Last summer, Mario Draghi, the president of the European Central Bank, declared that he would do "whatever it takes" to preserve the euro. We may soon find out just how much his word is worth.

On the surface, things have gone well since Draghi's speech at the end of July. Sovereign borrowing costs in Italy and Spain have plunged across the curve. After fleeing for more than a year, depositors have started returning to Spain, albeit tepidly. The IBEX 35 Index has soared by 44 percent, and Italy's benchmark index, the FTSE MIB, has gained more than 30 percent.

Yet none of this has translated into an economic recovery. Joblessness in both countries continues to climb as national incomes shrink at an accelerating pace. One explanation could be that borrowing costs are still extremely high relative to those in Germany and other countries in the euro area's core.


Now, after years of pain, a popular reaction may be under way. Italian voters ejected Mario Monti, the "technocratic" prime minister undemocratically imposed by Frankfurt. Spanish citizens will have to wait until the general elections in January 2016 before they can express their displeasure at the ballot box, although Catalan separatists won a significant victory in November.

Draghi's policies, which failed to help the people of southern Europe, have also proven deeply unpopular in the single currency's northern tier. Jens Weidmann, the president of Germany's Bundesbank, has suggested that the ECB is following a strategy devised by Mephistopheles. Dutch taxpayers, who face high taxes and a deflating housing bubble, aren't keen on "bailing out" Greek and Italian governments they view as corrupt.

Draghi and the single currency have survived these political challenges so far. But a new threat in Frankfurt may prove more than a match for the wily Italian: the Alternative for Germany, or AfD. Founded by a group of businessmen, economists, politicians and journalists, this political party has a simple platform. They argue that the euro has subverted democracy and undermined the rule of law, particularly the Maastricht Treaty's provision against bailouts.

They recommend breaking the euro area into "smaller and more stable currency unions." The AfD's innovation is that troubled countries would stay on the euro. (Perhaps the ECB could move from Frankfurt to Milan.) This would help prevent destabilizing bank runs and the thorny legal problems associated with redenominating debt. Meanwhile, Greater Germany could establish a new currency bloc based on a revived deutsche mark.

It would be easy to dismiss the potential of the AfD. It has little money or organization, and its most prominent founder, economics professor Bernd Lucke, doesn't exactly have the charisma of a Beppe Grillo. But a recent poll conducted on behalf of the German newsmagazine Focus found that 26 percent of Germans would be willing to vote for an anti-euro party. Moreover, support could come from across the German political spectrum, not just the populist right. Focus reports that 27 percent of Greens would be willing to vote for an anti-euro party, as would 15 percent of center-left Social Democrats.

Germany holds national elections at the end of September. This gives Draghi six months to pay as much attention to his critics in the north as those in the south.

(Matthew C. Klein is a contributor to the Ticker. Follow him on Twitter.)