Debt crisis can break up EU: Mario Monti

Berlin: Italy’s prime minister has warned that the eurozone’s sprawling debt crisis has created resentment amid the bloc’s nations, which could ultimately trigger a breakup of the wider European Union.

Mario Monti told German news magazine Der Spiegel in an interview published Sunday that eurozone tensions over the past few years “bear the traits of a psychological dissolution of Europe,” adding that Europe “must work hard to contain it.”

[caption id=“attachment_406840” align=“alignleft” width=“380”]  Mario Monti. Agencies[/caption]

The debt crisis started in Greece more than two years ago, and soon engulfed Ireland and Portugal, with all three eventually needing to be bailed out. Spain recently applied for an aid package to rescue its troubled banks, and Italy, the eurozone’s third-largest economy, has also been hit hard by rising borrowing costs on its government debt.

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Asked about a strengthening in resentment between the allegedly profligate southern European nations and the bloc’s thrifty northern members, Monti told Der Spiegel “it is very alarming, and we have to fight against it.”

“Yes, there is a front line in this area between north and south, there are reciprocal prejudices,” he said according to the interview’s German translation.

An Italian newspaper this week run a front page decrying alleged German domination of Europe, showing an image of Chancellor Angela Merkel - often criticized for insisting on austerity measures and fiscal discipline in the crisis-hit nations - alongside the headline “Fourth Reich,” alluding to a new generation of Adolf Hitler’s Nazi regime.

German media, in turn, have often criticized Greece and other southern nations, accusing them of failing to live up to their financial commitments to the 17-nation Eurozone. Sunday’s edition of Germany’s top news website Spiegel looked at Italy’s changing view of Germany, and how the eurozone crisis has strained friendly ties.

Monti insisted the 17-nation currency’s disintegration would “destroy the founding of the European project.”

“Therefore it is the prime task of the nations’ leaders to explain to their citizens Europe’s real situation and not give in to old prejudices,” he was quoted as saying.

Monti, a former EU commissioner who now leads a government of technocrats, is lobbying for bolder political steps and help from the European Central Bank to counter the crisis, but Germany and others reject some of the proposed rescue measures.

He is set to meet Merkel, the leader of Europe’s biggest economy, later this month in Berlin.

Meanwhile, Romano Prodi, a former Italian prime minister and president of the EU Commission, urged Germany to show “true leadership” in steering the continent through the crisis, saying the bloc’s biggest economy has the duty “to lead Europe toward a better future.”

According to text excerpts of an op-ed in Monday’s edition of Germany’s top-selling tabloid Bild, Prodi warned that “the confrontational debate between those receiving and those giving has already become common and destroys the founding walls of the European idea.”

If Germany fails to lead through the crisis, it “would be the political end, for Europe and for Germany,” he insisted, urging Berlin to present a “clear action plan to achieve a democratic, federally structured Europe.”

AP