The case of Italy. Is the European Union, thanks to the euro, partially freeing itself from the overpowering hold of some international financial instruments? The world's main rating agencies downgraded Italy's reliability on the financial markets, because, in their opinion, it had failed to take appropriate measures to turn public accounts around. However, the European Commission and the Eurogroup, while calling for further efforts, have shown faith in the Italian programme to bring finances back within the “Maastricht criteria”. Experts expected the markets to react to what the rating agencies had said, with increased borrowing costs for the Italian state and a further “risk supplement” in the form of an increase in the cost of insurance contracts against State insolvency. But, there has been no sign of anything like that.
The conclusion of Community circles is that the financial markets have greater confidence in the judgment of the European institutions and a little less in purely technical and financial assessments. These latter remain essential, of course: figures and concrete commitments retain their full value, but other considerations have to be taken account of, such as confidence in the intentions of the authorities and the reform programmes which accompany budget forecasts. In Brussels, these two points worked for Italy, because the Prime Minister is a former European Commission President, and the Finance Minister occupied high level posts in the Commission and the European Central Bank (ECB). They understand, and share, the aims and leanings of EU instruments (Stability Pact, Lisbon Strategy etc.) and they know the extent to which the stability of the euro is important to their country (the protection offered by the euro is their first guarantee). The Italian government provided Brussels with lengthy explanations of its reform projects on opening the professional markets (some “professional associations” hang like a lead weight on the county's economic efficiency) and setting to right subsidies and other state aid. These are essential elements for assessing the future; rating agencies don't take them into account, but operators increasingly do. It is true that, in Italy, those who derive profit from State weakness and shortcomings are battling to prevent any change; but half of Italy's public debt at least is in foreign hands.
Other weaknesses. There are other shortcomings. In particular, Italy continues to be weakened by its inability to get a key number of its backward regions off the ground. Something seems to be moving, however, and Romano Prodi has spoken about it with assurance. He has not done so at national level, because he has to be sensitive to some concerns (and electoral interests). However, in an interview with the daily “Le Monde” last month, he said, “Italy has not taken full advantage of European Funds. They have been badly managed, except in a few little-known regions, such as Basilicata and Abruzzo. We have to make greater efforts to change, and the first thing will be to accept that we have wasted huge amounts of money”. In other Member States, like Spain or Ireland, the backward regions (or most of them, at least) managed to cast off the shackles of under-development within a few years, yet some regions of Italy, which have been receiving substantial European aid for half a century, have made no progress. In spite of the permanent whining and whingeing, the fault does not lie with the lack of funding and certainly not with a lack of individual ability, but with the vast power of organised crime: this is certainly true in Calabria, Naples, Sicily and elsewhere. Today, there are signs of a desire to change: vigorous denunciations in books/investigations (with the authors protected by the authorities), newspaper investigations which are making public the most incredible stories (one example: European funding allocated for training young people, but the beneficiary did not organise a single class - yet he owned a Ferrari).
Three misuses are being ever more strongly criticised: poor use of European funding, excessive payment of regional officials (€1,500 per day for a person responsible for water distribution in Sicily, a sector completely controlled by the Mafia!), and increasing numbers of universities, to the benefit of lecturers, but to the detriment of the quality of studies and research. In these three areas, criminal prosecution is not taken into account by rating agencies, but the effects for the economy of the country can be significant, if the government has the political strength to act with vigour.
(F.R.)