Italy, the markets and Europe

Silvio Berlusconi has often maintained that the personal authority with which he is credited by other heads of government has given Italy an enhanced, and on occasion critical, impact on European and international decision making.

At the present time, this risks being true. Yet it is a bitter truth. Italy will indeed play a crucial role at meetings of the European Union and G20 to staunch the eurozone crisis and reverse expectations but, sadly, it will be as a source of problems. Italy will certainly not be an influence on decisions to be taken, particularly as we are under what amounts to a Franco-German and European Central Bank protectorate.

It is now widely believed – in Europe, America and Asia – that it will not be Greece that undermines the eurozone, possibly leading to break-up of the European Union, global financial crisis, severe depression and dramatic social crises. Given their size, it could well be Spain, or even more probably Italy.

Spain has made more progress along the road of crisis-containing political and economic recovery while Italy lags behind. This is clear from interest rates on public debt, which are higher for Italy than for Spain. In fact, rates for Italy are now higher than for Poland, even though the latter is not part of the euro and thus presents an explicit exchange risk.

Italy lags because there has been not the slightest acknowledgement of responsibility from the government. This contrasts with Spain, where the government has actually stepped back and called new elections. In the meantime, it has asked for, and obtained, the opposition’s collaboration over various essential measures. In Italy, even though they have had no strategic view of economic policy and have long indulged in smoke-and-mirrors optimism, government and majority prefer to pass the buck of responsibility. The opposition is accused of “stopping the government from working”, a charge that ascribes to the opposition a political identity and effectiveness that one strains to perceive.

Magistrates are claimed to have “forced” the prime minister to focus his attention mainly on them instead of the economy or future-deprived young people. The “Left”, insubstantial as an opposition, is alleged to have absolute influence over Rome-based foreign correspondents. This is claimed to be the only reason why so much criticism of the prime minister and government is penned around the world.

Read more: Italy, the markets and Europe - Corriere della Sera