Eurocracy

The "Enemy of Germany"

Already last week, the 81 year old economist Paolo Savona's nomination to become Italy's Finance Minister had been virulently commented in leading German media: Rome is appointing an "enemy of Germany" to head the finance ministry;[1] Savona is a "declared opponent of Germany," who sees the euro as the "consummation of Germany's idea of dominating Europe," as "propagated already by National Socialism." In case the economist, a former minister and bank manager, actually becomes finance minister, it would provoke "massive skepticism particularly in Berlin," one journalist wrote, drawing parallels to Yanis Varoufakis. Varoufakis, as Finance Minister of Greece's left social democratic Syriza government coalition in 2015, had unsuccessfully fought Berlin's austerity dictate.[2] Athens was "outmaneuvered" at the time, notes the journalist. Italy, however, as the euro zone's third strongest economy, is far more important than Greece, and an Italian Varoufakis would therefore be of quite a "different caliber." The conflict between Rome and Berlin - similar to the one between Athens and Berlin in 2015 - is revolving around the economic policy in the euro zone, the journalist admits: "The state debt at 130 %" of the GDP is responsible for Italy's problems, according to German government circles. Rome, on the other hand, attributes them to the EU's austerity policy, which is "widely seen as a German dictate."

A Proven Austerity Commissary

Savona's nomination as finance Minister has led to a serious political crisis in Rome not least because of German complaints.[3] When Italy's President Sergio Mattarella rejected Savona's nomination - claiming, the experienced banker would be a risk to the "savings of the Italians" - designated Prime Minister Giuseppe Conte relinquished his mandate to form a government.[4] In the meantime, initial rifts are beginning to appear between the paralyzed coalition partners. Whereas the M5S favors Matarella's impeachment, the far right Lega Nord is strictly against it, with its leader Matteo Salvini saying "he does not want to talk about it" - and in any case his party has to decide first, if it wants to continue pursuing a coalition with the M5S. Currently, the racist Lega has reached a peak in opinion polls, whereas the popularity of the M5S is stagnating. New elections in the fall appear to be the most likely scenario. In the meantime, Matarella asked the former IMF official Carlo Cottarelli to head an interim government. In 2013 and 2014, Cottarelli had already served in an Italian government as austerity commissioner ("Mr. Scissors"). With his nomination, Italy, for the second time,[5] is being submitted to the supervision of an "expert," who has not been democratically elected and must execute the economic policy prescribed by Berlin. However, this time, it is being imposed in direct rejection of the new democratically elected majority.

Meteoric Career

Savona, the blocked Italian finance minister, makes Berlin see red, precisely because he cannot be accused - like the Five Star and the Lega - of being driven by diffuse populist motives or of pursuing an ultra-rightwing agenda. Savona has had a meteoric career among the EU-loyal Italian elite functionaries, before Italy's long-term economic stagnation turned him into the most prominent critic of the common currency and Germany's dominating role within the EU. The economist, educated at the prestigious Massachusetts Institute of Technology (MIT), had been General Secretary of the Italian Federation of Employers, functionary of the Italian, as well as the US-American Central Banks, Director of several Italian banks and a member of the board of Telecom Italia. He had obtained government experience already in the 1990s, as minister of the economy and in the first decade of the 21^st century, as Chair of the Department for EU Policy in Prime Minister Silvio Berlusconi's third cabinet. In his latest book "Like a Nightmare and a Dream," in which he describes the euro as a German "cage," he provides insight into his transformation from a former EU-politician to a euro-critic. Germany didn't change its "idea on its role in Europe" after the end of Nazism, he writes in his book; even if it abandoned the idea of "imposing itself militarily."[6] Savona emphasizes that "in principle, the idea of a united Europe" is still worth supporting. However, given the economic realities in the German-dominated euro zone, which has "halved Italians' purchasing power," this is no longer possible.

Plan B

Already in July 2015, as Berlin had pushed the left government in Athens into a corner, the internationally renowned economist called on the Italian political establishment to elaborate a "Plan B" to leave the common currency. Germany is the "country in command" within the euro zone. It is using Greece to entrench this position through draconian austerity measures. Therefore, Rome must prepare its withdrawal from the euro, Savona explained in an interview that Beppe Grillo, the leader of the M5S, had also linked, at the time, to the movement's webpage.[7] According to Savona, Italy's high national debt will be used as leverage to force the country to make neo-liberal reforms - and to insure that "those remain in power, who will perpetuate this condition of subjugation." He was referring to Italy's old political elite, who according to Savona are collaborating with Berlin. By appointing Cottarelli, the ex-IMF man favored by Germany, Mattarella has now inadvertently confirmed this accusation.

Wind is Turning

Savona is by no means standing alone in his assessment. Even German media organs admit that a growing number of Italian citizens "hold Germany responsible for the misery in their country" and feel confirmed in this conviction by a growing number of "renowned economists."[8] In fact, the Italian economist Luca Zingales, who was also in consideration for the finance minister post, likewise had called for a "Plan B" and for leaving the euro, should no redistribution mechanism - as counterweight to the excessive German trade surpluses - be implemented at EU level. According to Zingales, ideally, even though unrealistic, Germany should leave the euro, since the common currency is the basis for German dominance in the euro zone. Germany's situation could "not be better," writes the economist. Berlin does not pay anything "for saving Europe," while Germany is a safe haven for loans, which keeps interest rates low. In addition, the dominant exports are creating not only wealth, but jobs as well. Zingales concludes that "Germany profits, Italy loses."

Stagnation and Impoverishment

Italy is in fact losing, which is shown by the persisting socio-economic crisis, which has led to the M5S election victory.[9] Due to persistent economic stagnation, that Mediterranean nation - with its debt at 132 percent of its GDP - has a GDP that is inferior to what it had been before the 2007 crisis began. Unemployment remains high, particularly in the southern regions where jobless rates are as high as 29%. Under German pressure, Rome has imposed several neo-liberal reforms, including a liberalization of the job market in 2014, which further deteriorated the social situation of the population. In the meantime, nearly 60% of the jobs created are part-time, with much lower job security, massively increasing the risk of poverty in Italy. Before the onset of the euro crisis, nearly 15 million Italians were threatened with poverty; today it is more than 18 million.

[1] Tobias Piller: Italien will einen Deutschland-Feind in der Regierung. faz.net 26.05.2018.

[2] Andrea Affaticati: Die Deutschen sind an allem schuld. n-tv.de 25.05.2018.

[3] Oliver Meiler: Ein Konflikt, wie er den Populisten gefällt. sueddeutsche.de 28.05.2018.

[4] Andrea Spalinger: Conte verzichtet auf das Amt des Ministerpräsidenten - Italien drohen Neuwahlen. nzz.ch 27.05.2018.

[5] See als Europa auf deutsche Art (III) and Eine neue Achse Berlin-Rom.

[6] Paolo Savona, the eurosceptic at the heart of Italy's standoff. thelocal.it 26.05.2018.

[7] Il #PianoB per l’uscita dall’Euro, di Paolo Savona. beppegrillo.it 15.07.2015.

[8] Andrea Affaticati: Die Deutschen sind an allem schuld. n-tv.de 25.05.2018.

[9] Daniele Palumbo: Italy's election: How the economy is performing. bbc.co.uk 02.03.2018.