Greece and Italy…and what then?
“There is no alternative….”
…offered a conditional resignation on Tuesday, agreeing to step down but only after Parliament passes an austerity package — before the country will go to early elections, government sources said on Tuesday evening.
The move comes in the face of an escalating debt crisis that has hobbled Greece, threatens Italy and could infect the rest of Europe.
Infect? Italy’s national crisis is also and already a significant component of the Eurozone’s system crisis. It is not an agent external to the Eurozone. Italy is Europe’s third largest economy. Because of Italy’s size and importance, it should come as no surprise that:
Speaking after a meeting of European Union finance ministers in Brussels on Tuesday, Olli Rehn, European commissioner for economic and monetary affairs, said Italy’s economic and financial position was “very worrying.” He added that the European Commission was “concerned about the situation and we following the situation very closely.”
“’The problem in Italy is not primarily the real data,” Germany’s finance minister, Wolfgang Schaüble, said in Brussels on Tuesday. “The debt is high, the deficit is not — economic data are not that bad. The problem is a lack of trust from the financial markets and that of course is a realistic situation. And this trust has to be strengthened.”
It is a matter of “trust,” and thus, in the first instance, “a political crisis as much as an economic crisis,” as David Dayen points out. Finance capitalists across the world just do not trust Italy to resolve its problems, to solve them, in other words, to their satisfaction. This mistrust is contagious. The economic crisis is a political crisis because Italy’s sovereign debt crisis, like those found in Greece, Spain, Portugal, Ireland, etc., ineluctably threatens the core institutions of the Eurozone system. Whence the Euro, we might wonder, when so many national economies collapse?
To be sure, Italy’s sovereign debt crisis will not spare Italy’s political institutions and political culture. The imposition of an austerity regime on Italy will necessarily modify its political institutions, and thus kinds of politics Italians can feasibly give themselves in the future. Alterations of this sort are features of the austerity project. They amount to an economic and political constraint placed on Italy’s democratic institutions.
From the part to the whole: The Eurozone’s political crisis — Will it exist tomorrow, the day after? — also helps to determine its financial crisis. After all, imposing austerity regimes on Italy and Greece will fail to resolve the Eurozone’s economic problems. It will, at best, transform them into a diminished quality of life for many living in those countries now suffering sovereign debt crises. This ‘best case’ outcome will, in turn, merely create another political problem for the Eurozone and, naturally, for those countries forced to endure an austerity regime. Europe’s transnational institutions and some of its national institutions will appear less than sufficiently rational and thus able to provide in the future an acceptable standard of living for many living in the Eurozone. In fact, this rationality deficit has already appeared as such: The Europeans and the G-20 have no answers, according to Barry Eichengreen. Consequently, “[t]he republic of the centre [in Europe] has institutions and media behind it, but it is tottering,” according to Serge Halimi. Armies await their orders, for civil order — Which civil order? Whose civil order? — must be kept intact even if the new transnational order demolishes the lives of millions.