Member states “under tutelage”? By revising and strengthening in two days its programme of return to a balanced budget according to European Central Bank (ECB) indications, has Italy lost its autonomy when it comes to making decisions and is it effectively under the tutelage of the Community institutions and bodies? That is the question that has been rattling Italian political and economic players over the past month. It has provoked a debate that has gone beyond national borders because it involves the effects of European economic governance in general. It is therefore interesting to take stock of the Italian debate and its results.
The Italian government had barely adopted its two-year budgetary balance re-establishment programme when Mario Monti published a thought-provoking article in the Corriere della Sera. The title spoke volumes - “Il podestà forestiero” (or “The foreign mayor”). Monti considers that the measures announced in Rome were not spontaneous but “dictated by the markets and by Europe” following the indications provided by a “supranational technical government (…) whose HQ is scattered between Brussels, Frankfurt and Berlin”, the objective being not simply budgetary discipline but also economic growth.
The objectives to be pursued had in fact been outlined in a letter from the ECB which was signed by its president, Mr Trichet, and by Mr Draghi who will soon succeed him and who is currently the head of the Bank of Italy. The response from Rome was immediate (a programme defined in just two days!), as were reactions at a national level. The general rule laid down was as follows: support in principle for public spending cuts, with the exception of those that actually target the interests expressing this view… In this case, the budget savings are firmly rejected because they are described as incompatible with the interests of the country… Parliamentary debate is now taking place and the government has indicated its willingness to accept amendments to its project, on condition that the goal of the two-year budgetary balancing project be maintained.
Reality and limitations to national autonomy. In addition to the selective spending cuts and choirs of lamentations which have, unsurprisingly, accompanied the cuts, the debate has focused on the political and institutional aspect mentioned in this column yesterday: are the member states in general and Italy in this specific case totally or partially losing their autonomous power to make decisions? The response is both yes and no at the same time. Respect for the eurozone's budgetary rules is obligatory but the road to follow is covered in a national remit and it is up to the government and parliament of the country in question to adopt application measures. If they do not do this, they effectively place themselves outside the eurozone. This is what European economic governance really means.
The different positions taken have almost been innumerable (often dictated by political positions or personal interests rather than by a balanced assessment of the situation) but I would just like to underline the contributions made by Barbara Spinelli - the daughter of Altiero Spinelli and wife of Padoa Schioppa - to provide clarity and balance to the different positions taken. She considers that for a eurozone country “to be under tutelage”(a term that she does not use elsewhere) “is not a loss of sovereignty; it represents self-discipline that the country concerned applies and which is not imposed from the outside. Thanks to Europe, states are regaining their sovereignty.” The operation, however, must take place transparently.
Greater transparency. It is in this perspective that Ms Spinelli calls for the letter to be made public that was sent to the Italian prime minister by the president of the ECB and the central bank of the country concerned. She obviously knew about it, or at least was informed about its essential aspects, because she indicates that the letter suggests increasing VAT (which the Italian government rejected) and at the same time tough measures to help support economic recovery (€15 billion in infrastructure investment). Given the importance of the measures suggested, which will impact on the current situation and also on the lifestyle of future generations, all the different political forces, economic players and public opinion in general, must, according to Ms Spinelli, have access to this letter. I would like to add that the efforts required are to a large extent positive for the Italian government because they get rid of irregularities and waste that impact heavily on the country's economic health. Tomorrow, I will return to this often-neglected aspect.
For democracy. Ms Spinelli emphasises that the system, through which a technical body - the ECB - indicates what economic policy member states should follow, is not democratic and that it is necessary to create a European economic government - a question that Germany and France have just officially raised.
(F.R./transl.fl)