Venetians and Catalans have had enough. It’ll be the Germans next.
The crisis engulfing the European economy is beginning to manifest itself it in unexpected ways, not least the growing demands for independence in the regions of Southern Europe. Last week it was Catalonia. This week Venice. Where is it going to end?
On Saturday, several thousand Venetian separatists took gondolas (what else?) across the Grand Canal to demand the recreation of an independent Venetian state with its own language and Government.
Recent polls suggest that between 70 and 80% of Venetians back independence from Italy, in a region that proudly ruled itself for centuries until it was crushed by Napoleon in 1797. They had another brief flirtation with self-rule after the revolutions of 1848, before voting in a referendum in 1866 to join the newly created state has become modern-day Italy.
Might it really happen? Rome will, of course, resist vehemently, but in the current climate Venetian self-rule may be no less likely that independence for Catalonia or Scotland.
And as in Catalonia, much of it is being driven by a perception that they have been paying too much for too long to the central Government. Venice (the region rather than the city) is, like Catalonia, a huge net contributor to the national Treasury. That was just about acceptable in the good times. In the midst of austerity, it is becoming a powerful source of resentment.
All nation states, not just Italy, Spain or the UK, are "transfer unions" in which money is moved from richer regions to poorer. But if the concept of a transfer union is losing support in single nation states, what chance of a newly federalised European Union become a transfer union?
Because that is exactly what is being suggested as the way to get Southern Europe of its current malaise. Euro-bonds, Banking Union, a Federalised EU budget; all would require huge transfers of money from Northern Europe (OK, from Germany) to the Club Med countries on a more or less permanent basis.
Which brings us to Germany’s Chancellor Angela Merkel and her visit to Athens tomorrow. Somehow she has to square the circle of keeping Greece in the euro - which she now really wants to do - while not having to ask her voters/taxpayers to give the Greeks any more money.
She has been convinced that letting Greece go would bring the whole temple crashing down around her, but at the same time she knows that asking the Bundestag to authorise a THIRD bailout for Greece would be political suicide, with a general election to be held next year. It’s quite a dilemma.
The problem is that the sums just don’t add up. Sure, they can (and will) force the Greeks to cut yet more Government spending, but every time they do that the problem gets worse.
By way of illustration, back in 2010 the International Monetary Fund forecast that by 2012 the Greek economy would shrink by 1.5%, and by now be growing again. In fact it has shrunk by 14%, and will contract again by another 5% or so next year.
It is a well known definition of madness to keep doing the same thing in the hope of different results.
But what else can they do? Write off yet more of Greece’s debts? The trouble is that the only people that still own significant numbers of Greek bonds (debt) are other Governments and the European Central Bank.
If a Government writes off debt, it must admit to its taxpayers that the money’s gone - the taxes they worked so hard to pay are now in Greek pockets. If the ECB were to say to the Greeks, "Forget it, we’ll pick up the tab", that would be in direct contravention of the Maastricht Treaty. So there there really is no easy way out, beyond somehow getting the Greeks to turn their economy around themselves.
This is likely to be Merkel’s message in Athens. "We are with you. We may have flirted over the summer with letting you go, but that’s in the past. But there is no alternative to pressing on with a new round of cuts, while enacting reforms and paying the taxes you owe".
It’s not going to make her popular, but maybe that was always too much to hope for.