Pulling Plug On Greece Sells In German Town Opposing Merkel Plan

Bloomberg

By Leon Mangasarian - Jun 12, 2012 1:01 AM GMT+0300

In the German town of Hassloch, sandwiched between vineyards and farms growing lettuce and asparagus, people have had enough of the debt crisis.

“We can’t go on funding the Greeks, they’re beyond help,” Angelika Hoerner, 50, said as she served customers from behind a glass counter of her family’s butcher shop in the town of 21,000 in western Rhineland-Palatinate state. “It’s better to have an end with horror than horror without an end.”

While nationwide polls show Germans are swinging against helping their poorer southern euro partner, opinions in Hassloch underscore a warning for Chancellor Angela Merkel as Greeks prepare for a second shot at electing a government on June 17.

The town has been used since 1985 by market-research company GfK SE as a miniature Germany to test products ranging from Unilever NV (UNA)’s Dove soap to Ferrero Spa Rondnoir chocolates before they are rolled out across the country. About 3,400 households have a GfK card that residents show at stores to register their purchases.

“Nothing that succeeds in Hassloch has flopped in the rest of Germany,” Bettina Bartholomeyzik, 52, GfK’s Hassloch manager, said in an interview. “It’s an ideal test site because most Germans don’t live in big cities.”

Political Mood

The demographics of Hassloch, a town of well-kept single- family homes where people leave bicycles unlocked, are in Germany what Peoria, Illinois, is for U.S. politicians and marketing executives who ask whether their policies, products and movies will “play in Peoria?”

The mood in Hassloch also matters because it’s in an election district that voted for the winning chancellor’s party in six of the past eight German elections, including the backing of Merkel’s Christian Democratic Union in 2005 and 2009. Germany holds elections next year.

The “nein” to giving more aid to Greece comes as Merkel finds herself increasingly isolated in Europe over her demands for austerity and her rejection of euro-region bonds. As Greece teeters on the verge of insolvency and Spain and Italy move to the frontline of the crisis, Merkel hasn’t ruled out a limited euro-region debt sharing under a European redemption fund.

On June 9, Spain became the fourth euro member to seek a bailout since the start of the debt crisis more than two years ago with a request for as much as 100 billion euros ($125 billion) to rescue its banks.

Greek Exit

National polls show increasing German opposition to keeping Greece in the euro. Sixty percent of Germans want Greece to exit the single currency, up from 49 percent in November, a ZDF television survey on May 25 showed. The poll showed 79 percent opposed to euro bonds that would reduce Greek borrowing costs. Merkel said June 2 that she would “under no circumstances” agree to Germany-backed euro bonds.

Hassloch Mayor Hans-Ulrich Ihlenfeld said his constituents “just won’t accept” giving more money to Greece.

Germany is the biggest contributor to the euro-region bailouts and its guarantee commitments to the European Financial Stability Facility amount to about 211 billion euros, or 27 percent of the total.

“It would be better if Greece left the euro,” Ihlenfeld, 49, a member of Merkel’s CDU party, said in an interview in the town hall across from an 18th-century church topped with a golden weathervane. “Their structures are too dilapidated and their public administration is too corrupt.”

War Weary

Residents, including Hoerner in the butcher shop, are angry about how Germany is depicted as still having to pay for the Nazis actions in World War II, while others are concerned about what happens to the money once it arrives in Athens.

“These terrible things happened 70 years ago,” she said. “At some point, it’s over and you can’t keep holding the next generations responsible.”

Of 20 people interviewed in Hassloch from May 30 to June 1 only one said European Union solidarity meant it was worth fighting to keep Greece in the euro.

Most people believe the euro would survive beyond the departure of Greece, whose economy is shrinking for a fifth straight year and accounts for less than 2.5 percent of the 17- nation currency group’s gross domestic product. Spain and Italy make up a combined 29 percent of the region’s output, according to data from the European Commission.

Helping Spain

“Greece’s economy is only a tiny part of the euro area,” Cristina Amarghioalie, 28, an employee at the “Sun for Fun” tanning center in Hassloch, said in an interview. “I don’t think Greece leaving would destroy the euro. Greece has been helped enough. Spain and Italy are more important.”

Lars Engisch, an 18-year-old 11th grade student, agreed.

“The euro won’t break up if Greece leaves,” he said as he delivered newspapers. “We don’t even know what happens to money that already goes to Greece.”

Bernd Ruckdeschel, 74, a retired BASF SE employee who now heads Hassloch’s local museum, said Greek “corruption and non- payment of taxes” has caused the crisis. “Germany shouldn’t do anything more for Greece. Merkel is doing the right thing.”

Greece won a second bailout this year from the EU and International Monetary Fund taking the total rescue package to 240 billion euros since 2010. Political parties in Greece are now split between sticking to terms of the loans by reducing spending, or reneging on the agreement while keeping the euro.

Austerity Debate

Some in Hassloch have sympathy with that argument. Katrin Wagner, 30, public relations head of the town’s Holiday Park Plopsa, which attracts more than 500,000 visitors a year to rides such as the “Expedition GeForce” roller-coaster, said that while she’s opposed to euro bonds she worries that too much emphasis on austerity will harm the economy.

“We shouldn’t let the euro break up,” she said as riders shrieked in the background. “If Greece goes, where does it stop? Spain and Portugal are at the tipping point.”

Ihlenfeld, Hassloch’s mayor, said getting Greece out of the euro might give Merkel leeway to offer more German assistance to other struggling euro bloc members.

There would be “more understanding for helping Spain and Portugal if Greece left,” he said.

Hassloch, surrounded by fields with cackling pheasants and a pine and oak forest with cuckoos, built its economy on farming and many houses have a small barn in the backyard.

As many as 3,000 people commute from Hassloch to jobs, mainly at BASF (BAS), the world’s biggest chemical company, in Ludwigshafen almost 16 miles (25 kilometers) away, Ihlenfeld said. The town’s jobless rate stands at about 6 percent, below the national average of 6.7 percent, the lowest in two decades.

Germany’s Mirror

Civic duty is taken seriously in Hassloch where residents sweep the streets in front of their homes, using sharp-pronged hoes to remove moss and weeds from between the sidewalk cracks. The public toilet in the town center was immaculately clean with glistening steel fittings.

“Hassloch reflects Germany because it’s rural yet close enough to big cities to combine an urban lifestyle,” Julia Peschl, 28, a research consultant at GfK headquarters in Nuremberg, said by telephone. “The per capita purchasing power of its residents is almost exactly the German average.”

Residents are worried about inflation and the value of the euro, which has fallen 4 percent against the dollar this year. Locals are buying property or building more to have something to show for their euros, Ihlenfeld said.

Lucky Farmers

Friedrich Lichtenscheid, a retiree, said the town’s farmers are the lucky ones because they own land.

“That’s better than holding euros,” Lichtenscheid said, standing in the courtyard of a half-timbered mill from 1765 that has been converted into a hotel and restaurant. He was celebrating his 85th birthday. “I would have preferred to keep the D-mark,” he said, referring to the deutsche mark.

The community had a balanced budget until 2008 and now has a 2.8 million-euro deficit. The mayor wants to cut spending by 500,000 euros next year by trimming the town’s shuttle taxi service and replacing some paid positions with volunteers.

“Everybody has to save money,” Ihlenfeld said in the meeting room of his town hall. “Not just Greece.”

To contact the reporter on this story: Leon Mangasarian in Hassloch, Germany, at lmangasarian@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net