There is a conviction among European Union officials that in much the same way as the euro and Greek debt crisis was ‘fixed’ after 2010, so with right minded policies the catastrophic migration problems can be resolved now. The trouble with this narrative is that it is a gross distortion.
Yes, a €15 billion loan package may have been agreed between the Greek government and EU at the end of last week as part of a broader debt deal. But the underlying social and economic fissures are as wide as ever.
There have been 95 eurogroup finance meetings on Greece since 2010 and the results have been catastrophic. National output has fallen 25 per cent. Adult unemployment stands at 20 per cent, jobless young people at 40 per cent and three generations of families are being forced to live cheek by jowl in the same crowded apartments while Russian oligarchs buy up swathes of the country.
Looming storm: If Italian PM Giuseppe Conte sticks with the economic policies on which the coalition of the 5 Star movement and the League was elected, it faces a clash with Brussels
Sweeping Greek’s surrender to euro-fanaticism aside is easy because it represents a small part of the euro area’s output, budget and prosperity. But the notion that the economic basket case that is Italy, now in the hands of extremist parties, can somehow be contained and made good troubles even the most devoted EU enthusiasts.
When Italy became the third largest country in the euro at its birth in 1999-2000, it pledged to reduce national debt from 120 per cent of total output to 60 per cent by 2009. It currently stands at 130 per cent after several years when it actually managed small budget surpluses. The economy has barely grown. Domestic output is 8 per cent below the level it was in 2007 at the onset of the financial crisis and just 4 per cent above where it was a decade earlier.
If the new Italian Prime Minister Giuseppe Conte sticks with the economic policies on which the coalition of the 5 Star movement and the League was elected, it faces a brutal clash with Brussels.
Among the measures pledged are lower and flatter taxes, a citizens income for everyone and a roll back of the pensions reforms of previous governments.
The difficulties of Italy dwarf those of Greece. Much of Europe’s €900 billion of bad loans are concentrated in Italy. Rome is the biggest recipient of European Central Bank monetary support and is currently in receipt of some €444 billion.
Italy, like most of the southern tier of the eurozone, is simply unable to live with a single currency that keeps German motor cars competitive across the world but is too rich for the more dysfunctional euro-area states.
French officials and others are urging Italy’s populist government to stick with the eurozone playbook. That is going to be enormously difficult given that most of the policies on which it was elected move in the opposite direction.
Italy’s problems, including immigration, cannot be passed off as an aberration. The surplus on the current budget looks as if it will be rolled back if the government pushes ahead with its radical agenda. With adult unemployment at 11.2 per cent and youth unemployment at 33.1 per cent the country is too socially divided already for another bout of imposed austerity.
On top of this Italy has made it clear it wants no more truck with migration. The Aquarius boat carrying 629 migrants and turned away from its shores to Valencia in Spain demonstrated this just ten days ago.
A clash of political, economic and social cultures within the eurozone is more toxic now than at any time since the Greek crisis erupted eight years ago.