Europe is a-roil over Italy’s inability to form a government at any time since the nation’s elections some months ago. And so is the old guard in Italy.
Italy’s woes rippled across the eurozone, driven by investor worries that an exit by the bloc’s third-largest economy could force others out.
Bank of Italy Governor Ignazio Visco said this with a straight face:
We must never forget that we are only ever a few short steps away from the very serious risk of losing the irreplaceable asset of trust[.]
They’re risking losing that trust, anyway, on the political front—from which flows all economic trust. The Italian Old Guard is in the way here.
Italian President Sergio Mattarella blocked the formation of a euroskeptic coalition government formed of the antiestablishment 5 Star Movement and the League parties, raising the prospect of new elections.
He perpetrated the decidedly anti-democratic move of refusing to allow a coalition of the two parties who won the election to form a government because he personally didn’t like their finance minister nominee. I would have thought Italy would have had done with fascism. And so, sub rosa, would many in Europe, it seems.
And there’s this, based in no small part on those erstwhile coalition parties’ shared lack of enthusiasm for eurozone membership:
Italy hurtled toward a political crisis that is reigniting debate over Europe’s future, including whether the eurozone’s third-largest economy should remain in the currency union.
They’re worried that an Italian exit—if it actually were to happen—would spell the end of the currency union altogether.
Which brings me back to that matter of trust. Having blocked the formation of a government, Matarella has virtually guaranteed new elections soon—there are no other possible combinations of Italian parties capable of forming a governing coalition. And those new elections, given who won the last round, will surely be less an election of a new government and more a national referendum on whether Italy should remain in the eurozone.
Of course, Italy should not; they’re a terrible match for that currency union. Italy, along with Portugal, Greece, and Spain—the original PIGS—should form their own currency union. Those four nations’ philosophies concerning the purpose of money and of government’s role in society are much closer to each other’s than they are to the rest of Europe’s.