#1 COMPARING EUROPES

Hi reader,

today I want to talk to you about Italy, the European Union and choices. And the topic of the relationship between Italy and the EU is something extremely complex, influenced by a series of factors hard to quantify and intertwined with the problematic history of both Italy and the relations with its neighbours. Europe is founded and sits on the delicate balance between the regional and the international, between nationalism and globalization, between the irreducible diversity of peoples and customs (and the festering of hostilities and feuds among European peoples) and the historical necessity to set aside our differences and look at what we have in common, in order not to be devoured by the other powers on the international stage.

However, it would be too much to put all of this in an article. Because of that, today I want to focus on the analysis of something specific but of great relevance to understand where the European integration process is taking us and where we want it to take us: the analysis of the main difference between the European answer to the 2008 financial crisis and that on the ongoing Covid-19 crisis. Why this? Because it is not only the difference between austerity and expansionary policies, but also and above all between a mercantile vision of Europe, where every state (and every citizen) thinks mainly about its personal interest and about how to gain as much as possible as long as the boat is afloat, and a real European community, really integrated and able to cooperate for the collective welfare because able to work as a single entity.

To understand the situation in Italy and its relationship with Europe in 2008, we can observe the Italian public debt (the highest among European countries and famous Italian Achilles’ heel): if we look at the statistical data on public debt growth (in relative terms to GDP), using Enrico Letta’s words, it is “manageable until the 70s”. In the following two decades, however, the Italian public debt explodes: in 20 years it goes from around 40% to about 120% of GDP. This happens primarily because Italian politics had completely lost the thread of seriousness and it was thought that every problem of the nation could be solved by liquidity injections and aid measures without a systematic project behind them, thus irresponsibly going into debt on the shoulders of an economic growth which was already levelling off in the 70s and which has never returned.

At the beginning of the 90s, however, something happens on the European front: the 1991-94 period is not only the years of Tangentopoli and the end of the First Italian Republic, but also a key moment in the European history, as the Treaty of Maastricht is approved and enters into force. This is perhaps the most important treaty of the European Union, because it shapes the path of a stronger integration in the short run, with the introduction of the single currency, and in the long run, with the project of a single European foreign and military policy. Italy finds itself accepting the Maastricht criteria on deficit, debt, and inflation not only for the euro opportunity, but also and above all thinking that it is the only way to stop making debt in an inconsiderate manner (as rules forced us to be more rigorous). Therefore, Italy ratifies the treaty and begins a process which stops the debt growth mainly through policies of liberalization and privatization. The public debt slowly starts diminishing, so much that when the second Prodi government comes to an end in mid-2008 (a few weeks later the financial crisis would break out) a debt of 103% is presented, with a growth rate lower than in the past but still high if seen with today’s eyes. Italy shows that a debt containment is possible and becomes a “virtuous” country that keeps the public deficit below 3%. This improvement will then end with the crisis, which will make the growth rate plunge and thus the public debt soar, arriving at the pre-Covid 130% (+30% in a decade).

All this process is linked with the development of the Italian endorsement of Europe: until the beginning of the 90s, Italy is the most pro-European country of the Union in the polls, and in 1993 the consultative referendum (with very large participation) shows 90% of voters in favour of a stronger integration. However, at that very moment a slow but inexorable process of deterioration of Italians’ passion for Europe starts, bottoming out in March 2020 with those opposing Europe more numerous than those endorsing it in the polls. This happens because until the 90s Europe was a dream, a myth, the Europe of opportunities which could only improve people’s lives, while after the entering into force of the Maastricht Treaty (wanted, as we have said, by the same Italian political class to contain the public debt), the European dream has also meant renunciations and sacrifices. But those alone cannot explain the endorsement decline, constant also in the face of the undeniable opportunities that Europe continued and continues to offer. The real cause has been a widespread attitude in the Italian ruling class that, not to result unpopular, has always blamed the EU for everything, indicating it as an entity which requires unjustified sacrifices, and has never confessed to the Italian population that the appalling debt of the previous decades was to be contained and that the unpopular policies adopted to that purpose were not for the sake of the European tyranny but for that of the country and of future generations. All the sacrifices and the constant cuts have been described as European demands and diktats, and this has clearly destroyed the Italian endorsement for the Union.

We now arrive at the 2008 crisis, and if on the one hand the Italian discontent with Europe remains exaggerated, it is also true that Europe responds in a disjointed and disunited manner in a moment when only a strong and organic reaction could have prevented the consequences which burden Italy and other countries even today. The first real collective response at the European level arrives in 2012, with the creation of MES and the famous speech of Mario Draghi (the “whatever it takes”, which implied a collective effort to maintain the unity of Europe and the euro without leaving anyone behind), but in the four years between the beginning of the crisis and this collective response, the European action focuses on the idea that each state has to prove to be virtuous on its own, and that no forgiveness is to be granted by the Union to its weakest members. The problem is that a country already in crisis and strangled by the market cannot immediately align with strict austerity policies: it is instead necessary to distinguish between an emergency intervention, in which the state must be allowed to breathe giving it liquidity, and one on the long run, in which the nation no longer in difficulty can be made to follow strict economic policies to become more solid. However, this consideration seems to have no effect on the nationalist ideas of consistent parts of Europe – the famous “frugal four” (Austria, Denmark, the Netherlands, and Sweden), but also the UK, Ireland and Germany – which, strong in their national economies, want to delay the integration process by opting for making do with the monetary union, without pushing for a much stronger fiscal and economic union – as countries like France, Italy, and Spain want.

All of this leads to four years of total crisis which is not solved in a systematic manner and which makes Spain, Italy, and Greece pay a higher price than anyone else. The Union turns out weaker and less reliable for foreign markets and investments (to the detriment, incidentally, also for the countries which supported the most rigorist stance), while the trust in the European institutions in the most affected states plummets. The European mismanagement, the Greek bankruptcy, the entrenchment of the “frugal states” on their position almost of moral superiority: all this creates anti-European feelings, and the term “troika” begins to have a negative connotation even among those who still believe in the European dream.

But now, in 2020, facing an economic and health crisis, why is the European reaction so different this time? Why are the current policies, with the Next Generation EU (italianized in Recovery Fund), so different from those of 2008?

All lies in the new balance of powers among the European countries in the debate over integration. The situation has radically changed both because of Brexit, which has basically erased from the European power games one of the fiercest supporters of the austerity stance, and because for the first time in a while the presidency of the European Commission and the Council of the EU belongs to Germany. Today, the ones isolated are the “four frugal” and the expansionary stance has won, and, as much as it costs many of us to admit it, this difference is caused by the German change of position: Germany has always been and still is one of the cornerstones of the Union, and its political and economic influence makes the difference in the European choices. While in 2008 Germany had supported the most rigorist stance, it now takes the lead on the liquidity projects (750 billion), with new and really European money taken ex novo and then distributed according to each state’s needs (not borrowings among states which can then use those “loans” to make pressure and to obtain what they want). The “spread” is now a non-problem because we do not have to ask for money to individual states getting into debt at very high rates, but we can work as a single country. The Europe of solidarity and the union is really born here, and it is showing us that maybe for the first time we really are “United in diversity” (the EU motto).

However, the crisis is still far from over: the leaders of today have incredible possibilities to really revive Italy, but they have to be serious and responsible not to throw away such an opportunity. We need policies which do not waste money making them pour onto people but which link investments to reforms in order to make them create jobs and economic growth. This also means coming to terms with our own position in the Union and vis-à-vis the other member states, and even accepting a German leadership for the economic and political clout also when facing countries like China and Russia (as long as it is a shared leadership which takes into account the balances and pays attention to the European interests, not the German ones, as not even Germany can prosper inside a weak Europe).

The history of Italy from Maastricht on has been a history of mismanagement and usage of Europe as a scapegoat, helping create anti-European feelings now hard to eradicate. Now that Europe is on the path that we want, with Germany on our side and the UK no longer standing in the way of integration, a change of route also in national politics is needed. Even the sovereignist parties, which have exploited the narrative of the Europe-tyrant more than anyone else, must engage in the European debate, if only to bring about their cause of higher national sovereignty but from within Europe (thus in a more realistic and, as a consequence, healthy way for all of us). At the end of this crisis we will really have the possibility of constructing a virtuous path, also thanks to this moment which, however dark it has been and still is, has given rise to a stronger EU. But we need to stop seeing the privileges of living in Europe as something that is due and focusing only on the faults (real and fake), and rather restart thinking of Europe as an opportunity, something that must be deserved and appreciated. If we do not do so, we could lose the only opportunity we have to save our country from the abyss in which we have ended up and from which only Europe can save us.

And what do you think, reader? Are you convinced by our short analysis? Or do you think there are elements that we didn’t focus on and that you would like to see further explored? This topic is very complex, but we hope that this article can be an inspiration to make you think about the matter and tell us your opinion by leaving a comment here, sending us an email with your reflections or commenting on the related post on our social profiles.

Thank you for your attention,

Davide Bertot

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