Exitalia: Is Italy Next Out of the EU?
On Sunday, December 4th, Italians voted decisively in a referendum, rejecting a proposal by prime minister Matteo Renzi to alter the country’s constitution. This effectively forced his resignation because Renzi had repeatedly promised to resign if the proposal was rejected.
The proposals were complex (to reduce the powers of the second chamber and its size, from 315 members down to 100, to abolish a layer of local regional administrative bodies, and some other points). However, Renzi’s promise to resign turned it from technical referendum into a plebiscite on his personal record.
Some are calling this a vital test for the euro and the EU. Others are saying this has no link whatsoever to the European Union.There were some surprises. Long before the election, financial traders certain of Renzi’s defeat, were already selling down the euro and some other instruments (some early reports said by a margin of 18%) which is why the Euro rallied after an initial plunge as traders rushed to take their profits. Hyenas can always smell carrion and the Euro is that. Brussels can only dig Italy out of its pit by printing gargantuan amounts of paper on a scale that makes Weimar look like an exercise in overcautious fiscal probity.
The markets didn’t make the link to the euro and its obvious weakness unaided though. Two major Italian parties – the Lombardy League (long campaigning for northern Italy to become a breakaway state no longer obliged to subsidise Italy’s poorer south) and a newer movement, the Five Star party (campaigning for Italy to leave the EU) – treated the whole referendum as a chance to demand an election and get the public debating. The two parties are vocally angry about both harm caused by the euro and the continuing waves of north African migrants attracted to Italy’s long and indefensible shoreline by its membership of the Schengen area.
An Italian election is due in the spring of 2018, but electoral reform is also being heavily discussed, since the established parties are concerned not to help the Lombardy League or the Five Star movement grow even bigger or form the next government.
Several Italian banks – including the world’s oldest, the Banca Monte dei Paschi di Siena, founded in 1472 – are close to collapse. Italian banks hold half of Europe’s euro-denominated bad debts.
None of this should be cause for pro-Brexit Britons to celebrate. The collapse of an entire banking sector in any large country, especially a friend and ally of Britain like Italy, is no laughing matter, even if we can all see how the foolish single-currency experiment led to this point. We should be concerned for our Italian friends who are frustrated, angry, and in many cases unemployed, due to the sheer hubris of the euro-currency project. I personally know many Italians who are very supportive of Britain’s efforts to leave the EU. The European Union, and its single currency are not so much their creation as an adventure France and Germany have locked each other and others into. Many of my Italian – and also Dutch – friends are hopeful the EU will dissolve into something less ambitious, less federal, less unstoppable, more modest. Or even just …countries trading with each other under minimal tariffs. The way a bigger EFTA could have been had the 6 EEC members joined the 9-member EFTA in 1970.
EFTA (the European Free Trade Association), which Britain helped found in the 1960s, is now being a bit sniffy about Britain leaving the EU (and possibly rejoining EFTA). That’s partly because it is down to 4 members (2 of which are very small countries: Iceland and Lichtenstein) and has become a cosy, intimate club. They can be forgiven for raising an eyebrow after we formed that group, then sabotaged it by leaving it, and now four decades later are mulling over asking to rejoin. But this is a small problem if we approach them with a bit of humility and admit we were wrong to ever leave. EFTA has no desire to rewrite the laws of its members, it had something close to a tariff-free single market already in 1970, and it doesn’t have a stand-alone transnational bureaucracy with an agenda of its own.
We might start out developing this humility by expressing sympathy for Italy, which has seen only 1% of cumulative growth in the 16 years to date of the 21st century. In fact as of late 2014, Italy’s economy had actually shrunk compared to 2000, a truly Third World performance. Britain’s economy grew twice as much (2.5%) just in the one year 2015 as Italy’s has managed to in 16 years. This is largely due to the effects of the euro and the EU’s trade-restrictive practices, although Italy does also have a sclerotic government. Renzi’s reforms might not have been all bad.
Nonetheless, his reforms have been defeated in a big margin. Italy is now talking opening about its banking crisis. Two major parties are calling for a change of government. Ordinary Italians are expressing their anger about their government, their economy, their political elite, their membership of the euro & the EU. Italians used to have so little faith in their own country that they preferred to be governed from Brussels than from Rome. Now they are starting to openly discuss the EU’s basic illiteracy about trade and law.
European Commission president Jean-Claude Juncker recently demanded “No more referendums!” He is, thank goodness, unlikely to get his wish. Time to give this old fool his marching orders
Mark Griffith keeps a weblog at http://www.otherlanguages.org
‘Time to give this old fool his marching orders.’ Yes, the sooner the better.