Italy, EU bungling, and the COVID-19 curve

No-one has the perfect response to the Coronavirus. But the way different European states are responding shows that European "unity" collapses in the face of a crisis

Ursula hits the wrong note
Tim Hedges
On 13 March 2020 09:06

Italy’s manufacturing production rose 3.7% for the month of January, an astonishing performance considering Italy’s overvalued currency, poor demand in China and elsewhere, trade wars with America and poor overall European performance. Unfortunately the good news will not last.

We woke on the 10th March to the instruction that all travel had to be justified, in the form of a letter to the Interior Ministry explaining our journey. We had to make a trip out that morning and were not stopped but when we returned there was a police car blocking the entrance to our village (population less than two thousand, and four churches), asking people the reason for their journeys.

And those two stories tell Italy’s tragedy in a nutshell. The first outbreak of Coronavirus was only at the beginning of February, it seems incredible to recall. Since then the Italian government has really done its best. It may sometimes seem in retrospect to have been a little behind the curve, but other European governments have had the example of Italy.

Italy has had only the example of China, with a population nothing like so malleable as the average northern European, much less the average Chinese. An Italian, told to stay at home, will look for reasons to get out. A couple from different towns hoping to meet up for a holiday in Sicily have been arrested and fined.

Now, public meetings are banned, football is being played behind closed doors, and all shops are closed except for supermarkets and chemists. There’s not much to do except stay at home.

Several politicians have been confirmed positive for the virus, including Nicola Zingaretti, head of the Democratic Party. This will at least concentrate the government’s mind. Giuseppe Conte, the Prime Minister who is of no party is proving his worth. Without ideological baggage he seems stable and competent.

And the EU? To describe the response from Brussels as underwhelming would be overstating the case. To be fair, health has not been part of the Brussels power grab, or acquis communautaire as it is properly called. Different nations have different healthcare systems but there would be space for a coordinated response.

Brussels is responsible for the Schengen Agreement, by which people, goods and diseases travel freely across the EU’s borders. It has not been suspended, although individual countries have closed their borders, the Austrians at the Brenner Pass, for example. Was there no plan for an epidemic? Obviously not.

And then there is the financial co-ordination. Viruses know nothing of money, and often it is the poorer countries which are hit the worst, both in terms of treating the virus and of putting the economy back on its feet. Italy, for example is the third largest economy, with an excellent health system, but it was nearly in recession before this.

The European Central Bank, in attempting a policy response, has not lowered interest rates as America and Britain have, because they are already negative. This will have the effect of pushing the euro higher against other currencies, which will itself have further recessionary implications in an export dominated economy. There will be some more Quantitative Easing instead.

There are words, of course, brave words. ‘An ambitious and co-ordinated fiscal policy response is required’, said Christine Lagarde. And how will this work? The Germans and the Dutch will not allow a common borrowing instrument, much less fiscal transfers. Just words.

Ursula von der Leyen has made a video broadcast to the Italian people which many will have found patronising: ‘In Europe we are all Italians’. Indeed, Ursula. We in Italy are all over-promoted political apparatchiks. Whilst this Poundland Charlemagne talks cross-border coordination, she should not forget that the Germans and French, both of whom manufacture surgical masks, refuse to sell them to Italy. The Italians will not be forgetting it soon.

This virus will offer further proof that the institutions of the EU are not fit for purpose; that when there is a crisis the superstate offers no solutions.

They have two alternatives: they can strengthen the institutions or do what Britain has done and revert to the nation state as the constitutional base. My guess is they will continue to do neither. 

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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