During the crisis a structural, unbridgeable, gap has been created between Germany and the eurozone countries .
Matteo Renzi, the new Italian prime minister, never forgets to proudly emphasize in Italy and in Europe his indisputable electoral success in the recent European elections. The explanation, if we want to find one, is that, unlike other governments that have been heavily defeated, Renzi’s just borne new government couldn’t be deemed accomplice of the European austerity policies. Renzi presented himself as a new man, an outsider in politics, mostly determined to shake up the Italian as well the European politics. A task, mostly the latter, as ambitious as hard.
Aware of the difficulties, Renzi has chosen to play the game in the very crucial German field, applying directly to Angela Merkel. In Berlin Renzi has not arrived as someone who is merely pleading. He, first of all, reassured the Chancellor about his full commitment to respect the budgetary rules established in Europe - the budget deficit under 3 percent of GDP, and the reduction of the public debt (currently at 133 percent) to 60 percent of GDP, during twenty years, in accordance with the Fiscal Compact.
Renzi has also guaranteed the commitment to deliver the structural reforms that are the true heart of the European economic strategy. In short, the full liberalization of the labor market with freedom of dismissal, reduction of public spending, and privatization of what remains of public assets. These were the sacrificial lambs offered on the altar of European policies, in return for greater flexibility in the application of the austerity rules – e.g. the exclusion of investments linked to EU structural funds from the calculation of the budget deficit.
Angela Merkel welcomed the pledge of allegiance to the fiscal rules of the eurozone. Yet, as is her style, she did not take any specific commitment. As always, the first response had to come from Wolfgang Schäuble, who heads with unchallenged authority since many years the German economy as well as, informally, the eurozone’s with the support of the executive arm of Brussels’ technocracy.
"The focus on growth and reforms is right and we fully support it- declared Schäuble - ... but reforms should not be an excuse to avoid fiscal consolidation." In other words, Italy must follow the recommendations of the EU and "strengthen the budgetary measures for 2014." Then, Pier Carlo Padoan, who presides over as economy minister Ecofin during the Italian semester Presidency, to avoid misunderstandings pointed out that the Italian government is "on the same line as the German Government ".
What about the magical flexibility invoked by Renzi? If all goes well, Italy, like France and Spain, is going to obtain a delay of a year to implement the target of the balanced structural budget and the threatening jump in the Fiscal compact.
Essentially, all as before. Nothing under the dress, said the title of an old movie. It is a clear mistake ,or , if you like, the Renzi’s naivety. You can’t modify European austerity policy, playing with the ambiguity of the pledges. On one side, swearing allegiance to the rules, on the other invoking their flexibility. Austerity, stupidly set during an economic downturn, when not in the midst of a recession, has shown not to cure the disease, but rather slowly kill the patient.
It takes quite a different determination to face the reality. The eurozone crisis has become a structural feature. What characterizes it is a deep internal rift. An unbridgeable gap has been created, during the crisis, between Germany and the eurozone countries . The year 2014, according to forecasts, Germany will grow around 2 per cent, just as the United States. Yet, with one key difference. The United States accuses a permanent trade deficit, while Germany has got a stratospheric surplus, equal to 7 percent of GDP. From this point of view, German has become the Western capitalism's China.
There is more. By starting 2015, it is going to be implemented the legal minimum wage of 8.5 euro (about 11.5 dollar); meanwhile, in a recent interview to Spiegel, Jens Ulbrich, Bundesbank Chief economist, has endorsed the current wages' rise of more than 3 per cent, backing the push by trade unions for inflation-busting wage settlements. So exports and wages' rise are bound to increase the anemic domestic demand, giving room to the growth, and supporting the reduction in unemployment, which is already significantly lower than the eurozone average, equal to about half of the Italian and a quarter of the Spanish one.
Summing up, its role as a world medium- large power gives Germany an absolute hegemony on the eurozone. Meantime, in this framework, France and Italy, the two eurozone major economies after Germany, are progressively reduced to the status of subdued provinces of an empire that dictates its untouchable as economically devastating rules.
The question is: how long can this situation last? The European elections of May humiliated the governments of the major European countries. We saw Cameron overwhelmed by UKIP, the party requesting the exit from UE of the Great Britain. François Hollande, who had just won the French presidency two years ago, has been bypassed by the National Front of Marine Le Pen, who who wants to get out of eurozone. While the Spanish Popular Party of Rajoy, who triumphed in past elections, lost twenty points, retaining a small majority only because of the division in the deployment of the left wing parties.
It is not astonishing if in this deceiving landscape shines the star of Matteo Renzi. He has got its own parliamentary majority, enlarged, as a matter of fact, to a Great Coalition that includes Forza Italia , the revived party of Silvio Berlusconi – who, meanwhile, has been acquitted in a prostitution case by the Appeal court reversing a lower court conviction that had carried a seven-year prison sentence and a lifetime ban on holding political office.
Strongly supported by Berlusconi, Renzi is fighting to implement its program of reforms, including constitutional and electoral overhaul that threaten to transform the Italian democracy in a sort of authoritarian regime.
However, there is something deeper that threatens the roots of the ambitious project of the Government. Italy has the worst economic landscape in the eurozone: being in its third year of recession, for 2014 it has been forecast a growth close to zero, if not below, and a level of unemployment still on the rise, having more than doubled compared to 2008.
The problem of Renzi, like that of Hollande in France is the trap of the German backed austerity. The Renzi's Democratic Party was the most voted party in the European elections, but no one has had the courage to reveal that the king is naked. The imperial policy of Germany is killing many eurozone countries reduced to a condition of the provinces of the German economic empire.
Cameron will try to win the British election of 2015, strengthening its criticism toward the European Union, while preparing for the 2017 a referendum "in or out" of the European Union. The example of the British referendum can push on the same path other EU member states. It is not a coincidence that in France François Hollande has fallen to a popular support level below 20 per cent, the lowest in the history of the Fifth Republic. And in Spain, Rajoy, in the upcoming election of 2015, will have to account for the bleak condition of Spain, burdened by a debt more than doubled since the beginning of the crisis and the unemployment at 25 per cent, as in the darkest seasons of the Great Depression in America. Meanwhile, Renzi, given the Italian lack of growth and the growing unemployment, might regret having endorsed the rules of Berlin in exchange for an elusive flexibility.
In this scenario the trap of the combination of austerity- structural reforms can no longer be hidden . Either the elites who govern the provinces will keep bending the dismal rules of the empire under the false cover of a tighter integration. Or, perhaps more likely, the provinces exhausted, and on the verge a democratic crisis, would rebel against the empire with the declaration of bankruptcy of the eurozone, as we have known it in this first part of the century.