Pride and prejudice at heart of German dilemma

As the Bavarian march struck up, Hilde Kutritz clasped her giant tankard of beer and threw a hard stare towards the man climbing on to the stage. Along with 2,000 others, Mrs Kutritz had come to hear for herself what Karl-Heinz Schneider, candidate to be mayor, would do for Augsburg, 30 miles west of the Bavarian capital, Munich.

"We want someone who understands our problems - who knows us, who we know and can trust," she said. "We are fed up with the politicians far away, they cannot help."

Around her, the crowd was cheering. Mr Schneider was talking of the town's loss of jobs, of immigration and new cheap labour coming into Germany from Eastern Europe.

He spoke of the need to build new industry and roads. The problems he raised are problems facing Europeans everywhere. But not once did Mr Schneider mention "Europe". Europe is not a vote-winner in Bavaria.

Germany, Bavarians complain, is paying for the rest of Europe. And they fear plans for a single currency. "What will happen to the deutschmark? What about my savings?" asked an elderly woman. "Brussels can do nothing for ordinary people," said Alfred Ebert, a retired textile worker. "We have lost thousands of jobs in Augsburg."

"We have to fight for Bavaria. We are a kingdom. King Ludwig II is here in our hearts, " declared the manager of the bar, pointing to a badge of his hero- King pinned to his lederhosen.

Such displays of nationalist sentiment, combined with open scepticism about Europe, are a recent phenomenon in Germany. Germans have always believed that their post- war future as Europe's biggest power, living at peace with its neighbours, could only be secured as part of political and economic union. If the fears pronounced in an Augsburg beer-tent suggest that the pro-European consensus is collapsing, then Europe's leaders should take note.

It is no surprise that Germany's suspicions of Europe should erupt most virulently in Bavaria. Known as the Texas of Germany, the "free state" of Bavaria, twice the size of Belgium, has always defended its independence, and boasts that it existed as an entity well before France or Germany.

After the Second World War the region was still largely agrarian, but fought hard to build up its prosperity as a centre of the motor industry and high-tech engineering. These days, the neon signs for BMW, Siemens and Mercedes are as much a part of Munich's skyline as the onion domes and spires.

Now, however, as elsewhere in Germany, unemployment is rising, reaching 15 per cent in certain pockets. Companies are relocating to escape the effects of the strong mark and to take advantage of cheap labour.

Siemens has cut 20,000 jobs in the last two years, launching 30 joint ventures in China, and new plants in Eastern Europe. BMW has opened a plant in South Carolina, as well as plants in eastern Europe, and it has plans for a factory in Vietnam.

The people feel at the mercy of decision-makers far away, whether they be directors of multi-national companies, bureaucrats in Brussels, or even the government in Bonn.

There is little doubt that anxiety about the single currency is the prime source of concern. Bavarians are not so much "anti-European" as fearful of where Europe is leading. Few have anything good to say about sinking a strong mark into an uncertain monetary union.

With its long eastern border, Bavaria always saw the political value of European integration, as a safeguard against Communism. Yet they are also swift to say that, if Germany were really to face a new military threat from the east, the country would look to the US - not to Europe - for protection.

In principle, Bavaria supports the EU's plans to accept new members among its Eastern European neighbours as a means of furthering stability. At the same time, however, there is deep anxiety about economic competition. "My farmers are already not happy," says Mr Bocklet, citing a 20-per- cent loss of income during last year's devaluation of the Italian lire. "Poland already produces as many potatoes as the EU put together and at half the cost."

Porcelain and textile factories in the region have been put out of business by competitors to the east, and there are constant fears about immigration.

Bavaria has taken in nearly half the 300,000 refugees who fled to Germany from the former Yugoslavia. "Immigration. Foreign policy. These are areas where the EU should act. But on these issues, it does nothing," says Heinz Mittendorfer at the regional council.

For ordinary Bavarians, the frustrations point to the need to snatch back power for their regions. All the German states already insist on scrutinising EU legislation, each having an office in Brussels. But for Bavaria this is no longer good enough. There must be "bottom-up" federalism, they say.

The state has even put its own paper to the Inter-Governmental Conference starting in Turin next week, calling for new limits on Brussels' powers under the "subsidiarity" rules.

"You must understand we are not nationalistic," says Mr Bocklet. "That is a very bad word here. But we are close to our culture to our Bavarian roots. We do not need a political union by integration - but by common interest." On that point, even John Major, who proposes a "partnership of nations", might agree.