Italy Towards European Monetary Union (and Domestic Disunion)

The prospects for monetary union are fraught with uncertainty. Prestigious politicians, authoritative Eurocrats and austere central bankers debate whether the deficit of a given country amounts to 3.2 or 3.0 per cent of the GDP when the GDP measure itself is so vague an estimate as to make such calculations dubious. The construction of Europe has indeed been transformed into ‘a sort of parody of an accountant’s nightmare’ (Keynes, 1982, p. 241). In order to understand why things have taken this turn — and whether they are likely to get better in the future — reference must be made to the interests of those who rule the roost. This is why our chapter begins with Germany (Section 5.1). Sections 5.2 to 5.5 then discuss the long history of Italy’s wobbling public finances and their over-hasty redressment — imposed by the Maastricht criteria — which has aggravated the country’s inveterate problems, paved the way for new ones and made the political transition Italy is going through tougher and more hazardous. In particular, the deepening of the north-south and east-west economic and social divide has set in motion centrifugal forces in the richer parts of the country while creating an explosive situation in the poorer. What is at stake is indeed the very idea of a common Italian destiny.