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ANALYSIS

EUROPE

‘Northern EU countries don’t take Italy seriously’

On July 1st Italy will take over the EU presidency, setting Europe's agenda for the next six months. The Local investigates whether Matteo Renzi can use the chance to reposition Italy in Europe.

'Northern EU countries don't take Italy seriously'
European Commission President José Manuel Barroso (L) with Matteo Renzi, prime minister of Italy, and Herman van Rompuy (R), president of the European Council, in Brussels on June 4th. Photo: Georges

Usually the underdog when it comes to serious European politics, Italy came out as the unexpected winner of last month’s EU elections.

Prime Minister Matteo Renzi won an impressive 40.8 percent of the vote, making his Democratic Party (PD) the largest left-wing party in the European Parliament.

Great things were expected of Renzi in the days which followed, not least of all as Italy will on July 1st take over the rotating EU presidency.

But the Italian premier has kept quiet since election fever waned, failing to get involved in the debate surrounding who will be the new European Commission president, prompting hopes to fade of a new place for Italy in European politics.

SEE ALSO: Will Italy oust France as Germany's EU ally?

Despite the prime minister’s great election victory, Italy will likely have a “passive presidency” of the Council of the EU, according to Christian Blasberg, a professor at Rome’s Luiss University.

“I don’t think that many things will change. I don’t think the election result will have a very big impact on the semester,” he tells The Local.

One indication that Italy may fail to reposition itself in Europe is the recent debate over the next European Commission president, who is set to replace José Manuel Barroso later this year.

German Chancellor Angela Merkel has backed Jean-Claude Juncker, former prime minister of Luxembourg, a choice rejected by UK Prime Minister David Cameron.

As Blasberg explains, “the focus is on Germany and the UK, while perhaps France can play a little role. There’s not much talk of Italy.”

While it could be in Italy’s interest to play a stronger role in the Commission president decision, Blasberg says “northern European countries don’t really take Italy into consideration.”

But for Daniele Pasquinucci, a professor at the University of Siena, Italy still has the chance to make itself heard.

“The defeat that Renzi inflicted on the Italian Eurosceptic parties, especially the Five Star Movement (M5S), immediately turned him into a ‘European leader’,” he argues.

While Italy has just six months at the helm of the Council of the EU, the presidency will give the government “a good opportunity to put the country at the centre of the European scene,” Pasquinucci tells The Local.

As president, Italy will be responsible for organizing EU meetings and setting the EU’s political agenda, with a focus on economic growth and job creation.

But for Blasberg, the structure of the rotating presidency does not give Italy much opportunity to make a real difference to the EU.

A country “can give some orientation and make proposals, but it’s not in a position to be able to make policy changes. The Italian presidency is not in a position to do much more,” he says.

Furthermore, despite Renzi getting the backing of his electorate, Blasberg believes that “Germany is inclined to not take the promises from Italy too seriously.”

Just a few months with a youthful, reform-driven prime minister in Rome is not enough to turn the tide on years of political turmoil.

Since three-time prime minister Silvio Berlusconi resigned in November 2011, leaving the country’s economy in dire straits, Italy has had one national election and three prime ministers.

Such a record is unlikely to fill the leaders of the EU – the world’s most well-developed union of democratic nations – with confidence, less so to grant Italy significant decision-making powers.

Hopes that Italy may be able to shake off its bad reputation, with Renzi as the poster boy of Europe, were promptly dashed with the recent revelations of not just one, but two, high-profile corruption scandals.

A number of officials at Milan’s Expo2015 trade fair – billed as a way to promote foreign investment in Italy – are currently being investigated for corruption over €1.35 billion worth of construction contracts.

Shortly after the scandal broke, police in Venice announced they had traced €20 million transferred from the city’s “Moses” flood barrier project to foreign bank accounts and allegedly used to finance political parties.

Pasquinucci describes the two scandals as “extremely serious”.

“Nobody can underestimate their meaning and their implications,” he says, although adds that he does not think they will weaken Italy’s EU presidency.

On the other hand, however, Pasquinucci says that “a lot will depend on the measures that the Italian government takes to tackle the problem of corruption.”

No matter Germany’s view of Europe, or that of other leading EU nations, Blasberg believes the Italian government is currently far too preoccupied to place much emphasis on the forthcoming presidency.

“Italy is concerned with its own problems. There’s not much orientation of what we can do within the EU, but instead how we can solve our own problems,” he says.

Growth in Italy this year has been forecast at 0.6 percent by the European Commission, after shrinking by 0.1 percent in the first quarter of 2014. Job creation also remains a challenge, with unemployment reaching 13.6 percent in the first three months of this year.

But for Pasquinucci, Italy’s new “strong-willed” leader can get attention both at home and abroad.

“The main merit of Renzi is to have given a strong momentum to the inconclusive Italian political life, through the announcement of a vast and ambitious reform agenda,” Pasquinucci says.

As Italy reflects on the European elections and looks to its presidency, he says, “the current position of Italy in the EU seems to be more solid.” 

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EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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