Populist obstacles. Setting up a government in Italy that is determined to take action to ensure respect for single currency rules represents the first phase in recovery. The bulk of the effort will come afterwards: defining and put into practice the various reforms, with the backing of the national parliament. We are currently seeing an upsurge in nationalistic populism expressed in statements such as, “we're not a country with limited sovereignty” or “we reject interference in our affairs by countries that are experiencing problems of consensus, credibility and economic crisis”. It is true that participation in the euro involves common monitoring mechanisms for respect of the rules that have been decided upon in common. This is the condition for remaining in the zone and benefiting, if need be, from support mechanisms. It is obviously not just Italy but all eurozone countries that have agreed to this monitoring (and participate in it with regard to the others). Any rejection of these principles is demagogy or simply another way of preparing to defend one's own specific privileges.
We therefore have to ask ourselves whether some of these appeals to national pride are not in fact concealing fears that the new government will put a stop to special favours and abuses, which those benefiting from them do not want to give up.
Clear ideas. A few remarks made by Mario Monti before his appointment demonstrates that he was aware of the risks indicated above. He said that, “it is necessary to put unpopular reforms into practice frame by bringing together, for the time that it takes, the most willing parties present in all the different political forces… fiscal pressure on income from work and made by companies is too great and too low for financial profits. (…) The euro is not in crisis: if Italy were not part of the Eurozone, the issuing of treasury bonds in lire would be even tougher”. After asserting that, “Mr Berlusconi has made Europe unpopular”, Mr Monti concluded that he would not backtrack when faced with the task of “upsetting some Italians by gnawing away at their privileges”. It is obviously not a theoretical taste for austerity that inspired these remarks but an awareness of the scale of effort required. President of the Republic Giorgio Napolitano also pointed out that, “from tomorrow and until the end of April, almost €200 billion worth of treasury bonds will reach maturity, a sum which will once again need to be floated on the markets”.
Mr Monti had not in fact waited until Mr Berlusconi had lost his Parliamentary majority in order to express his opinions. In an article published a month ago (Corriere della Sera of 16 October) he complained about Mr Berlusconi's “bubble-like perception” of the situation, provoked by the, “incredible level of servility” of those around him. In Europe, his remaining at the helm of the government was seen by several different leaders as being difficult to reconcile with “the level of government activity required in terms of energy and credibility”. He pointed out that these concerns had been expressed by “heads of government belonging to his own political family”.
Clarification of three essential aspects. One aspect that has been misunderstood in the Monti project concerns the definition of a technocratic government. In his improvised press conference on Monday night/Tuesday morning, the new Prime Minister expressed the wish that the secretaries general of the political parties join his government alongside “technocratic” ministers (while still being aware of the difficulty that this would pose). Above all, he rejected the hypothesis of a short-term government, in charge of schmooze the Community and global institutions. The timeline ends with the current Parliamentary term, therefore in 2013. He will not accept any shorter term but is quite aware that Parliament could still oust the government. With regard to the financial markets, the third essential aspect, Mr Monti said that it was “natural” that their reaction (after the first positive responses) should not come before he takes up office and incisive and operational measures are announced.
Two almost parallel phrases. On the information available to us, the Monti government will seek firstly to find ways to reduce spending and debt (with the aim of making a comeback on the markets as soon as possible but without excluding the possibility of negotiating funding from the ECB and IMF). Measures for economic recovery will in practice be in parallel. Mario Monti will also aim to introduce political and institutional reforms, such as the reduction in the number of Members of Parliament and the revision of the voting system (electoral reform law).
Decisive for the future of the euro? My attempts as far as possible to clarify developments currently taking place in Italy take into account the fact that the Italian example is generally considered as constituting a decisive step for the future of the eurozone. Any failure to redress the problems would entail the prospect of further radical change.
(FR/trans/fl)