Brussels, 27/07/2012 (Agence Europe) - The efforts that the European Union demands of its member states in difficulty are in turn passed on to the municipalities and regions, which are also financially fragile. The financial crisis is said to be not only causing tension between member states but also tension within the states themselves, the US publisher of geopolitical analysis Stratfor concludes in a study. The report published on Thursday 26 July studies in detail how relations between national governments and their regions is like a “cat chewing its own tail”. It warns against tension between the two levels of power saying “this political tension is even more dangerous than the crisis' economic effects because it threatens to destroy the bonds that hold a country together”. “First, high debt levels in some regions are undermining central governments' abilities to implement austerity measures; and second, the crisis has increased tensions between the more developed and the poorest regions within countries”, the report summary states, based on recent regional situations in Italy and Spain especially (see EUROPE 10664 and 10663).
International versus intra-national. The analysis is based on the principle that, although the crisis had initially caused friction at supranational and international level, this is now extending to encompass the intra-national level. “Many European countries are facing a similar problem: highly indebted regions that cannot meet their cost-reduction targets are asking their central governments for more time and more financial assistance - which are exactly what the central governments are asking of Brussels”, Stratfor states in its analysis. Such a situation occurs not only with a rescue fund for Spain's autonomous regions or a plan for financial recovery for Sicily, in Italy, but also in Portugal where a credit line was created for municipalities this spring, as debts amounted to 7% of Portuguese GDP.
Solidarity shaken. This risk of regional failure is detrimental for the solidarity between richer and poorer regions. Political tension could, in time, destroy a country's unity, Stratfor continues, going on to add: “The lack of an effective system to transfer funds between countries is a major weakness in the European Union. If countries reproduce this failure internally, it could seriously threaten the political stability of the eurozone member states”. (MD/transl.jl)