Madrid view: Bad blood

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The expression bad blood denotes the unpleasant turn taken in a relationship when one party is perceived to be hurting the other. The result is animosity, and an inability to communicate and interact freely. Think of Angela Merkel characterized as a Nazi in Athens, or branded with swastikas in Lisbon. Or think of the cover of Der Spiegel, featuring a quaint Southern European peasant on a donkey loaded with euros, under the EU umbrella, and the legend “The lie of poverty: how the crisis countries hide their wealth.”

And never forget that, though the center left has assumed power in Italy, some 55 percent of Italians voted for Beppe Grillo or Silvio Berlusconi, whose electoral speeches were furiously anti-German. And the French Socialist Party’s internal memo complaining of how Germany’s “selfish intransigence” is dragging Europe down: we are talking not just about placards in street demos, but about the spread of resentment in the corridors of power. While Hollande sinks in the opinion polls, Merkel is headed for re-election. In Spain, too, as the German ambassador’s recent article in this paper showed, Hispano-German relations - which in the absence of any recent negative or bilateral conflict have always been among the best in the EU - have plunged into an abyss of distrust, and a crossfire of negative perceptions. Bad blood indeed.

These phenomena are not just to be dismissed as negative, anecdotal noise; they are symptoms of a huge paradox. Since the crisis began, Germany has managed to impose all of its views, and to implement solutions at the rate it sees fit. Merkel cannot be accused of dishonesty just for trying to apply to Europe what has worked in Germany. Both the diagnosis of the crisis, focused on excessive debt, lack of competititiveness and political and fiscal laxity in the periphery, and the solutions, articulated around a combination of budgetary austerity and structural reforms to improve competitiveness, mimic the experience of Germany in the past decade. If it worked for us, think the Germans, why shouldn’t it work for others?

Given Germany’s primacy, there is only one recipe on the table: the German one. A possible federalist alternative, based on rapid political and economic integration around a banking union, a beefed-up European budget and a mutualization of debt is no longer on the menu. The Spanish government’s despondency in the face of rising unemployment, and its unconvincing and humiliating demand for patience, have to do with the realization that German recipe may succeed and lift us out of the crisis, or fail and lead us to a collapse of the euro and of Southern European economies - but it sees no alternative.

If the euro survives, it will do so with the lifesaver designed by Germany, comprising balanced budgets, wage repression, and very strict vigilance over the euro-zone countries. The asymmetry is such that while France, Italy and Spain keep plunging, Germany is not only imposing its economic model, but doing so without losing sovereignty. On the contrary, its democracy and parliament are now stronger, its Constitutional Court has its way on EU integration, and Merkel is the only leader in the euro zone who will be re-elected.

All this leads to a dead end, there being no political project to give this EU a meaning. After partly overcoming the distrust of the markets, what is now spreading is political distrust. Every day that goes by, Berlin’s position becomes more unsustainable. We are seeing the emergence of a political crisis whose axis is polarization and resentment at the economic Germanization of Europe. The German EU is succeeding economically but failing politically, and we don’t really know where it will take us. So uncertainty is back in the picture.

The article first appeared in El Pais

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