Italy

Italy, a country that no one outside of Europe knows much about more than Pizza Pasta Fashion and Football, is in the news as the new Greece of Europe (not a good thing). The global markets have been jittery over the last few days as Italy wrestles with another political crisis. What is going on?

A few events together have caused a greater issue, these are:

  • Italy has an economy that is not going that well
  • There has been a huge influx of migrants from Africa / Middle East (Syria!)
  • Italy is part of the Euro, so are subject to European finance rules and laws
  • There is a lot of inequality in Italy (and a North / South – Haves / Have nots divide, not that dissimilar to the metro / rural divide in the US and the London / non London divide in the UK)
  • The electoral system is mightily confusing, borderline ridiculous and barely feasible

The recent elections led to two anti-immigrant parties (M5S and Lega Nord) getting the most seats in Parliament (not a convincing result). Once they agreed to form a coalition they agreed to nominate a Prime Minister and a cabinet of Ministers. What is interesting here is that the Prime Minister that is nominated or the cabinet ministers do not have to be elected officials – the parties can choose from literally anyone. In the US, the cabinet can be anyone, but at least you know who is choosing the cabinet (the President, whose election you voted on). In Italy you are voting for someone to then (often) make an agreement with someone else, and then choose everyone who rubs the government. It is odd. From this, the parties agreed to chose Giuseppe Conte, a professor from Florence University, who was controversial because no one knew about it, and when people researched his academic resume they found a lot of it to be false.

Weird, but at least they have a result, right? Well, adding to complexity, there is a President of Italy too, who holds executive power, although the position is mostly ceremonial (they sign the bills and do events, not that different to the Queen). The President is elected by the parliament to 7 year terms (that part is kind of political), but long term enough that they are hopefully not that political. Anyway, it was hard to convince the President that the nominated Prime Minister was ok, but he was eventually convinced. Then the parties nominated a cabinet of Ministers that the President was able to stomach.. apart from one – the Finance minister Paolo Savona, a 81 year old ‘Euro-skeptic’ who wants to pull Italy out of the Euro. Of course, we all know there is no better way to revitalize a country that to put in charge of it a whole bunch of old white guys. Unfortunately (but unsurprisingly) this appointment was deemed no good by the President who refused to swear the cabinet in, which triggered the latest so-called crisis. This will likely lead to some fresh elections that will lead to similarly opaque results as people continue to lose faith in the system. Lovely.

There are a couple of further things going on in the background here.

Italians and a lot of Europeans are not that stoked at the Euro currency. You may remember other Euro crisis’s, especially Greece, that have occurred recently. This is partly because when a Euro economy tanks, countries have no control over fiscal policy (interest rates and others stuff), but instead have to submit to the bigger countries of the Euro (Germany and France) who make financial demands that usually include cutting spending and making life pretty crap in exchange for selling them more debt. Invariably a bad economy is made worse and these conditions make it pretty easy for people to vote for stupid stuff, like anti immigrant parties with rubbish “flat tax” policies that favor the rich and who want to pull out of the Euro. This has happened before and will continue to happen. The only thing keeping the Euro together is goodwill and the hardest soft power over seen from Germany and co. And the memory of World War 2. These Austerity policies haven’t happened yet, but they are hanging over the top of the Italian elections because..

The head of the European Central Bank (ECB) at the moment is an Italian, Mario Draghi. He has been willing to sell debt to the Italian’s to keep their economy going in a way that would be unlikely if someone else was the head of the ECB. But his term will end at some point, and the money tap will likely be turned off, or at the very least it will be slowed, and additional conditions will be put on the money.

Now the broader questions about the Euro should be asked. It would be bad to pull out of it in the short term, but in the long term, it could be the best for everyone (economically at least) if the Euro dissolved. But there is a lot of instability at the moment, and having more instability seems like it would be bad. But one has to admit this is an open question.

So in summary, we have the head of the ECB, who is Italian, who is helping keep the Italian economy afloat – but his term is ending soon. We have a convoluted “democracy” which is leading to unclear election results. These results put together parties with relatively extreme agenda’s to come up with something coherent to be signed off by the President. The President is being loose in his desire for coherence, but he is drawing the line at “this will definitely be chaos”. What will happen next?

God only knows (at least the Pope lives in Rome).

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