THE “peripheral” economies of the European Union are all in trouble, it is said. So Europe's “core” economies, especially in the euro-area heartland, must decide how to help colleagues teetering on the edge of both bankruptcy and the map—without wrecking the budget discipline needed to make the euro work. This week's summit of EU leaders, which began after The Economist went to press, was due to be dominated by this debate, pitting Germany (the core of the core) against governments that believe a credible plan must be drawn up to help far-flung, spendthrift members of the club. The list starts with Greece. But there are worries ahead about Portugal, Spain and even Italy.

Talk of an ailing periphery has become so common in the EU that it takes a squint at a map to realise how odd (and revealing) it is. An outside observer might conclude that in the EU, a country's economic might (and its credit rating) correlates with its distance from Brussels and Frankfurt. Yet this is not so. Finland is a euro-area country a long way from both cities that can raise ten-year government debt more cheaply than such core countries as France and Belgium.

In practice, talk of peripheral Europe is, deep down, a way of saying something quite different. When journalists, officials and politicians first began to use the phrase, it was shorthand for southern countries with worrying public finances, plus Ireland, also on the edge of the European map. Recently, though, Ireland has become a pin-up country, praised by senior officials and politicians for a stoical embrace of austerity after its property bubble burst. “Peripheral” is now no longer a shorthand term, but a euphemism for “southern”.

North-south divisions are hardly new in the EU. When the euro was planned in the 1990s many German politicians wanted a currency zone comprising only Germany, the Benelux countries and France. France wanted a bigger group, fearing that southern countries outside would devalue, as both Italy and Spain did in 1992-93, making French exports less competitive. But the Germans suspected France's southern push had other goals: a monetary union likelier to tolerate both greater fiscal laxity and more political meddling.

In truth, Europe's south is not a monolithic block. Charlemagne recently went to Portugal. Although it is under less pressure than Greece, Portugal's credit rating was downgraded this week. It has a big budget deficit and deep structural problems (more than half of Portuguese adults left school at the minimum leaving age). Portugal suffered a shock when ex-communist countries joined the EU and lured multinational firms that liked cheap labour. Against that, Portugal has done more to trim its public sector than Greece and Spain and more to reform its pensions than Italy, and recently froze welfare spending until 2013.

In Lisbon memories are fresh of how northerners were “surprised” when Spain, Italy and Portugal met entry conditions for the single currency. Antonio Vitorino, a minister at the time, recalls a Dutch colleague frostily saying: “well, now you've qualified for the euro, you don't need cohesion funds [ie, EU regional help] any more.” Yet Portugal did not do its homework to prepare for euro entry, says Mr Vitorino. After qualifying for low German interest rates overnight, citizens entered a spiral of private debt. Nor did Portugal reform its labour markets. “We all knew from 1999 that there could be asymmetric shocks in the euro zone,” says Mr Vitorino, later an EU justice commissioner. But Germany “refused to discuss” the strains that might be caused by differing levels of economic development.

Today's north-south divisions are sharper, more populist, and carry greater risks. It is no political mystery why the German chancellor, Angela Merkel, has taken such a hard line on a Greek bail-out and hinted that the worst-behaved countries should face expulsion from the euro. German voters are strongly opposed to paying for Greece to avoid default, and Germany's constitution also sets legal hurdles to any bail-out that might threaten the euro's stability.

German virtue against Greek vice

In politics arguments have special force when they are easy to grasp and reflect long-held prejudices. The German debate on Greece has been shaped by the fact that some Greeks can retire ten years earlier than Germans, and by the statistical fraud carried out by previous Greek governments to disguise their budget deficit. From this, it is but a short step to German headlines calling Greeks “swindlers in the euro zone” (triggering Greek headlines about Nazi crimes and gold-pinching in the second world war).

Such name-calling ignores the human complexity of Europe. Greece has been badly governed for years, with successive governments handing out jobs for life, early retirement and lucrative contracts. But such clientelism came about partly because the country was harshly ruled for many years. Socialist rulers expanded the public sector in the 1980s partly to bring leftist citizens back into the mainstream after decades of exclusion and repression by the right. Jobs for life were granted partly to stop new governments sacking their predecessor's favourites.

Such history matters. From the north, southerners handed jobs for life by political patrons look privileged. From the south, those public-sector workers feel more like victims, whose low-paid jobs are just compensation for past ills. (Portugal's public sector grew partly to absorb 800,000 citizens who arrived after its colonial empire collapsed in 1974.)

Europe is going to need more empathy if the euro is to hold together. The hard work of returning to true convergence will be impossible without voters' consent. As Europe faces that task, no economy, north or south, can be considered peripheral.





Economist.com/blogs/charlemagne