Greece is on the verge of
settling the repayment of its bailout loans from the International
Monetary Fund, European banks and other creditors. The bailout
program is scheduled to end on August 21, 2018, but the creditors
agreed June 22 to grant an additional ten years to repay nearly 100
billion euros ($116 billion) and to defer interest payments and
amortization for another ten years, to 2033. In return, Greece will
have to endure tight controls by its creditors to make sure the
nation does not revert to its previous profligate behavior. It is
already enacting yet another round of painful reforms demanded by its
creditors—including a 13th round of pension cuts.
During the years Greece was
sustained by a series of three bailouts, it was apparent if one of
those failed, Greece would be out of the European Union and could
well result in the end of the EU. Now the likelihood of Greece being
out of the EU and perhaps the dissolution of the EU is no longer
viewed as a concern. But a similar threat has arisen from another
country, Italy.
In the recent Italian
election, two minor parties regarded as no real threat to the
nation's mainline parties did surprisingly well for the seats up for election among the 900 members in
the two houses of parliament. When the president chooses someone to
be the next prime minister, each house must approve. The 5-Star Party
and the League got about half of the votes among the six parties in
the election. Those two parties have both spoken in favor of Italy
withdrawing from the EU, which they regard as a failed experiment.
When the president picked
someone to form a new government, he deliberately avoided choosing
someone from either the 5-Star or the League. This created a furor
since he was single-handedly eliminating the people's most popular
choices in the election; he was accused of usurping the popular
will expressed in the March parliamentary elections. Clearly, this
tactic was not going to win approval of the two houses of Parliament.
So he would have to find another candidate. Both the 5-Star Movement
and the League spent weeks trying to find a mutually acceptable
candidate, finally agreeing on Guiseppe Conte, and then persuaded
President Matarella to appoint him prime minister. Conte is a law
professor, unaffiliated with any party and has no political
experience.
The 5-Star Movement and the
League have given voice to the many who are disenchanted with the
mainstream political parties for their continuing failure to provide
economic growth. Italy's economy is 5 percent smaller than it was in
2001, the only EU country other than Greece whose economy has shrunk
over that period. Nearly 60% of unemployed Italians have been
jobless for at least a year, and about 5 million live in absolute
poverty (defined as being unable to afford basic goods and
services)—nearly double the number of a decade ago. Last year the
Italian economy grew a puny 1.5 percent, the fastest in six years,
but that growth is already slowing, and wages haven't risen. Almost
30 percent of Italians age 20 to 34 aren't working, studying, or in a
training program, more than any other EU country. And about half of
that age group live with their parents, more than double the European
average.
“Italy is collapsing and
yet nothing has changed in this country for at least thirty years,”
said Carlo Gaetani, an engineer. He says with conviction that he
voted for 5-Star because it is “our last hope.” Apparently a lot
of other young people agree because they are flocking to 5-Star and
the League. In just the three months since the March election, the
League's popularity has grown from 17% to 28%.
That the upsurge in
popularity of 5-Star and the League is due to younger voters is shown
by recent polls. In the March election, about 35% of Italians under
age 35 voted for those two parties combined. About 43% of Italians
over 65 voted for the old mainline center-right and center-left
parties, while only 28% voted as the young Italians did.
Economic growth is one of
the two major political issues in Italy. The other is immigration.
Italy has taken in 750,000 immigrants. The EU cannot solve Italy's immigration problem;
other EU members have problems with immigrants, too, and no law or
policy on this subject will solve this EU-wide problem. Lack of EU
help for Italy's immigrant problem has turned Italians towards
anti-EU populism. 5-Star became Italy's largest party by running a
strong anti-EU and anti-immigration campaign. This is likely to
continue with an unstoppable rise in populism and the growing
political power of younger voters. Italy has changed from a very
pro-EU country to a strongly anti-EU country, and all the ingredients
are at hand for this to continue.
It is likely, therefore,
that a populist leader will one day be running the Italian government
not at some distant point in time but perhaps quite soon. 5-Star and
the League have solid majorities in both houses of Parliament. If
Conte stumbles as prime minister, he might fail a vote of confidence,
which would require a new election. That would almost certainly
result in a victory for 5-Star or the League, most likely for Matteo
Salvini, who is the real power in the League. And the first thing
the government will then do is vote to withdraw from the EU. If Conte
does not stumble and is not thrown out by a Parliamentary vote of no
confidence, he will sooner or later have to face an election against
5-Star and the League, whose populist appeal to the voters will
probably have grown even greater than it is today.
In 2011 Italian Prime
Minister Mario Monte issued a statement describing a closed-door
conference with [French] President Sarkozy and [Angela] Merkel in
Strasbourg on November 24, 2011. It said that those two had declared
Italy the decisive battleground in the euro-zone crisis and that
“they are aware that a collapse of Italy would inevitably lead to
the end of the euro.” Of course that was long before immigration
emerged as a problem, but there were other reasons, which I explained
in my book, and which still exist, for Italy to become crucial for
the existence of the EU. Nevertheless, with this perspective, it is
interesting that Chancellor Merkel on June 28, 2018, told the German
parliament, “Europe faces many challenges, but that of migration
could become the make-or-break one for the EU.”
