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05 March 2018

Carnegie Europe: From Berlin to Rome: Europe’s Latest Headache


Germany finally has a government but Italy could scupper major reforms of the European Union.

The German public may not like it. Once again, the country will be led by the same grand coalition of conservatives and Social Democrats. It has taken five months to put a government in place after Germany’s inconclusive federal election last September. Angela Merkel is now about to begin her fourth term and soon usher in her fourteenth year as chancellor.

But it’s good news for Paris and Brussels at a time when decisive leadership will be needed over the Brexit negotiations, reform of the eurozone, and a much-needed viable migration and refugee policy. [...]

So despite the relief in Paris and Brussels that Merkel is still in charge, Germany and France now have to contend with Italy, the eurozone’s third largest economy, the world’s eighth biggest economy, and a founding member of the EU.

The center-right coalition, led by former Prime Minister Silvio Berlusconi’s Forza Italia (Go Italy!), looks set to win the most seats in the lower house of parliament but not enough to form a majority, according to exit polls.

The antiestablishment Five Star Movement is in second place and is poised to become Italy’s largest single party. The governing center-left coalition came third in a campaign dominated by intense criticism of mass immigration, high levels of youth unemployment, and growing poverty. 

Indeed, as the Economist wrote in its leader about the campaign, “the country is in poor shape to withstand the next downturn. Responsible, reforming government is as badly needed as ever.”

That’s not going to happen soon. But it would be a mistake for Berlin, Paris, and Brussels to hold back on the reform of eurozone until a new and stable government is in place in Rome. With or without Italy, it’s time to rev up the Franco-German engine. [...]

Full article on Carnegie Europe



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