CNN: Europe, Is it time to break up this marriage?

12/9/2012:

By Erin Burnett, contributor

From up close, it looks like the 'poorer' nations could do just fine without a single currency.

FORTUNE -- This summer trips to Europe opened my eyes to something: There's a lack of passion in Europe for keeping the euro. Yes, the pain of a breakup would be severe. But many of the poorer southerners of Europe don't seem to feel that they need "Europe" anymore.

That, at least, is the way it appeared to me after spending time recently in Malta, Italy, Switzerland, Belgium -- and even the Berlin airport. These Europeans are proud of being Maltese and Sicilian. Proud of being citizens of greater Europe? Not so much.

Sure, the euro has helped the poorer Southern European nations. Take Sicily: When Brussels mandated that European Union countries get 20% of their power from green sources, entrepreneurs -- and the Mafia -- jumped at the opportunity. Press reports refer to the Sicilian Mafia as "lords of the wind" after bosses took a piece of the more than $5.6 billion worth of green-related subsidies that Brussels doles out (some of those subsidies may fall victim to the financial crisis). As a result of the temporary largesse, Sicily is Italy's top producer of wind power. Hey, where there's a subsidy, there's a taker.

Still, the people I crossed paths with didn't seem to think their new wind farms, visitor centers at historic sites, and motorways are annuities. They saw them more as a lottery: something nice to win once, but that's about it. The attitude was consistent: "Okay, this is over. Who cares? I'll go back to my life now, thanks." In the windswept hill town of Agira, Greece, one man said, "My family is my life -- that's it." In Palermo, the answer to my question "Would it be bad if the euro died?" from one thirtysomething man was even more direct: "No. Why would it be bad for us?" He asked it in a challenging way, making it clear, politely, that in his view I was biased even to ask the question.

I believe, as do the southerners, that the biggest beneficiaries of "Europe" as a statelike concept remain Germany and France. Without the euro, they're No. 4 and No. 5, respectively, on the list of the world's biggest economies. With it, they're No. 1 -- triple the size of China and a couple trillion dollars in GDP ahead of the U.S. The euro keeps Europe's most powerful economies relevant -- in league with the juggernauts.

So they need the much-maligned South -- including Italy (world economy rank: No. 8) and Spain (world economy rank: No. 12).

If the European Union broke up, the South would suffer from "Drachmageddon": That's how Pimco's Tony Crescenzi describes the "exceedingly" difficult process of paying back debts that used to be in euros in drachmas, liras, or pesetas.

But Europe's South is more economically resilient than you might think. Take Mazara del Vallo, home to Sicily's biggest fish market. Sicily's fishing fleet is Italy's biggest. The biggest export destination for Sicily? Not Euro-pals France or Germany, but Japan. If Italy left the euro, Japan would still buy Sicilian tuna if Sicilian tuna was the best. And closer to home, fishermen this summer were selling to men they knew, sealing the deal with a handshake. It's an economy that prides itself on being locally driven. They don't need the Germans for that.

Right now, Malta to me still feels more like Jerusalem or Tunis than Berlin. Parts of Sicily? More like North Africa than Milan. A tighter European Union, which is needed for the euro to survive, would slowly but inevitably erase many of those cultural differences. But there is another way. After all, 12 years ago there were 17 separate currencies. That worked fine. The financial pain of breaking up this European marriage would hurt. But when it comes to daily life, I'm betting that Europe can handle it and move on.

This story is from the September 24, 2012 issue of Fortune.



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