Malcolm Blair Robinson

Italy On The Brink

May 28, 2018 By Malcolm Blair-Robinson

Italy is a great country. Italians are great people. They make great things like cars and fridges which we use and enjoy. They have wonderful cities and art treasures few can match. We love Italian food. We enjoy great holidays in Italy from the mountains to the beaches. But they have, for years, suffered from rotten governments. Now they are in a crisis, because the figurehead President will not accept the nomination for finance minister, from the non-elected prime minister, chosen by two minority parties in their bid try to forge a  majority, through coalition, in which neither leader becomes prime minister. Wow.

But at the heart of Italy’s problem is the Euro. The single currency lacks a democratic structure of governance, there is no finance minister or finance ministry and no economic policy shared among its members. The way it works is that the euro is, in practice, Germany’s currency shared by the other members. That is how the markets treat it or it would have gone long ago. It is the devalued D-mark, which has worked very well for Germany, paid for unification of the two German halves and made Germany a world economic power. It is also an up-valued franc, which has caused France economic pain with which it is just able to cope. But in Italy it is a very much upvalued lire, which has been a disaster, an economic ball and chain and fertile ground for the growth of excessive debt.

The spat with the pro euro Italian president is over the nomination of a finance minister who is anti-euro. There is now talk of impeachment or new elections. The future is uncertain. It may remain an Italian crisis or it could blossom into a full blown euro crisis. Italy is not Greece. It would be much, much bigger.

And the effect on Brexit? It could go one of two ways. The EU caught up in a euro crisis might be more accommodating to GB’s priorities, if and when the government can articulate them. Or the twenty-six may close ranks and say no concessions, because to offer them might weaken their whole project. In that event it is over the cliff Brexit. Then it would become the biggest peacetime  crisis the UK has ever faced.

There is a third way. We could abandon Brexit and go to Europe’s rescue. Not for the first time. But the option which, in the end, is in our very best interests. And Europe’s too.

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