversation.

"That means what was history, and what we thought we had definitely buried, it resurges fast," he said. "European integration remains a highly fragile undertaking. One has to deal carefully with European sentiments and not think history is history. No, no — history is present and we have to treat each other carefully."

Cinzia Alcidi, a research fellow at the Brussels-based Center for European Policy Studies, said national politicians had an obligation not to inflame passions.

"I think there is a sort of division emerging between the creditors and the debtors," Alcidi said. "I think that this element should not be underestimated. I perceive this as the biggest threat to the European project, and the EU as a whole."

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Frances D'Emilio in Rome; Geir Moulson, Juergen Baetz and Robert Reid in Berlin; David McHugh in Frankfurt; Alan Clendenning and Ciaran Giles in Madrid; Nicholas Paphitis in Athens; and Sarah DiLorenzo in Paris contributed to this report. Don Melvin can be reached at http://twitter.com/Don--Melvin

AP-WF-08-08-12 2058GMT

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