From banks to immigration, how Italy can take advantage of united Europe

June 26, 2017
Editorial Europe
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Published below – courtesy of Assonime – are the remarks by Stefano Micossi during the presentation of the book “Europe, a challenge for Italy ”, an event organized by the LUISS School of European Political Economy and the EuropEos Association, held at the Sala Zuccari of Palazzo Giustiniani on June 6, 2017.

We are faced with an unprecedented, in the postwar period, challenge to the values of openness, internationalization, liberal democracy, social market economy on which 7 decades of peace, growth and prosperity have been founded. Assailing these values, under attack from within and from outside forces, requires a strong political response, on a national and European level.

The elections in Austria, in the Netherlands and, above all, France have shown that – when facing existential choices for and against Europe and for and against the Euro – voters have chosen to go with stability, the Euro and the European Union. But this challenge is not won yet. European institutions must be able to regain consensus around jointly funded projects, supported by the public opinion. Institutions as well as member countries have to ponder on the mistakes that have been made and need to relaunch the European construction on new bases of democratic effectiveness and legitimacy – in order to address the momentous challenges of security and immigration, environment, economic and monetary union among economic systems that are still highly divergent.


The texts presented here cover the main subjects discussed on how to advance the European construction. They do not necessarily reflect a unified vision, but they share two premises: that a return to nationalism and closed borders would be an epoch-making disaster, endangering the fundamental good of peace; And that we can advance in European construction only starting with what has already been built: there is no other European design in which to overcome what we have. The institutions as well as the regulatory framework can certainly be adapted and revised, with the division of competencies between the Union and its member states reconsidered – but the new rights of freedom and integration in the large common market created by the European construction can not be called into question.

The book opens with a section devoted to Italy, in which the different authors show the great benefits that our country has received from belonging to the Union and the Euro zone. The common theme is that our country must grow up, that it needs to solve its internal problems right at home, and can not continue to lay the responsibility of its low growth and high unemployment on others. Above all, Italy must find the determination to tackle its enormous public debt – which compromises our ability to grow and exposes us to the risk of new financial instability. If we can put our public debt on a safe and believable reduction path, the return of investor confidence will largely counterbalance the depressive effect of deficit containment measures.

On the European front, everything is moving around the Franco-German axis made feasible again by the outcome of the French election. New food-for-thought papers published by the European Commission address the new arena and, hopefully, the way forward. The hypothesis of amendments to the Treaties no longer seems to be a taboo, not even in Berlin. The fact should not be disregarded that President Macron always mentions Italy as a key actor in this new phase – a clear proof of the need to balance, along with us, an altogether unbalanced weight in favor of Germany in the negotiations.


When it comes to security and defense, although NATO remains the cornerstone there, it is now clear that we will have to equip ourselves to “take our fate into our own hands”, as Chancellor Merkel put it, given the policy changes in the United States and the new assertiveness of Russia along our borders. We will have to spend more on our defense and do so in a much more co-ordinated way – thus reducing the huge waste given by the existense of 27 national defense policies. The European Commission will release a new document, which suggests significant advances on two fronts: on the one hand, the consolidation of the defense industry and the unification of armaments policies; On the other, the creation of common operational military capabilities. The challenge remains to define common guidelines that so far haven’t been there. Nor can one overlook the need to keep the United Kingdom tied to Europe in this crucial field. Regarding immigration, Italy has long been isolated and alone facing an unprecedented wave of migration, too intense to be absorbed without serious upheaval in our political, economic and social bodies. The situation, however, is changing, not least thanks to the decisive and effective action of Secretary Marco Minniti, which strengthened our credibility in the first place by boosting the mechanisms in place for managing arrivals and reception.

A joint letter to the European Commission of Minniti and de Maizière – the German Federal Minister of the Interior – outlined a coherent approach to reception, strengthening border controls and aids in developing the countries where migrations flows originate, all of which is being implemented. Huge European resources will have to be mobilized, although they are not available yet, but the path now seems to be open in the right direction. The creation of the new border police body is advancing. Finally, the Economic and Monetary Union. The food-for-thought paper published by the European Commission in the past few days clearly outlines the way forward, in the direction already indicated in 2015 by the Five Presidents’ Report.


The two front for this particular worksire concern the unfinished but already well-established banking and financial union, as well as the tax union, that has yet to be included in this project. Banking and financial union can advance by finding a balance between the opposed demands for reducing risks in the national financial systems – a demand that invests Italy in particular – and to share the risks, above all through a cross border European Systemic Risk Board and an adequate fiscal back stop of the unified bank management system (the Resolution Fund). Concrete proposals are already on the table, Italy can contribute through its concrete acts on public debt and the riskiness of bank budgets so as to speed up the process. The tax union project remains vague. President Macron tends to interpret it as the opening of common spaces in support of national budget policies, especially in regards to investments in new technologies and infrastructure; But Germany believes that the margins to advance with budget-coordinated policies, without political union elements, are now depleted. They are, instead, calling for the monitoring tasks on the economic policies of the member countries to be moved to the MEP, controlled by the member countries themselves, removing it from the duties of the Commission, which is considered as too politicized. Dialogues have been launched on the matter of a common Eurozone fiscal capacity: a scheme, complementary to those of the single countries, featuring anti-cyclical support against unemployment (there is a good Italian proposal on this) along with one on investment support.

What remains is that the development of a common budget, which can also be used for economic policies, requires that the member countries respect the budgetary balance and that “no bail out” rule already envisaged by the TFEU. National public bonds would then be exposed to the risk of restructuring in the event of non-compliance with those same principles.

If all this was to be achieved, it would open the way for a “secure” bond to be issued at European level (just who the issuer may be would have to be decided upon), a common liquidity tool for the European financial system and maybe even an instrument for partial risk sharing regarding sovereign – through a partial conversion of these into a safe title. The picture would be completed with a figure of European finance minister who would promote and manage the aggregated budgets of the Eurozone, the surveillance on national budget policies and a common debt instrument. It is clear that these advances would be possible after restoring full confidence in the ability of France and Italy to bring their economies back to a “structural” convergence path, along with that of Germany, thus removing sovereign risks.

So, the wind has changed, Europe is moving forward again. It is up to us, as President Ciampi once said, to participate in the game as active players on an equal footing with other major partners.