The return of the lira? This year, Italy’s fate hangs in the balance.

January 5, 2015

An employee of Editalia shows a silver reproduction of 500 Italian lira as part of a coin collections in Rome

FLORENCE, Italy – Italian Prime Minster Matteo Renzi, the youngest leader in Europe, faces a national economic morass that, if not decisively addressed in the coming months, could bring down the entire 17-nation eurozone. 

Indeed, if he does not tackle the staggering national debt and woeful unemployment numbers, Italians this time next year could find themselves back using the lire – and the Germans marks, French francs, Spanish pesetas and Dutch guilders too.

When the 89-year old president of Italy, Giorgio Napolitano, announced this week that he is stepping down soon because of his age, he urged Italians to embrace something that has always been in short order here: national unity and trust in each other and in Italy’s institutions.

Giannelli, the cartoonist of the Corriere della Sera, could not help but comment on the symbolism of the departure of Napolitano, who it depicted throwing a crown over his head that was caught by a smiling Renzi, who turns just 40 on Jan. 11. “Grazie, Giorgio!” Renzi exclaims in the cartoon.

Napolitano’s looming departure creates an immediate political quandary for Renzi: Can he bring Italy’s famously fractious political factions together to choose an acceptable presidential successor? If he navigates that battle successfully, there may hope for the coming war to remake the Italian economy and reduce its out-of-control debt, which stood at 132.6 percent of GDP in 2013 and is expected to hit 138 percent for 2014. Forcing it off its steady rise is the largest job of the center-left government: and a grinding, horrible, unpopular one it will be.

In a recent press conference, Renzi said that 2015 would be the critical year for Italy. He admitted that there was “a sense of worry, of weariness, of mistrust” but said that “the word for 2015 is the same as that for 2014 — rhythm, to give the idea of change and urgency, to do everything possible so that Italy again plays its proper role in the world.”

The many pessimists grumble that in his 10 months in office, he hasn’t hauled Italy out of the mire. But on the other hand, he’s giving it a good shot.

He’s secured his base and launched an annual get-together called La Leopolda (after  the old Florentine train station in whose reconstructed hall it’s held) to be the gathering place of a new elite – of entrepreneurs, inventors, ideas people. Using the metaphor of a garage – the kind where Steve Jobs and others developed the idea for Apple – he told his 2,000 influential fans that “the garage is the place where ideas are made … Italy is our home, and we won’t leave it … we will change Italy.”

Renzi has been compared to Britain’s Former Prime Minister Tony Blair – with whom he dined in Rome in November. Those on the left in Italy consider Renzi, like Blair to be right wing. But like Blair, he dominates his party, the center-left Partito Democratico (Democratic Party). It had been a quarrelsome grouping, split at the top into half a dozen baronies led by (mostly) former leaders from when it was still the Communist Party of Italy. Now the Partito Democratico has been renamed by the columnist Ilvo Diamanti as the PdR – the Partito di Renzi. The opposition within is marginalized, ignored.

Renzi has also built support by taking on corruption – which grew strongly during the years of former Prime Minister Silvio Berlusconi. He’s appointed as anti-corruption commissioner a magistrate and former head of the Anti-Mafia Commission, whom the news magazine Espresso named as its man of the year. The Espresso editors declared that Raffaele Cantone’s task is huge: changing the Italian mindset that regards some tax dodging here and expense fiddling there as okay. Instead, the editors said these so-called minor legal dodges must be seen as the foundation of much more serious crimes.

His labor reforms have brought out the unions in mass demonstrations in Rome but the changes he has instituted – allowing easier firing and elimination of redundancies – are also considered crucial. There’s an argument in the cabinet as to whether or not these procedures should be extended to the public sector, widely seen (and experienced) as sluggish and off-puttingly complex. For now, Renzi has allied with those who want to leave that for another day, which may or may not be a sign of deceleration rather than urgency – or may be the sign of one who knows where and when to choose his battles.

 

PHOTO: An employee of Editalia shows a silver reproduction of 500 Italian lira as part of a coin collections in Rome, Jan. 14, 2014. REUTERS/Stefano Rellandini 

56 comments

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the only question for europe is: which country exits first?

is it ukip, le penn, or maybe greece, why not italy or spain, hell the dutch or the germans could very well do it too.

each one of those are around 30% probabilities and one of them will happen one way or the other.

Posted by yobro_yobro88 | Report as abusive

Slovenia will be the first one to leave the EU .

Posted by Macedonian | Report as abusive

The fundamental fact is that there are probably several countries in the Euro Zone that should not be there. If one exits, and it doesn’t matter which one, then several more may as well. If this takes the Zone down to a core of reasonably similar economies that are capable of rising and falling with a single monetary policy then it’s a golden, perhaps once-in-a-lifetime, opportunity to reset the Euro Zone and get it right the second time.

Posted by WCTopp | Report as abusive

Fair commentary on Renzi. In light of Mario Draghi’s willingness to engage in QE, it a “return to the Lira” is, for now, wishful thinking on the part of British conservatives. It’s a shame Britain has never been fully behind the European Project. They could make it better. Instead of playing the game, the UK sits on the sidelines criticizing the players. Bad form.

Posted by raybnyc | Report as abusive

I don’t think any of those countries want to leave the EU. EMU is another matter!
(I don’t have an opinion on Slovenia though; pardon my ignorance)

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