ROME, July 18 (UPI) -- As the diplomatic row between Italy and Germany continues to simmer, it may have an unexpected casualty: the Italian economy.
The problems between the two countries started earlier this month, when controversial Italian premier Silvio Berlusconi remarked that a German member of the European parliament who heckled in relation to the prime minister's ongoing legal problems was fit to play the role of a Nazi camp leader in a film being made in Italy about World War II concentration camps.
Since then, the problem has mushroomed. German Chancellor Gerhard Schröder demanded an apology and got one -- until Berlusconi said he stood by his comments a few days later. German leaders then said the remarks proved that Italian government leaders were racist, and an Italian junior minister responded by penning an newspaper column that referred to Germans as "hyper-nationalistic blonds" who "loudly invaded Italian beaches ... (and) held burping contests."
Unamused, Schröder announced that he would cancel his planned August vacation to Italy, and tour companies began reporting that thousands of other Germans were following suit.
Now experts are saying that lower-than-expected levels of German visitors could be enough to nudge the already-stumbling Italian economy into recession.
"German tourists are probably the most important group of visitors to Italy, and tourism has become Italy's largest industry," Niccola Bodrogi, an economist with Roma Tre University specializing in tourism-related issues, told United Press International. "Will this make an impact? Of course! How can it not make an impact?"
According to government tourism figures, around 10 million of the 41 million visitors to Italy last year carried a German passport, accounting for around 40 percent of all Italian hotel bookings and around 30 percent of all tourism-related car rentals. All told, German tourists injected around $9.6 billion into the Italian economy in 2002.
"By my calculations, if even a fifth of the people who would have come otherwise stay home or go elsewhere, then that could be enough to push the economy into recession," Bodrogi said. "August is the big tourism month. August will tell the tale."
To be sure, the Italian economy was already hurting before the insults starting flying. A worldwide economic slump was already hurting the Italian tourism and fashion sectors, and the well-documented problems from the largest Italian employer, carmaker and industrial titan Fiat, have also slowed economic growth.
To reflect those problems, government year-on-year growth targets for 2003 were lowered from 2.3 percent in April to 1.1 percent in May to 0.8 percent in early July, before the fallout from the diplomatic name-calling between Germany and Italy was apparent. If that holds, it likely means zero growth over the second half of the year, raising the prospect of negative growth if large numbers of German tourists stay away.
That seems to be developing into less of an "if" -- at least in the short-term. Reisen, a Rome-based travel agency specializing in visitors from Germany, Austria and Switzerland told UPI that business was down by around a quarter compared to the same period last year. Though some of that is probably due to the weak economy in the German-speaking countries, company representative Angela Winkler said that the decline was due at least in part to cancellations, particularly from German clients. Similarly, Volare, a low-cost airline specializing in flights between Italy and Germany has reported lower-than-expected passenger levels.
It's enough for leaders of Italy's tourism sector to call for a truce.
"This is all getting out of control," Bernabo Bocca, president of the Italian national hotel association, told UPI. "Germans are our honored guests, and it would be a serious loss if they decided to boycott Italy because of a few reckless comments."
There are some signs of hope. German tourists in Rome in recent days say they discussed the possibility of changing plans in the wake of the insults between the two countries but in the end they decided to stick with their original plans.
"We know that those comments are from a few people, but they don't reflect the views of Italians in general," Hans Günter, part of a 12-member German tour group at the church containing the popular Bocca della Veritá monument in Rome. "We come to Italy every two years and we still love it."
That view apparently goes very high up. Even though his boss, Schröder, cancelled his plans to visit Italy this year, Foreign Minister Joschka Fischer -- probably the second most visible member of the German government -- told UPI in Washington that he still planned to come to Italy for his vacation plans.
