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Emet m'Tsiyon

Wednesday, March 06, 2019

Italian Economist Sees Euro Currency as Harmful, Likewise Germany's Stifling Role

Paolo Savona is an Italian economist of the older generation. A veteran official at the Italian central bank, the Banca d'Italia, he was nominated by the two main political parties in Italy, the Lega [League] and the Movimento Cinque Stelle [Five Stars Movement], to be minister of finance when the Italian government was being formed last May and June [2018]. But Savona's positions on the euro currency and German domination in the single currency [euro] zone were anathema to the EU/Eurozone and to various domestic Italian interests.
His views were summed up by the Wall Street Journal:
Savona . . . sharply criticized the euro and compared the dominant role of Berlin in determining Eurozone financial policy to Nazi German aggression in the Second World War. [Globes, 5(29-30) 2018]

In any event, the president of Italy, Sergio Mattarella, nixed Savona's appointment as finance minister on the grounds that a new government with Savona as finance minister might endanger Italy's membership in the Eurogroup [that directly sponsors the Euro currency]. Now, criticism of the EU and its institutions and Germany's role in particular are nothing new in Italy. Former socialist Prime Minister Matteo Renzi sharply criticized the EU and Germany's dominant role in it [here].

In any case, the man who did become finance minister in the new government, Giovanni Tria, was quite conciliatory towards the Euro and the EU. In contrast to Savona. But he too indicated tensions with the EU and the Eurogroup, Germany in particular, but France as well that --under Macron-- wants to expand the powers of the EU central authorities in Brussels through greater political and financial integration of the Eurogroup [the single currency group] and the EU. Tria told an interviewer:
"Look, paying attention to keeping the accounts in order and to bringing down the debt  is not appropriate because Europe tells us but because we should not take the chance of damaging confidence in our financial stability"[qui Corriere della Sera, 9 (modified 10) June 2018; Eng. trans. here]. Thus Tria expresses fear of what the Eurogroup and Germany in particular will say or do if Italy acts in such a way as to damage their confidence in Italy's financial stability. Nevertheless, as long as Germany enforces an austerity policy on Greece, Italy and other Eurozone states, economic growth in the Zone will be low --and it is now low in Germany too. But the Germans and the Brussels bureaucrats, the unelected rulers over millions --sometimes called Eurocrats-- are rigid. Thus needed changes will not be made or only very slowly and too little will be done in the way of changes out of the austerity straitjacket. The Greek case is blatant because the country cannot pay its debt in the long term --debt which was mostly incurred by the initial refusal of Germany led by Wolfgang Schaeuble to help Greece keep up with a smaller debt than now starting in 2010. Even the International Monetary Fund, notoriously friendly to fiscal stinginess, now agrees that the Greek debt should be restructured if not forgiven in part. But this does not happen. German domination of the Eurogroup seems to be still intact.

We have already explained why the EU is  not democratic [here] and we believe that the more the EU integrates and centralizes control and regulations in Brussels (the EU parliament at Strasbourg hardly counts) the less democratic each member country will be.  That is the less democratic power or influence the various peoples of the member states will have over their own lives. This greater political and financial integration is what Macron is seeking. He gave a speech on this subject just the other day. However, looking at France today, what with the mass terrorist attacks and the Yellow Vest movement which opposes Macron's proposed reforms, reveals that things are not going smoothly in what French people call the Hexagon. Safety on the streets especially for Jews, but not only, cannot be taken for granted in France today. Maybe it is not Macron's proposed reforms that have brought France down --reforms mostly not yet implemented-- but the EU and Eurogroup policies that have been in effect up till now.

Yes, the dream of a united Europe has its attractions but the reality is not so rosy.
Knowing what we do about the EU explains to us why nothing good for Israel is likely to come out of the EU. Israelis and Jews generally have to start seeing the EU as a body that cannot act for the best of its own several peoples let alone helping to bring peace to Israel and the Middle East generally.

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