FINANCE AND POLITICS / So the EU's turnaround puts our Government in trouble

It is not yet clear to what extent the current government in Italy can claim the title of "change", but it is clear that it will be dealing with "the Europe of change". The European institutions are changing shape and attitude both because the leaders who have marked the last years of their activity (Chancellor Angela Merkel, President of the European Commission Jean-Claude Juncker and President of the European Central Bank Mario Draghi) leave the scene (the last two) and are tarnished (the Chancellor; see the long analysis by Jochen Bittner on the last issue of Die Zeit), and for a change of relative importance between the institutions.

The European Parliament has acquired a new centrality. The nomination of Ursula von der Leyen as President of the new Commission has been approved by a very narrow majority (and essentially thanks to the vote of the Italian Members of the 5 Star Movement), but is keeping the completion of the collegiate body in check and has not given the its approval to as many as three of the candidates proposed by national governments and, after a series of interviews by von der Leyen herself. This has nothing to do with the major role Parliament wants to play.

After the elections last May, the two traditional parties (popular and socialist-democratic), which had 54% of parliamentarians in the previous legislature, have a total of 45% of the seats (a loss of 76 benches); not having the absolute majority, they must come to terms with other groups (let's call them “non-traditional”) on the single measures – be they normative or approval of appointments). This also leads relatively small European parliamentary groups to sell their alliance at a high price, even temporarily on individual measures. The overall outcome is that "sovranisti" and "eurosceptics" weigh far more than their seats in the European Parliament say; they have, in fact, the power of majority.

The new Commission, still not in charge, appears to be much weaker than the previous ones (since the one presided over by Walter Hallstein immediately after the ratification of the Treaty of Rome). This is not only due to the increased role of the Parliament, but because it presents itself as a not well-matched group with European-federalists such as Paolo Gentiloni and vaguely sovereign Europeans, such as Oliver Varhelyi. Moreover, in the last year an important part of its competences in the field of monitoring (and action) on budgetary policies and on public debt has been, almost silently and without noise, transferred by the Commission to the European Stability Mechanism (known as the Fund save-states) established in 2014, now with 180 employees and entrusted with the responsibility of assessing the sustainability of public debts and the management of funds to prevent, in the event of a State's serious difficulties, being “infected” with others whose debt is instead sustainable. In the Esm, the result of an intergovernmental agreement, only Germany and France have the power of veto.

Changes also to the ECB where Christine Lagarde has taken the place of Mario Draghi. Two very different professional profiles. Draghi is an economist, having joined the ECB after an academic career in which he worked for a long time on the macroeconomic aspects of rational expectations, he was a counselor of Treasury ministers and of the Bank of Italy, he represented Italy on the Board of Directors of the World Bank, general manager of the Treasury before coming to the leadership of the ECB. A route from public servant, interrupted only for a short period in an international private business bank.

Christine Lagarde, on the other hand, is a largely American lawyer, business lawyer and training officer, who entered relatively late in political life and in the public sector, when in 2005 she became, first foreign trade minister, then Minister of Foreign Affairs. 'Agriculture and Fisheries and, finally, Minister of Economy, Industry and Employment. Role from which it came to lead the International Monetary Fund at a time when the institution's summit (occupied by a former minister its compatriot) was in a serious and unexpected crisis. In Washington, she was interested above all in the organizational aspects of the institution, leaving economists the care of the most purely economic aspects. He led the IMF in the years in which the international community emerged from the crisis that began in 2008; years in which formal legal dimensions were particularly important.

Christine Lagarde proved to be very skilled in seeking consensus in the IMF Board of Directors. Draghi did not hesitate to announce innovative policies and measures (such as the Whatever it takes) even if influential members of the Council of the ECB had, and demonstrated, differing opinions. With Lagarde as president we must expect greater consensuality and collegiality in the ECB. At the last session of the ECB Council, at least 7 of the 24 members expressed themselves against the new phase of Quantitave easing; among them the representatives of central banks of weight, such as those of France, Germany and Holland. A few days later the former presidents / governors of the central banks of Austria, France, Germany and Holland took pen and paper and wrote a note of harsh criticism to Draghi for his leadership of the ECB. It is clearly a letter to daughter-in-law because her mother-in-law means. The true recipient Christine Lagarde. It is conceivable that he will listen much more to the "hawks" than Draghi has done and that his mission will be to ensure that policies, programs and measures converge with the "doves" in satisfactory compromises for both sides.

So the "dramatis personae" and the institutions change. It is interesting to note that two economists from the European Commission (Lewis Dijkstra and Hugo Poelman) and one from the London School of Economics (Andres Rodrigues-Pose) have drafted a still limited circulation work on «The Geography of EU Discontent "(The Geography of Discontent in the EU). It is a detailed analysis of the 63,000 electoral colleges in the EU-28 (ie with Great Britain): the conclusion is that the discontent it is particularly marked in electoral colleges characterized by industrial decline and unemployment.

One wonders if the Italian "Government of change" has full knowledge of "the change" underway in Europe and whether the economic and financial policy of Italy does not give more attention to growth and less to welfare.

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