Italy needs the EU, and the EU needs Italy

Italy needs the EU, and the EU needs Italy
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It’s been a chaotic few months for Italy. After elections in March with no conclusive results, and after several unsuccessful attempts, the country finally has a government.

New Prime Minister Giuseppe Conte now has the unenviable task of representing the views of both the anti-establishment Five Star Movement, which was the biggest party emerging from March’s elections but without enough seats to govern by itself, and the League, the nation's far-right party, while maintaining Italy’s status as one of Europe’s largest economies and leading players.

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Driving this movement is popular discontent with economic austerity following the eurozone crisis beginning in 2009. This dissatisfaction has been compounded by the waves of migrants arriving across the Mediterranean Sea escaping conflict and poverty in Syria, Iraq and parts of Africa.

The new populist government has already laid out some proposals to addresses these sources of frustration: cut taxes, implement a guaranteed basic income for the poor and deport 500,000 migrants.

Perhaps it’s too simplistic to say only the past few months have been chaotic, since the country has been plagued by economic and political instability for many years. Since former Prime Minister Silvio Berlusconi’s resignation in 2011, Italy has had four prime ministers.

The country has never been known for political permanence: Berlusconi was the country’s longest serving prime minister since World War II, and the country has had 64 governments since the war. So, what’s different this time?

The United States and Europe have both witnessed waves of populism in the decades since World War II, yet never before have so many anti-establishment candidates been successful in national elections. Gains made by populists in one country empower those in others.

These parties speak to frustrated populations in an increasingly globalized world of economic and humanitarian crises — hence the tendency to withdraw from international collaboration and focus domestically.

There are two major points of consideration for Italy’s new government as it moves forward: the economy and its relationship with the European Union. Many areas of concern for politicians and voters stem from Italy’s economic struggles. It is the third-largest economy in the eurozone, but it has been weak for a long time.

Italy’s government debt burden is massive, ranking second in the EU only to Greece — a country whose name has become practically synonymous with economic upheaval. Since 2011, Italy has seen a massive rise in unemployment and increased poverty.

This is one reason many Italians have pushed back against accepting migrants: If there aren’t enough jobs for Italians, how can they be expected to create jobs for newcomers?

Furthermore, austerity has been very unpopular. With the new government in place, there has been a lot of discussion of Italy “spending its way to growth.” The policy points mentioned above — cutting taxes, implementing a basic income and deporting migrants — would all be very expensive.

Recent Italian governments (some of which consisted of economic technocrats) implemented economic reforms aimed at ensuring the country stayed close to the EU.

Previous iterations of the Five Star-League coalition government were rejected because President Sergio Mattarella was concerned by the anti-Euro rhetoric of a proposed finance minister and rightly so. With the size of its economy and sovereign debut, an increase in borrowing costs as a result of leaving the euro could cause a default with effects felt around global markets.

Markets have already responded with higher borrowing costs as a result of this instability and subsequent speculation. Though Italy’s leadership has backed away from proposals to leave the eurozone, it plans to aggressively pursue what it views as reforms to the EU’s Fiscal Compact and Stability and Growth Compact, which limits a country’s budget deficit to 3 percent of GDP.

Finally, and most importantly, Italy needs to consider its future in the EU. In questioning the importance of the European Union, we must remind ourselves that just 75 years ago, France and Germany were at war with each other — a situation almost unthinkable today.

With economic interdependence at its core, the EU has served as a beacon for economic liberalism, democracy and peace on the continent for decades. Though it is weighed down by bureaucracy that can make it slow to respond and adapt to new challenges, its institutions cannot evolve without support and investment from member states.

In the face of economic upheaval, the EU should realize that a standard 3-percent deficit-to-GDP ratio, a target even its wealthiest nations can’t meet, is unrealistic.

In the face of an ongoing refugee crisis, the EU should rally and empower its member states to accept their share of those fleeing conflict so that the Dublin Regulation (under which those individuals must seek asylum in the country through which they entered the EU) can be reformed and an undue burden doesn’t fall on countries like Italy and Greece.

The European Union needs Italy, one of the six founding members, to be engaged and provide leadership in shaping its future; and Italy needs the European Union now more than ever.

Emily Buss is a former program assistant in the Wilson Center’s Global Europe Program. Prior to joining the Wilson Center, she worked in the Public Affairs Office of the U.S. Mission to the European Union in Brussels, Belgium. She holds an M.A. in European Studies from Georgetown University’s School of Foreign Service.