Italy seeks a better deal

Italy has benefited enormously from the European Union but now it is a net contributor and suffers the consequences of the disastrous single currency. How long will it be before the Italians decide enough is enough?

Plenty of ways to go
Tim Hedges
On 8 November 2016 08:24

Refugees, earthquakes, confidence. Plenty of the first two, which are substantial drains on the economy; stuttering or non-existent for the last.

That sums up the opinions of the Italian press on what is important right now. It is budget time in Italy and the papers, the people and, I rather think, the Government don’t know where to start.

The refugee problem tugs at the hearts of Italians because they are kindly folk. But the crisis will soon ease because of winter. St. Paul, famously, was shipwrecked in Malta In AD60. In those days you simply shouldn’t have travelled in the Mediterranean between September and March. It seems, with the rickety boats the refugees are crowded on to, things have not improved in nearly two millennia.

The immigration aspect to the refugee problem is, I am sure, a short-term, if continuing, one.

No one pretends that these unhappy folk have risked so much to get to poor, jobless, Italy. They want Britain, Germany, Holland, Sweden for their new life. Most refuse even to claim refugee status in Italy (or France, as we are seeing). They want to work their way up the peninsula, picking fruit and vegetables and doing casual labour, until they can get somewhere rich.

But the refugee problem has piqued Italy; the nation feels isolated. The Italian view of the European Union (it’s never been mine) is of a family, close-knit like an Italian family, which shares good times and bad.

Italy is genuinely surprised that other European nations refuse to take their ‘fair share’ of migrants. They have only landed here for geographical reasons, but it seems the European ‘family’ are just saying ‘bad luck’.

In its budget, Italy seeks permission to borrow more in order to cope with the costs imposed on it. Instead, it has been told that the deficit, at around 2% of GDP, is already too high.

There has been another series of earthquakes. I have a couple of times visited the old church of Visso, with its ancient, almost pagan, mural. Most of the town is now rubble. St. Benedict’s Basilica in Norcia, built over Benedict’s home, is destroyed.

The assistance the Italians want after Amatrice, Visso and Norcia is not help from outside. The wonderful Civil Protection Service can cope. Italy simply wants permission to use its own money to restore these unhappy people’s lives.

But, as I say, it is budget time, and the new budget must be approved by the European Commission (read German finance minister Wolfgang Schaeuble). Italy is not an independent democracy. If Schaeuble wants the migrants to suffer, they suffer. If he wants the people of Visso and Amatrice to live in tents, they do.

And what of the third worry, confidence? Italy may survive its banking crisis; my guess is that if it does, there will at least be a very rocky road ahead. But it is not even allowed to bail out its own banks. It cannot rescue them, even though it knows that the savings, the lifeline of hundreds of thousands of families are at risk. Germany doesn’t permit it.

Actually, refugees, earthquakes and confidence are not what the budget should be about. It should centre on tackling supply side issues such as the cartels of lawyers, chemists and the rest; it should make it easier for this creative nation to start new businesses; it should reduce business taxes, reduce the cost of employing people.

But spending is what Italians perceive to be important and with the budget well under the 3 percent limit, at punitive levels due to old sins, they are bitter that the EU won’t let them address these concerns.

Italy has benefited enormously from the European Union but now it is a net contributor: like Britain it is paying for membership of this restrictive club with its dangerously overvalued currency causing lifetime unemployment and welfare dependency for many of its citizens. How long will it be before the Italians decide enough is enough?

Italy has been loyal, since the Treaty of Rome nearly 60 years ago. Now it seeks a better deal.

Tim Hedges, The Commentator's Italy Correspondent, had a career in corporate finance before moving to Rome where he works as a freelancewriter, novelist, and farmer. You can read more of his articles about Italy here

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