Op-ed Ana Botin “EU joint goals require joint financing“(FT.com, April 7) take where your Great Read”Risk of losing Italy“Go by repeating the same call for some form of joint EU debt instrument to fund Italy and Spain.
Regardless of the euphemism that is used every time this problem arises, what is being asked is fiscal transfers from countries with greater capacity to borrow from those who are lacking. Set aside for a moment whether this is the right course of action or not. To be sure it will not happen without clarity and requirements.
Take Italy – Italy’s economy has performed poorly in almost every metric for decades, largely because of structural inefficiencies that Italy recognized but only refused to overcome. I can buy skyscrapers in London or New York without a notary while Italians make appointments, photocopy paper reams, lick and put government stamps on them and pay exorbitant fees to many notaries to sell one-bedroom flats. Ever wondered why Italy doesn’t have a pharmaceutical chain? There are rules, including the requirement to have a degree in pharmacology to own – not operate – a pharmacy, which prevents ownership of more than one. Foreign investors or foreigners who have dealt with any part of the justice system and have never returned. Fiscal authorities abuse their cruel power to extort tax settlements with the full knowledge that the road to court takes years.
About 60 million tourists travel to Italy every year and we have a large population of emigrants throughout the world – but Alitalia has never been a solvent. Every government has seen the benefits of elections by electing the oldest residents outside Japan with unreachable pension rights. Young and educated emigrate. This and many other things, before the world had heard of Covid-19, explained the ratio of Italy’s gross debt-to-gross domestic product of 135 percent.
Matteo Salvini and other Italian populists asked for “solidarity” when they meant money and then turned into perverted arrogance by suggesting that unless Germany paid no one would buy a BMW. The idea that German taxpayers must support Italian spending so that German workers can work in full while Italy buys a BMW with money that has just been sent by Germany (someone must tell Mr. Salvini) cannot be persuasive. Endless humiliation based on stereotypical stereotypes of German history is of no use other than to embarrass us.
The Covid-19 crisis can present important opportunities from this chaos. Italian politicians must stand aside and ask Mario Draghi to negotiate an Italian state debt restructuring. This can be achieved in an orderly manner, with the “solidarity” of the European Union, with concurrent fiscal transfers from the EU and a one-time tax on Italian domestic savings. Far from being afraid of any conditions, Italians must hope that the conditions attached – fixated – to such a solution will prevent a repeat of decades ago.
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