What are we to make of the Italian crisis, and what threat does it pose to the Euro and, indeed, the European Union itself?
I wish I knew. International banking and eurozone issues have become so complex and arcane – and so mired in bad politics – that for those of us who are not insiders or financiers it is impossible to get to the bottom of what has gone wrong.
My colleague Iain Martin, founder of Reaction (subscriptions available for just £48 a year!), is in no doubt that the current Italian madness represents an existential challenge to the EU – something he does not welcome. He also sees it as evidence that the British were wise to get out while they can.
I agree with much of his analysis. It would be difficult not to. But, with more caveats than I would normally wish to put in place during such a Brexit-related discussion, I am still hoping for a more positive outcome.
For a start, as with most European crises, the Italian meltdown was largely self-inflicted. Yes, the euro came along too soon and lacks the centralised constraints of a national currency, such as sterling or the dollar. And yes, Jean-Claude Juncker and his pals in Brussels have disgraced themselves by blatantly interfering in Italy’s domestic affairs to the extent of vetoing as the country’s economy minister the candidate chosen by the Five-Star and Lega parties.
But… as with Spain, Portugal, Ireland and, most of all, Greece, Italy’s euro crisis arose less because of the nature of the single currency (flawed though that was), and more because of the flagrant abuse of borrowing and investment by Italians who thought they could take Germany and other northern European countries for a ride, drawing billions out of the banking system to put into God-knows-what daft scheme while simultaneously paying as little tax as possible into their national exchequers.
This didn’t happen in Germany, the Benelux countries or, to a great extent, France, which suffered not because of their own profligacy but because of the greed and stupidity of others.
Italy didn’t just accept the euro, it was one of its champions. Now the results of never pushing for, or wanting, the necessary safeguards are coming back to haunt it.
But let us turn to the examples of Spain, Portugal and Ireland, and even Greece. The two Iberian nations grumbled and whined. But at the same time, they dug deep and did what was necessary to bring their economies into balance. They are putting the nightmare of recent years behind them and moving gradually back up into Europe’s middle ranks.
Ireland – which came perilously close to disaster in 2008 – is now once more among the fastest-growing economies in the EU. Greece – Greece! – is turning round and, however fitfully, beginning once more to expand. All four countries use the euro. Only Italy, with its national propensity for dissimulation and farce, has remained stuck in the mire – though even Italy would be on the mend (just) if it wasn’t for the sheer irresponsibility of its electorate, which opted to hand power to a coalition straight out of the Comedia dell’Arte, equivalent to a government formed in Britain between Momentum and UKIP.
Maybe Italy will bring down the single currency. Maybe for the EU the countdown has begun to the End of Days. But I suspect wiser heads than those of Luigi di Maio and Matteo Salvini, of the Five-Star and Lega movements, and, for that matter, the more arrogant members of Jean-Claude Juncker’s European Commission, will ultimately prevail.
If those wiser heads, following next year’s European elections and the appointment of an all-new Commission, turn away from further short-term integration and towards a somewhat looser confederation of nation states, the EU will be the better for it. The ultimate irony in that event would be that the UK – which never sought to lead Brussels away from its excesses, preferring to negotiate opt-outs at every turn – would be locked outside of a grouping that, post-Brexit, was now much more to its liking.
