„Italy would deserve better leaders but also better European neighbors“
Rising populism in the West is partly based on fake news and political speculation and partly rooted in the harsh consequences of economic globalization on western middle class income and quality of life.
In Italy there’s a third reason: widespread hostility towards the EU. This hostility is also due to bad politics (speculating on job losses and economic slow down), trying to shift the voters criticism towards the scapegoat of the Euro and the European Commission, instead of focusing on internal lack of liberal reforms since the end of`the ‘90s.
However Italians bad attitude towards EU has some reasons to be there.
Refusing to admit a short sighted political and economic behavior of the core EU countries (namely Holland France and Germany) towards their Southern neighbors, and particularly Italy, might open the Government gates to the populist parties for the next 20 years.
EU is showing lack of realism and no mercy towards countries struggling with the Euro membership, apparently not considering the risks of such a punitive attitude. A „Greek approach“ to the Italian crisis could mean the end of the Union as we know it and a continental GDP loss which is unthinkable in case of Italian default and Ital-Exit.
International media and even political leadership in Europe often tend to forget that, notwithstanding its secular North-South divide, its peculiar way of doing business and widespread criminality in 4 regions out of 20, Italy is not only a founding member of the Union (second to none in terms of carrying the tremendous financial burden of Eastern enlargement) but it is also an economic and industrial giant.
Italy is the 2nd manifacturing country in Europe and the 9th exporting country in the World. Its manifacturing industry is second only to Germany in terms of trade competitiveness, the country is not only world leader in agrifood exports but also in the use of green technology for food production, thus paving the way in the West towards a clean industry model. Pharma export growth is the fastest in Europe. Italy is the nr 1 EU exporter of furniture to non-EU countries. Italian industrial machinery ranks 4th in the world in terms of trade surplus after Germany, China and Japan. The Italians have the second largest market share in fashion after China (France doesn’t even rank in the top 5). The Genova Port, after decades of mismanagement and market shares losses to the Northern ports of Hamburg, Antwerp and Rotterdam, is now aggressively entering the Central European market of Import-Exports to China, pivoting on its favourable geographical position and profiting from massive investments in infrastructure and technology.
Italy is also the third net contributor to the Eurpean Union budget after France and Germany and largely suffered, during the crisis years, the aggressive use of EU incentives by Eastern European Governments to attract a large number of profitable manifacturing SME‘s.
European policy makers should take into account that manifacturing and exports combined are the engine of the Italian economy, as much as for Germany, and Italians are not ready to give up on those solid assets to embrace the smoky dream of artificial intelligence and universal income sold for years in the Sylicon Valley by a generation of liberal entrepreneurs, economists and politicians.
Economic and fiscal policies to protect and make the country’s industrial assets competitive during the globalization years have not been effective and Italian leaders should be the first to be blamed for that, but there are signs that EU neighbors (the same neighbors that in the EU impose on Italy harsh fiscal policies) often behave in a predatory way towards Italian industry, even on strategic assets. These repeated predatory actions led even the former pro-EU liberal-democratic Government to introduce an unprecedented protectionist measure towards M&A’s operations: the « Golden power » on thechnological assets. It now allows the Government to intervene if a strategic technological Italian asset risked to fall in foreign hands.
Just as in the case of Italian relations with Eastern European economies, France and Germany have shown little or no reciprocity towards Italy in the last few years : in 2009 Fiat Auto’s offer to take over Opel was stopped by the German Government and the agreement was reached with a much weaker US industrial partner; lately the French Government of President Macron breached a contract approved by his predecessor Hollande that allowed World top player in the ship building sector Fincantieri to take control over STX France. After the agreement had been also approved by the European Commission, France and Germany together have lately decided in a very unusual way, to involve the EU antitrust authorithy to stop the operation which might be suddenly now considered to be in breach of EU competition law. France on the other hand overtook strategically Italian assets like Telecom and Unicredit and Germany is one of the world markets where the rate of forgery and imitation of Italian brands is more widespread.
All odds seem to play against Italian manifacturing industry that (nothwithstanding high taxation, and a national social and political system which is definitely « corporate unfriendly ») scores a lot of points on the international markets, having also shown by far the highest increase in Value Added in Europe (10%) between 2013 and 2017.
This is not dangerous for Italy only but mainly for Europe as Italy is not Greece and the consequences of an Italian industrial collapse would put out of business a great number of German, Dutch and French exporting companies, not to mention the financial consequences on the whole Euro area, which might cease to exist as we know it, due to speculative attacks on the European currency.
The issue would require a more pragmatic approach to the Italian problem, by the leading nations of the EU, knowing that the country is economically and socially split in two parts not only geographically but also economically with some non traded protected sectors suffering low competitiveness (Public Administration, Transports, Logistics, Banking, water and energy distribution..) as opposed to a very dynamic export oriented manifacturing industry. National but also EU policies should be oriented to encourage the healthy part of the economy to prevail and lead economic recovery.
The Maastricht criteria are not written in stone and a restrictive fiscal policy is not always the right medicine to heal any disease, expecially considering that breaking European consensus and playing «homo homini lupus» in the EU, weakens pro-European political parties in the members States, serves our non European competitors interests and weakens the European voice on the world scene.
In the end Italy would certainly deserve better leaders but also better European neighbors.
