The economic growth in Europe is, according the current forecasts, blocked as the consequence of the Ukrainian war. For Italy it is not an  novelty, but the perspective is worsened also in relation to a not brilliant past. According to OECD statistics, Italy is, the only European country that in the last thirty years has suffered a reduction in wages of 2.9 per cent, while all the others have registered a more or less satisfactory growth *

There had been in Europe a new phase of growth in the last years of past decade. But 2020-2021, with the pandemic crisis, economy was again in difficulties. The resumption of growth and the increase of the employment were foreseen for 2022. Unfortunately, the war in Ukraine cancelled this forecast. The reverse happened.

1.  in Germany, with the new year, the political framework had deeply changed. Last autumn's meeting in Moscow between Angela Merkel and Putin had underlined the importance of relationship between Germany and Russia in trade, investment and of gas supply.

The meeting had ended with Putin offering a large bouquet of flowers to Angela Merkel - testimony of a relationship with distant roots, which dated back to 2001 when Merkel was at the helm of the CDU, the conservative party but not yet Chancellor of German.

Olaf Scholz, the social democratic lhead of the new government had promised the continuation if the Merkel’s policy. But the new government is  composed by three parties with different position, and the "Verdi" have a clear anti- Russian attitude. The previous agreement between German and Russia hadn’t a  a follow-up.

The case of France is indicative of the new European context. In the April elections, Emmanuel Macron was re-elected to the presidency of the Republic. But with the subsequent elections for Parliament the coalition inspired by Macron didn’t achieve the majority. The  Resemblant National (National Rally) led by Marianne Le Pen won 89 seats, an unprecedented result in the French parliamentary history, well above any forecast.

In this new context he broad  alliance, NUPES, united behind Jean-Luc Mélenchon head of the extreme-left, became with 131 seats the second party and the most prominent opposition group in the Assembly. At the same time, The Republicans, the old party of the traditional right, lost half of the previous seats gaining only 61 representatives in the National Assembly.

As a consequence of this unexpected election result, Macron’s Ensemble , the electoral coalition of eight parties, lost control of the National Assembly having obtained 245 seats, well short of the 289 needed for a majority. The two main opposition parties, away from the traditional political asset of the he Fifth Republic, have became respectively the second and the third party in the National Assembly in open contrast with the government policy. 

The novelty was even more profound in Italy, where, after the crisis of the government led by Mario Draghi, former president of the European Central Bank, early elections will be celebrated at the end of September. According to forecasts, a right-wing government will be led by Giorgia Meloni leader of Fratelli Italia, a far-right party, together with the League led by Matteo Salvini and Forza Italia led by Berlusconi, who had led his first right-wing government nearly three decades ago.

In other words, the war in Ukraine has deeply destabilized the politics of the main eurozone countries, as it is the case of Germany, France and Italy.

2.   With the beginning of the new year, after the abandonment of the German-Russian agreement – the Russian belief was that the problem was not any longer in the choices of European countries but in the United States in agreement with the Ukrainian government of Zelensky.

On 24 February Russia invaded Ukraine, taking the  responsibly of the war.  Russia could have still point on the position of France, which was trieding the possibility of an agreement, But Moscow was convinced that, after the retirement of Merkel, the policy was in the hands of the US. A war in many ways avoidable began.

European countries suffer to a large extent from the war. The goal was the isolation of Russia, the blocking of its exports (excluding gas), the heavy devaluation of the ruble, and the putting into crisis of the Putin government. The opposite happened. The export of gas has found new outlets in China through the pipeline inaugurated in 2019 while ta new one that will pass through Manchuria will double the supply of gas to China, bringing it to over 100 billion cubic meters.

 A new agreement with India has provided for the quadrupling of liquefied gas supplied by Russia. Overall, Russian gas has found outlets in two countries which comprise 40 percent of the world's population.

It should be added that also Turkey, violating the rules imposed on countries belonging to NATO, has established new agreements for the supply of Russian gas.

3.  This conversion of outlets has placed European countries in difficulty and, in first place, Germany and Italy, the main users of Russian gas in Europe. Alternative sources from the Middle East, Algeria, potentially Congo are not immediately available, creating growing problems for household heating and for the energy supply of industry and services.

Unsurprisingly, inflation, for the first time since the euro was established, has reached levels around 9 percent, drastically reducing household purchasing power and production levels.  The recovery of the economy, that was already underway and which should have taken a definitive leap forward, has given way to a new phase of stagnation, a reduction in income from work, an increase in poverty. 

Is it a scenario destined to last over time? Any prediction is risky. The war in Ukraine can go on for a long time. Russia will not accept Ukraine joining NATO. Ukraine is the largest country on the continent with about 45 million inhabitants directly bordering the Russian Federation. The difference with two small countries like Estonia and Latvia. already members of NATO, with less than a tenth of the inhabitants of Ukraine, is evident. And, in any case, their membership belongs to an era characterized by the difficulties of Russia.

Moreover, Russia has substantial control of large part of the Donbas region. And the fundamental port of Odessa cannot operate, as has been the case for wheat, without an international agreement with Russia.

France needs to resume the initiative that at international level remains in the hands of Macron as President of the Republic. Germany has overturned the policy followed by Angela Merkel, but it cannot renounce the partnership with France. Italy will be led by a composite right-wing government in which the League, according the declaration of its leader, will operate for a compromise aimed to stop the war.

The future looks uncertain and any forecast can be risky. But the fact remains that the war has created a new political horizon, strengthening relations between Russia and China, and increasing the difficulties in the relations between Chine and Europe.

Summing up, the sort of the war is in the end linked to United States and Russia. Over the past twenty years the United States had to leave Iraq and withdraw from Afghanistan. The development of the current war is difficult to predict. The only certainty is that the framework and international relations have profoundly changed. And, without taking the initiative, Europe, risks ending up definitively on the margins of global politics, the center of which increasingly tends to focus on the shores of the Pacific, dominated by the United States, on one side, and by China, allied with Russia, on the other.
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*Tito Boeri and Roberto Perotti – “Repubblica”, 29 agosto 2022, p.7.