Italy and the Eurozone

Since the last Italian election all those interminable months ago, which yielded no party with even a serious plurality, the several (and I do mean several) political parties have been trying to form a coalition of some sort so they could form an actual government with which to operate the country.  The coalition most likely to succeed in forming a government, if not in actual governing, consists of the far-left 5Star Movement and the equally far-right League (Lega Nord, Northern League).  What’s of interest to me is less the irony of these two parties trying to govern together and more the impact on the eurozone and the EU if these two parties actually succeed in allying and governing Italy.  They want

renegotiation of EU treaties, including the Stability and Growth Pact, the cancellation of €250 billion in Italian government debt by the European Central Bank, and a revision of Italy’s contribution to the EU budget.

Although formally walking back much of that, they’re not walking that far back.  Among the things included in those three items, and one that directly impacts Italy’s debt, is the 3% of GDP limit on government deficit that every eurozone nation’s government must meet.  The coalition wants that waived for Italy.  Not raised, gotten rid of.

The coalition didn’t include a commitment to hold a national referendum on whether Italy should remain in the eurozone, or even the European Union, if Italy doesn’t get satisfaction these items, but you can bet that’s still there in the background.  A significant fraction of the population would vote to leave, too; although whether that fraction is large enough to reach a majority is iffy so far.

I’ve suggested before that all of the nations of Europe are a bad fit when jammed together under one imitation government.  Italy is one of those nations that, in concert with the rest of the Mediterranean EU members, would be better off outside.

Leave a Reply

Your email address will not be published. Required fields are marked *