Berlusconi and the Eurozone - English

The Seducer

By Stefano Casertano3.10.2012Global Policy

Silvio Berlusconi is no friend of Germany. But his clownish appearances turn truly destructive when Euroskeptics succumb to his lure.

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Silvio Berlusconi, the flamboyant former Italian prime minister, does not love Germany. He made that blatantly clear during his last skit in Rome, when he appeared at a press conference to present a new book by Renato Brunetta titled “The Great Scam.” “Germany is a hegemonic state, not a country that acts in solidarity,” Berlusconi proclaimed. This is just the latest in a long line of expressions of lacking affinity. When he served as Italy’s prime minister, Berlusconi repeatedly answered German calls for fiscal discipline by arguing that, uh, Germans simply did not understand Italy. Unsurprisingly, Germany returned the favor: more than not understanding Italy, Germans felt they could not understand Italians. Berlusconi has never been popular in Berlin or Frankfurt, and Germans were as alienated by his governing style as they were surprised that Italians still voted for the guy even after stories about private estate sex parties began to circulate. Yet this sentiment seems to be about to change. At the book presentation, Berlusconi argued that a German exit from the Eurozone wouldn’t be a tragedy – no, it would even be desirable! His assessments sit well with a growing percentage of the German population who dream of leaving the monetary union. Many readers of the prominent newspaper “Frankfurter Allgemeine Zeitung,” normally critical to Berlusconi’s fireball comments, were enthusiastic: opinions expressed on the paper’s website included “Forza Silvio!,” “hopefully Angela Merkel was listening,” “I would vote for him right now,” and a legendary proclamation that “our new hope is called Bunga Bunga.” This is not surprising. A recent survey empirically confirmed that a majority of Germans holds negative views of the Euro. The survey – conducted by the respected Bertelsmann Foundation in July – found that 65 percent of Germans believe that they would be “better” or “much better” off with the Deutsche Mark, the country’s old currency. 49 percent even believe that the European Union has had a negative impact on Germany. But those who support Berlusconi’s latest stand-up comedy risk falling into the same trap that once transformed Italy’s political landscape in a quagmire. Having realized that he is very unlikely to climb back to power – even in miracle-battered Italy – Berlusconi is working to secure a presence in parliament. To him, this is still more desirable than exiting the political scene entirely. In order to succeed, he has to rely on Italians who still favor populism over facts. There can be little doubt that a failure of the Euro would be a tragedy for Germany and Italy. Instead of treading on the uncertain path of economic recovery, Europe would tumble into the abyss of economic apocalypse. Those who flirt with monetary nationalism appeal to the nostalgia of the 1980s, when the continent was not facing the competition of – among others – the new Asian economies. Above all, Germans must not forget that so far – so far, at least! – they have not paid money to restructure Italy. Actually, Italy contributed money to save Greece. The bill for years of fiscal mismanagement in Italy has been shouldered by the Italians themselves. Demonstrating an admirable sense of responsibility and a patience rooted in a long tradition of a Christian sense of sacrifice, Italians accepted tax increases (close to 50% of the GDP are paid as taxes). This does not mean that Italy is now an economically responsible and well-behaved country: corruption and lavish public spending dominate the news cycle almost every day. But Italians are hard workers (more hard-working than Germans, according to recent OECD data) and can rely on an industrial infrastructure that remains superior to that of Spain, Portugal, Greece, and Ireland. Italy ranks first among the economically troubled countries of Europe. If Italy slips into the abyss, so will Europe. Italy is the border country between economic health and financial trouble. Restructuring Italy and getting the country back on track represents linchpin between a destiny of failure and one of success for Europe. Not only should Europeans (all of them!) desire Germany to stay in the Eurozone, they should also desire that Germany and Italy deepen their cooperation. This would not necessarily require a system of permanent fiscal transfers from central Europe – Southern Germany and Northern Italy – to Southern Italy. It would require, however, the chance of setting up a continental industrial policy. Take the United States as an example: the realization that some US state face economic distress convinced the federal government to support local industries and focus its policies on supplies from a specific region. Although Milton Friedman and Ayn Rand would scream in disgust, this might be a good solution to resuscitate industrial clusters in cardiac arrest and rehabilitate them instead of giving them up forever. As George Soros mentioned in a popular column written earlier this year, Germany should “lead or leave.” Leading would entail close cooperation with Italy. Unfortunately, the perception is still that Italy is represented by an enigmatic comedian (Berlusconi). Germans, please, do not make the mistake of falling for the smile of the joker.

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