Sunday 24 March 2019

David McWilliams: Why Italy is the next country to fall to Trumpism

First Brexit, then Trump - will Italy be the next domino to fall?

Ancient Roman soldiers parade in front of the Colosseum during celebrations of the birth of Rome. For Italy, as for many other countries, the euro has been a disaster. Photo: Getty
Ancient Roman soldiers parade in front of the Colosseum during celebrations of the birth of Rome. For Italy, as for many other countries, the euro has been a disaster. Photo: Getty

David McWilliams

The Bangladeshi selfie-stick hawkers are doing a brisk trade outside the Colosseum. Local chain-smoking lads dressed as gladiators prey on vulnerable tourists, while portly priests on their annual visit to Catholicism's corporate HQ take time out from soul-searching.

Even the heavily armed soldiers, there to protect against a potential Italian Bataclan, are smiling in the Mediterranean sunshine. And as it is midday in Italy, everyone is checking out everyone else.

All looks quite normal, chilled out and as it should be.

But it is not. Italy is a country going through what could be described as a nervous breakdown.

After a decade of almost no economic growth, in two weeks Italians will vote in a referendum which will determine what direction this huge country of nearly 60 million people will take. The result will profoundly affect the EU.

Although the referendum is technically about the way Italy is governed, the country is split down the middle in a plebiscite that has come to symbolise something much bigger. Once again, like the Brexit vote and the Trump election, this referendum is about insiders against outsiders. It is about those who are the victims of inequality and globalisation and those who uphold the status quo.

On one side, you have the Italian political elite - the insiders embodied by Matteo Renzi, the youthful prime minister. He represents the people and institutions that have ruled Italy for decades.

On the other side, you have an unusual anti-EU coalition, the Left and the Right - the 'Outsiders' - who are united by a common belief that, after 10 years of economic stagnation, there must be another way.

We have the same picture we saw in the UK in June and in the US last week, where an elite is desperately trying to connect with the people and large swathes of the population are saying they have had enough.

In terms of the big picture, the Italian election can be seen as yet another domino in a year of falling dominos. First we had Brexit, then Trump, and the next big one for Europe after Italy is the potential rise of Le Pen in France.

Italy is the triplet in a quartet that will culminate in France, and, in my opinion, if the Italian elite loses on December 4, Marine Le Pen will win in France.

This is a global phenomenon that can't be seen in national terms but only in international terms. This is what happens in politics; what starts as a feeling becomes a reality at the ballot box, not least because every election that goes against the elite gives "permission" for the next bunch of popular 'Outsiders' to scent victory.

Ms Le Pen has said she will pull out of the euro the morning after she wins. There's no delaying Article 50 in her book. The Front National's policy is an immediate withdrawal from the euro for France. In Italy, the two main parties backing a No vote in the referendum, the left-wing Five Star Movement and the right-wing Northern League, both want Italy to leave the euro and reinstate the lira. Right now, the only consolation for the elite is that they are behind in the polls; anyone who wants to win an election may be better off trailing in the polls!

But the reality for Italy (as for many countries, including Ireland) is that the euro has been a disaster. For years Italy, the eurozone's third largest economy, was pre-eminent in fashion, design, sophisticated manufacturing and car-making. All this was predicated on periodic devaluations of the lira against the deutsche mark, which allowed Italy to compete. This was the deal and everyone broadly understood it.

Once Italy joined the euro, this traditional avenue was closed off to Italian industry and it started to become uncompetitive. Italian industry couldn't compete with Germany and, as Europe's biggest debtor, Italy began to lose control over its own destiny. Following the last euro crisis, Italy has become, from a macroeconomic point of view, little more than a protectorate of Germany. And it hurts.

Young Italians have less chance of getting a job than almost any other nationality in Europe. Unemployment for the under thirties is running at a staggering 35pc. Seven out of 10 Italians under the age of 36 live with their parents and 100,000 educated Italians left the country in search of work last year.

Real wages have stagnated and corporate Italy is not investing. All the while, the debt-to-GDP ratio - the highest in Europe - is going in the wrong direction.

Is it any wonder, with this sort of economic performance, that people want an alternative?

Could Italy turn its back on the EU? Of course it could. In fact, why wouldn't it? Any country that can change sides in a world war is politically capable of changing its currency, don't you think?

It's clear when you are in Rome that something serious is going on. Behind the designer sunglasses, the impeccable three-day stubble, and the beautifully coiffed hair, Italy is deeply divided. Italy is experiencing, as was the case in Britain and in America, a popular insurgency.

Far-off Brussels is firmly in ostrich mode, head stuck in the ground, planning a hard Brexit to teach other "deplorables" a lesson. But what it doesn't understand is that 'Deplorable Lives Matter'!

And - worse for the EU that has proved itself to be electorally tone deaf time and again - deplorables vote too.

Mr Renzi, the EU's man, asked for looser fiscal rules, but Germany vetoed it. Mr Renzi asked to be allowed to bail out his bust banks, but Germany refused.

Now Italy is about to embolden Ms Le Pen in France, and who is to blame?

Clearly not the Italians who are expressing their democratic wish, but the EU officials who didn't listen to Mr Renzi, their Roman legate, when he looked for help.

As I marvel at the Colosseum, I can't help thinking that Vespasian, the Roman Emperor who built the Colosseum and conquered Britain in the west and Judea in the east, would never have left one of his own with so little ammunition to fight a popular insurrection.

Irish Independent

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