Tuesday

22nd Jan 2019

EUobserved

How radical is Italy's Savona really?

  • Italy's president Sergio Mattarella thinks Paolo Savona is too much anti-EU (Photo: EUobserver)

Italy starts its working week by being thrown into a political crisis, as the two eurosceptic parties that wanted to form a government reached a standoff with Italy's president.

Over the weekend, president Sergio Mattarella rejected academic Paolo Savona to become a member of the new Italian government, reportedly because of his eurosceptic views.

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In response, Giuseppe Conte dropped his bid to become prime minister, while the Five Star Movement is calling for the impeachment of Mattarella.

So how radical is Savona?

According to Italy's president, dangerously so.

"The uncertainty about our position in the euro has alarmed Italian and foreign investors who have invested in our bonds and companies," the president said according to agency Ansa.

The concerns seem to revolve around Savona's eurosceptic views, in particular about passages from his latest book "Like a Nightmare and a Dream", in which Savona called the euro a "German cage".

The 81-year old would-be finance chief wrote that "we need to prepare a plan B to get out of the euro if necessary ... the other alternative is to end up like Greece."

But is that really such a radical position to take?

During the height of the euro crisis in 2012, national governments of EU countries were often asked whether a plan B existed in case the common currency collapsed.

It was always denied, but some years later it emerged that at least two countries had elaborated plan Bs.

Ironically, these were two of the most hawkish euro countries: the Netherlands and Germany.

Former Dutch finance minister and Eurogroup chief Jeroen Dijsselbloem admitted in 2014 his country had had a plan B.

"It is true that [the ministry of] finance and the then government had also prepared themselves for the worst scenario", he said then.

"Government leaders, including the Dutch government, have always said: we want to keep that eurozone together. But [the Dutch government] also looked at: what if that fails. And it prepared for that," he said.

On Sunday afternoon (27 May), Savona himself came out with a statement, in which he tried to defuse the debate.

"I want a different, stronger, but fairer Europe," he said.

That said, Savona is a long-time critic of several aspects of European integration.

As far back as 2004, he criticised the Stability and Growth Pact as too rigid,and called for public investments to be exempt.

Ahead of the euro introduction, in a 2001 paper, Savona struck a less controversial tone.

"When European Monetary Union came into being, its architects realised that it would be impossible to create a single European market if monetary management was unified while individual member nations retained 15 different currencies affected by flexible exchange rates," he wrote.

"I don't think anyone would object to the statement that a single market requires the existence of a single currency, or, as a second-best option, the retention of national currencies linked by fixed exchange rates, and, as a fundamental prerequisite, the free movement of capital in all forms and under any sort of maturity," Savona added.

Nevertheless, even calling for a plan B in case the euro fails is sensitive.

The European debate, as well as most national elections in EU countries, since Brexit has been framed as the pro-EU mainstream battling against anti-EU populists.

Although some feared victories for anti-EU forces in France, Germany, and the Netherlands last year did not follow through, the threat to the pro-European mainstream from those that criticise the system is far from over.

Italians vote in election dominated by migration and EU

Sunday's election outcome, under a new system, remains uncertain and is likely to result in uneasy coalitions between parties with conflicting views on how to deal with migrants and play a senior role in Europe.

Italian crisis felt in Spain and wider EU

Collapse of government talks in Rome triggered instability on eurozone markets and controversy over an EU commissioner's comments on Italian democracy.

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