Crisis a la Italy – again

It seems that the most indebted country in the euro zone (130% debt to GDP) will hold early parliamentary elections in a couple of months. The outcome will definitely have a serious impact on the future development of the European Union. In the interview, Elsa Fornero economics professor at University of Turin, whose name is associated with the pension and labour market reforms that were issued under her ministerial term (2011-2013) and still exemplary for Western Europe talks about the causes of this succession of crises, and the possible overall solutions.

Péter Zentai: It is said that your country is the most severe case in Europe. Will the upcoming extraordinary parliamentary elections help or worsen the chances of recovery?
Elsa Fornero:
It is a bit strange that a Hungarian journalist ask about this issue. Maybe you know that in international political, economic, and scientific circles the events of Hungary are seen just as complex and problematic as the issues of Italy. However, I do not question the validity of your question: Italy faces major structural problems, such as severe debt, the lack of economic growth, which is – contrary to other countries in similar situation – not originated from the 2008-2009 crises. Our basic problems reach far back; we deliberately deceived ourselves. Politics has always swept under the rug the broadening gap between Northern and Southern Italy, the young and the elderly, and between truly competitive fields and companies that are kept running by protectionism. Each successive government ‘bought’ social contentment again and again by taking some from the government budget, pushing the country into more and more severe debt. By now, there is 1 billion euros new debt on average for each day of the year. These enormous burdens are put on the shoulders of the younger generations, who are the key to our country’s future.

The majority of whom cannot find a job…
This whole situation gravely damages people’s – especially they youth’s – trust in politics. Despite that, the majority of people do not think that the country is on the verge of collapsing. Most Italians can easily adapt to difficult situations anyways, and they still remember what happened five years ago: we were on the brink of bankruptcy. The head of the government that was formed at the end of 2011 the economist Mario Monti asked me, a politically unexperienced university professor to serve as Minister of Labour and Social Policies and to conclude Europe’s most radical pension reform and raise retirement age as high as possible. After that, I had to make the Italian labour market as flexible as the German or the Swiss.

How was it possible to make the Italian society accept this?
By telling the people, if they did not make sacrifices now, then schools would have closed down, teachers, health professionals, police officers, and fire fighters would not have gotten their salaries. If something terrible had happened, there would not have been anyone to fight the catastrophes. For one and a half years, the government was full of experts, and we undertook what politicians did not dare to – unpopularity. We did not tell the people what they wanted to hear, but what was true. Those were rare moments in the Italian history.
According to the ‘deal’, in exchange for the reform of pension and labour market the ECB started and has kept buying our state bonds, quickly and radically decreasing their market prices along with Italy’s debt service charges. The central budget was relieved, and the country managed to avoid bankruptcy so that the EU Commission could suspend Excessive Deficit Procedure against us.

Did people view it as the government of experts acting as the ‘international capital’ and certain foreign governments dictated?
Some did think that. Even before the early parliamentary elections, populists, who wanted to be in the favour of the people and who vindicated thinking for them, along with laymen in political parties and the press had a big responsibility in that. There has been countless of misinformation about foreign parties deliberately causing Italy’s financial problems so that that German and other foreign banks could acquire its resources; or one which said that the German Chancellor wants to bring Italy under her own administration. What every Italian should understand is that the debt crisis and the problems of Italian banks are nothing else but the result of continuous ‘locally generated’ errors and crimes. They are our own faults, and nobody else can solve these problems.

Is it manageable? Is it possible that until the elections, the majority of Italians will think ‘it has been enough of democracy, it is high time a strong person led the country’, like a new Berlusconi?
Berlusconi was not strong – on the contrary, he was weak. He won the people with his strong personality and interesting character, but as soon as his politics were revealed, the majority of his supporters left him.

If not Berlusconi, then someone who represents strength, determination, and holds power with an iron fist?
You are wrong. There is no sign of nostalgia for power in Italians. Neither have they got disillusioned from democracy. Their trust is only broken in corrupt, unprofessional politicians who keep making promises only to cause disappointment. At the same time, Italians want to live in a more transparent and accountable democratic system. Such system and its upkeep require new and different politicians; someone like the new French president, Emmanuel Macron, or the new Canadian, who is also a young, dynamic, pragmatic, and absolute democrat Justin Trudeau. Italians want someone who is not talking in vain, but someone whose words and actions are guided by real expertise and proficiency.

Are there any figures in the Italian political arena like Macron?
Not really…

So Italians will have to choose from the ones talking to the wind; from the left wing radical Five Star Movement, or the right wing radical Northern League?
The difference between the Five Star Movement and the Northern League is quite considerable. The latter one bases its programme on misinformed and poorly educated people whom they keep misleading. In contrast, the composition of the Five Star Movement is somewhat better, even if its primary leaders are absolutely unqualified for their position and would endanger the country if they were allowed to exercise power on their own.  However, we shall not forget that among the supporters of the Five Star Movement there are intelligent and highly educated people, who do want the best for the country. They are probably going to vote for them, since there are no better alternatives.

What you say is not very optimistic.
The majority of Italians – including the political elite – has to trust their instinct. If they can directly see that the future of the country is at stake, they suddenly stop being delusional and face the truth. The truth that if they want to decrease debt, control and manage migration, and fight terrorism then everyone has to make sacrifices. Hopefully, the majority of them can learn from their past mistakes and will probably vote for Matteo Renzi and his expert colleagues. With them – with no better alternative – the country has a better chance for reforms that will bring economic recovery and development, and stabilize its place in the EU. Maybe the new, expertise-based political leadership will spend the financial resources from the ECB and markets on education, science, the modernization of the economy and society – all in all, to build up a more transparent and open country.

Original date of Hungarian publication: June 6, 2017