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'Lazy Italians' and 'ugly Germans': How the euro sows discord

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Source: Christoph Schmid

Italy this week offered Germans and all Europeans a lesson: The euro, which was meant to usher Europeans further along on their road to an “ever-closer union,” is instead increasingly dividing them. Instead of integration, divergence. Instead of harmony, discord. Instead of liberal democracy, populist rancor.

Listen to Matteo Salvini, leader of the right-wing League, one of the two populist parties that will form the next Italian government: “We have a basic principle,” he said. “Only Italians make decisions for Italy, not the Germans… A minister the Germans don’t like is exactly the right minister for us.” A colleague added that it was time “to free the country from the chains that Brussels and Berlin have put on our ankles.”

What, you might ask, did Germany even have to do with the events in Rome this week? Good question. Superficially, nothing. The Italians had run a campaign in which euro-zone politics barely featured. The winners were populists on the left and right, who tried to form an incoherent government with economic policies that would have blown the euro zone apart. When the populists nominated a euro-hater as finance minister, Italy’s president refused. Now the government will be formed with a slightly different cabinet.

Below the surface, however, Germany has a lot to do with Italy’s political crisis. That’s because Germany represents the opposite of the ideas that, more or less, unite the southern euro area, from Greece to France and Italy. Whereas the south demands “solidarity,” Germany fears a “transfer union,” in which northern money permanently subsidizes bad loans and fiscal licentiousness in the south. Where the south clamors for stimulus, Germany demands austerity. Where the south wants fiscal discretion, Germany insists on strict Ordoliberal rules.

01 p48 Southern Europe’s debt burden-01

These are not philosophies that can be reconciled in the long run, no matter how much Angela Merkel fudges in the short run. Instead, these cultural narratives force Europeans to metamorphose into the worst stereotypes others have of them. Germans become “more German,” Italians “more Italian.”

Thus Germans imagine southerners as dissolute and unreliable deadbeats. Der Spiegel ran a story titled “The moochers of Rome” this week. Southerners, meanwhile, resent the finger-pointing, rules-obsessed Germans who presume to lecture them. They pounce on any hint of hypocrisy, which Germany often provides by breaching EU rules.

This psychological chasm dooms the (southern-flavored) proposals by Emmanuel Macron for reforming the eurozone. The northern countries simply won’t stand for it. But the absence of such reforms also dooms the euro zone to another crisis, and then another, and another.

The time has come for supporters, not opponents, of the European idea to contemplate loosening, and even shrinking, the euro zone. Member countries that decide being in the euro club is against their economic interests or philosophies should have a way, temporarily or permanently, to return to a national currency without jeopardizing the entire euro zone. Meanwhile, European integration in other areas — security, foreign and defense policy, for example — should proceed irrespective of how the euro zone develops.

The idea of European integration was born in the rubble of World War II and has without any doubt grown into the greatest peace project in human history. No part of it, including the subordinate question of a common currency, must be allowed to sabotage that bigger idea, and to turn a peace project into a conflict machine.

To contact the author: kluth@handelsblatt.com

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