While the country’s election has provided more questions thananswers, one thing remains clear – Italian voters don’t wantausterity.
“Fifty-seven percent of Italians don’t like the idea ofausterity and they don’t want to do the sorts of things that theEuropean Union wants imposed upon them. That’s causing a hugeproblem,” Young said.
He says the political limbo has left Italy with a deep sense ofuncertainty.
“There is no clear outright winner, there is no cleargovernment…they simply don’t know whether Italy is going to be areliable member of the Eurozone. And if Italy is not going to be areliable member of the Eurozone then there is probably not going tobe a Eurozone,” he told RT.
Young spoke to RT about the wider impact of Italy’s economic andpolitical struggles.
RT: What will happen to the Eurozone if the parties can'tfind a way out of the deadlock and uncertainty remains if there'sanother election?
Patrick Young:
The Euro crisis – the elephant in the room that nobody wastalking about so far this year - is back…and it is back big time.Because ultimately 57 per ent of Italians don’t like the idea ofausterity and they don’t really want to do the sorts of things thatthe European Union wants imposed upon them. That’s causing us ahuge problem.
Because ultimately you have got incredible new parties, likeBeppe Grillo’s Five-Star Movement; you’ve got an incredible wave ofsupport that came back for Mr. Berlusconi, the former PM, and ofcourse now it leads to the worst possible political limbo. There isno clear outright winner, there is no clear government, it is goingto take weeks and ultimately markets despise the idea ofuncertainty.
What they are looking at now is an awful uncertainty, becausethey simply don’t know whether Italy is going to be a reliablemember of the Eurozone. And if Italy is not going to be a reliablemember of the Eurozone then there probably is not going to be aEurozone.
RT:
Italy has operated on shaky coalitions since the end of WorldWar Two - why should another one be any more problematic?
PY:
I think the difficulty right now, and you are absolutelycorrect, - there have been multiple coalitions in Italian historysince the end of WWII. But as for this moment, the divisionsbetween the politicians are huge.
You’ve got essentially Mr. Berlusconi, Mr. Grillo. Theyabsolutely cannot abide each other. I mean, Grillo himself isultimately the anti-Berlusconi candidate.
And at the same time we’ve got [Pier Luigi] Bersani, who justedged victory in the lower house of parliament by three of fourtenths of a percentage point for Mr. Berlusconi; who has gota soft-left in Italian terms reasonably hard-left compared to theUnited States of America mandate…but very shaky one…to moveforward.
And ultimately also a part of this you’ve got finally theblew-in Mr. Monti, technocrat, who the first time he went to thepolls was essentially a huge failure with barely nine percent ofthe vote. These people are not the sort of people who are going tomanage to get together instantaneously and get to agree adeal. Their differences are vast and that’s what is spookingthe markets.
RT:
One thing's clear: Italian voters don't want austerity.President Napolitano says it means 'the bell is ringing for Europeas well'. Will Europe listen?
PY:
This is an incredible problem, because ultimately the dolce vitacannot be paid for under the current economics of the Italiansystem.
Of course we’ve had a number of politicians who have spent thewhole of the last 50 or 60 years in frankly all of Western Europetelling people that government would ultimately be the answer toall of their problems.
That era is over.
We are looking at the era of smaller government, smaller debt,and actually a great deal more capitalism rather than governmentactivity. Italy is running into a brick wall and the EU with it.How is the EU going to react?
Well, ultimately, I think it’s difficult to see how Germanpensioners who are already seeing their libraries being closed inorder to subsidize places like Greece - those people, the Germanswho worked incredibly hard, the Dutch, they are reluctant to wantto go further and subsidize the dolce vita.
RT:
Italy has the second-highest proportionate debt - at 127percent. How big is the danger it'll follow Greece into severe debtcrisis?
PY:
We have to bear in mind the fact that actually day-to-day theItalian government is not in the dire straits of the Greekgovernment. The good thing about Italy is that they pretty muchcover their bills on a day-to-day basis.
The problem is that this dear old dolce vita factor dating back50- 60 years of shaky coalitions that essentially did not want tobite the bullet has led the Italian to have a huge debt mountain.So already there is 110-120 percent of GDP to put it in perspectivethat’s not anywhere near a 150 – 160 per cent that you have got inGreece, at least.
But on the other hand if you compare even to, let’s say, theUnited States of America which has been rather profligate for quitesome time. They are barely reaching 100 percent of GDP, in otherwords a year of economic output. A great many nations one wouldargue should be under around 60 percent.
So, Italy’s problem therefore is that they need to keep sellingthis debt. And what we have already seen in international moneymarkets is that as soon as the Italians came out this week and said‘We’d like to sell few more bounds in order to pay a few morepensions and cover a few more hospitals, etc.’ The money marketsturn round and said ‘Well it’s going to cost you because we don’ttrust your government.’
That is where the problem lies. It’s not a short fuse likeGreece, which is essentially a bankrupt nation. It is a longerfuse. If the Italians cannot keep sustaining the debt they alreadyhave, then they have fundamental problems. And unfortunately with acoalition that’s essentially a coalition from hell, looking at thenegotiations that are now being put together by the president, it’sgoing to be very difficult for Italy to sustain itself in theEurozone but there is some time.
All is not yet lost.
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