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An Umpire for Italy’s Circus


A few months ago I wrote a piece about the way in which the European Union seemed bent on compelling Southern Europe to trudge endlessly through the Valley of the Shadow of Austerity in order to preserve the Euro as a single currency. This policy meant that countries such as Italy would have to undertake supply-side economic reforms in the worst possible circumstances. Such reforms take time and meet strong political opposition (see, the Thatcher years for evidence of this.) And they are much harder to push through if they are introduced against a background of economic stagflation and social distress. If the entire political class of a country is united in support of reforms-within-austerity, then it can survive the loss of several elections. “Eventually, however,” I predicted, “some political entrepreneur or dissident party will see the opportunity of power by offering the voters an end to austerity and a program of stimulating growth outside the euro — and the entire house of cards will tumble down.

On that occasion I predicted that Silvio Berlusconi, the former prime minister, might be that entrepreneur because he had announced that his center-right political party no longer supported the reform program of Mario Monti, the ”technocrat” (read bureaucrat) whom Angela Merkel and Brussels forced Italy to accept as prime minister. As a result the political forces on both sides seemed to be lining up for today’s election exactly as one might expect: in support of the euro and Austerity were the Euro-establishment, the local Italian establishment, the center-left Olive Tree party, various small center parties, and Mario Monti. In support of an end to Austerity, a program of growth, and a loosening of the euro constraints were Berlusconi’s center-right party, some small rightist parties, and Berlusconi himself. But the chief drawback of the center-right in such a campaign was that Berlusconi would be leading it.

For various reasons he was not the right man to lead this campaign even if he remained head of his party and a strong influence behind the scenes. He was a moderate economic reformer (Italy is more capable of leaving the euro financially than any other Mediterranean country) and he would likely make strong noises about restructuring the euro in the campaign. But many voters, given his past complaints about the constricting effects of the euro that led nowhere, will doubt his determination and suspect his willingness to cut a deal with Brussels. So I concluded that what this campaign needed was a leader of the Right who was generally acknowledged to be a man of integrity, someone who is technically competent in fiscal and monetary questions to match Monti’s undoubted expertise, and a skeptic about the Euro in its unreconstructed form who is not hostile to the European Union in a wider sense.

Well, as Andrew Stuttaford has been documenting in a series of posts, the political entrepreneur who has emerged to lead a populist insurgency against Austerity and the Euro bears no relationship to that ideal. He is a left-right populist advocating an understandable but incompatible mix of policies united mainly by hostility to Italy’s political establishment and existing parties. We’ll see tonight, but Beppe Grillo looks like winning a lot of votes, maybe second place, but having little to contribute to a long-term stable program of necessary political reform—except his willingness to consider abandoning the Euro as the basis of government policy. If he does win a significant number of seats, the likelihood is that he will usher in a period of instability, followed by new elections, followed by his party’s gradual disappearance.  

So who might help to pick up the pieces for the center-right in these unstable circumstances? My candidate for the prime ministerial head of a center-right coalition a few months ago was Antonio Martino, a former Italian foreign minister in Berlusconi’s first administration and defense minister in his second. He is one of Europe’s most distinguished monetary economists and respected in the profession as such. (Americans might also note that he was a favorite pupil of Milton Friedman’s.) He is rare among Italian politicians for being known for his unwavering adherence to the principles he espouses publicly — and, not coincidentally, he has a following on the left as well as on the right because he can make the case for classical liberalism in a way that persuades opponents rather than merely cheers up supporters. He pointed out the design flaws of the euro in advance, and his criticisms have been validated by its crisis-prone experience since then. But though a skeptic about the euro, he is not a Euro-skeptic in the wider sense. Indeed, he is the proud son of the Italian foreign minister who, as the host of the Messina conference that launched the original European Economic Community in 1956, was one of Europe’s founding fathers. What he resents and resists — as far as I can judge from past conversations — is the current attempt to transform the cooperative international institution that his father helped to found into a vehicle for imposing regulatory interventionism on a continent undemocratically.

In my earlier article I proposed him as prime minister. Since the center-right looks like being deprived of a governing majority, that idea will no longer fly. In addition Italy’s greater need in the unstable political situation of the next few years is an Italian president who has the qualities described above and the respect of all parties. Italy needs a strong political umpire who is also known to Europe, America, and the world not merely as a safe pair of hands but also as a principled and upright person and someone ultimately above party.

Martino is an even stronger candidate for the presidency in my view than he was for prime minister.

Admittedly, there was an is one drawback to his candidacy. He didn’t want to be prime minister and he probably doesn’t want to be president. He would prefer to retire to his favorite Italian island, open a bottle of good Sicilian red wine, and read the comic novels of P. G. Wodehouse.

As far as I am concerned, that clinches the case.