Reputation Revenge: Spain Demands Compensation for German E.coli Accusation

There was a time when 'demands for satisfaction' meant a duel to the death - or worse. Anyone remember the War for Jenkins Ear (Spain vs UK, 1739-1748)? No, well it was real; people died and territory changed hands. Look it up.

This dispute, against the backdrop of rising European tensions over debt and the euro, underscores the importance of reputation in a global economy. Yes, Spain has suffered some lost revenue due to what now appear to have been hasty and inaccurate accusations about the quality of its vegetables. The larger issue is about the inference that Spain is not an elite, technologically sophisticated nation because it permitted infected produce to enter the global value chain.

Their concern is real. It is one thing to accuse China of producing faulty or unsafe products. Given their size and economic importance, they can afford to respond like a schoolyard bully, by saying "Yeah? Whaddya gonna do about it?" Spain does not have that luxury. Spanish authorities fear the implication is that this casts aspersions on their other products, their people, their government securities and their management capabilities. One assumes that particular argument this will be settled peaceably, but touchiness about national reputation is no laughing matter. JL

Victor Mallet and Quentin Peel report in the Financial Times:

"Spain has demanded compensation for unfounded and financially damaging accusations that its cucumbers were the source of a deadly bacterial infection that has killed 16 people in Germany and Sweden.

As anger over the outbreak deepened, Spanish ministers on Wednesday took turns to protest against apparently hasty conclusions reached by German officials and the European Union.

Alfredo Pérez Rubalcaba, Spanish deputy prime minister and interior minister, said Spain would seek compensation and might take action against the authorities in Hamburg who initially blamed Spain’s cucumber producers as the source of the deadly strain of the bacterium.
The toll from Germany’s lethal E.coli outbreak continued to rise, with hundreds of new cases reported, while laboratories admitted they had failed to identify the source of infection.

The Robert Koch Institute in Berlin, the government’s disease control agency, reported 365 new cases of E.coli infections, of which a quarter involved the dangerous haemolytic-uremic syndrome.

Although no official numbers have been calculated, Spanish producers’ groups say 150,000 tonnes of produce exported weekly is affected and they fear that they could lose €200m ($288m) a week.

The Netherlands, another exporter, has also been affected. Half its crop is exported to Germany, and the industry has lost almost all its revenues from cucumbers since the infection broke out.

That is about €9m a week, according to the greenhouse agriculture association Productschap Tuinbouw. Total losses for fruit and vegetables were estimated at €40m a week, as German consumers avoid buying raw produce.