The EU’s Future: A View from Italy

Gianfranco Pasquino, a political scientist, former Italian Senator and faculty member at Johns Hopkins SAIS spoke at a discussion form at SAIS late last week on current attitudes towards the EU in Italy.  In the course of discussing current budget challenges facing several European countries, Professor Pasquino pointed to trends with bearing on the future of the EU as a whole.

Since its creation, EU governance has offered smaller European nations both aid and a chance to enlarge their say in continent’s political decision-making. As often, Brussels has offered, in Pasquino’s words, “an alibi” to national leaders looking to share blame for politically unpalatable decisions or underperforming economies. Which perspective European leaders adopt depends on their nation’s economic weight but also, predictably, on their outlook towards government in general: Euro-skeptics tend to be conservative while left-leaning politicians tend, in Pasquino’s phrase, “to see Europe as an opportunity.” But this simple breakdown doesn’t fully fit. Just as unions in the U.S. tend to support protectionist economic policies, so far-left parties in Europe may end up aligning with Euro-skeptics on economic policy, a trend that Pasquino predicted may well occur should the Italian center-left win power in elections next year.

Pasquino was quick to observe – and condemn – the prevailing sense in the U.S. media that the EU is in the midst of an “irreversible” crisis that will end with the dissolution of the Eurozone. Other countries benefit, as Italy does, from the economic benefits the EU provides, primarily through growth in trade. Under Prime Minister Mario Monti, Italy is taking steps towards fiscal discipline while ensuring that growth does not stall. While Italy’s debt stands at roughly 120% of GDP (far higher than the U.S., although recent growth in U.S. debt has closed the gap) the bulk of Italy’s debt is held nationally, similar to the composition of U.S. debt immediately following World War II, while the majority of current U.S. debt is held externally. Pasquino also pointed to Italy’s historically high household savings rate as one sign that its economic footing may be sounder than is generally believed. 2011 OECD household savings data tells a slightly different story. As of 2006, Italy’s savings rate approached that of Eurozone leader Germany, but it has fallen in half in the recent crisis years, and now stands roughly on par with the U.S.

Eurozone proponents and Euro-sceptics will continue to differ over the role national governments should play in alleviating the current economic downturn. Pasquino concluded noting, as others have, that the Eurozone has moved into a generation of leaders with no personal experience of the postwar forces that drove its creation. At a minimum, further deepening the Eurozone institutions as a path to collective security may become less of a reflex. Pasquino’s comments implied future political discussions on the EU will bring starker demands that it prove its worth.