What does Italy want from Europe?

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Italy takes over the Presidency of the European Union today, its eleventh since 1959, with Prime Minister Matteo Renzi facing weeks of business delayed by the allocation of top EU jobs. The European Parliament, the Commission and the Council are all busy with appointments to new posts before they go off for their summer break. Prime Minister Renzi will probably try to use this time to push ahead with Italy’s presidency agenda. He’s in a strong position to build on his 41 percent share of the vote in the recent European elections in which Italian turnout - at 59 percent - was one of the highest in Europe.

Elections across Europe produced the most Eurosceptic Parliament ever but in Italy Renzi managed to contain much of that populism with Italian Socialist MEPs topping the poll. It has given him a legitimacy in Europe he had previously lacked. Mr. Renzi and Germany’s Angela Merkel lead the only two governments to have won the recent European parliamentary elections.

The Italian Presidency comes at a critical time. With no clear sense of political direction, Europe still faces a financial crisis which is difficult to forecast due to unpredictable markets and an economic crisis of growing unemployment and uncertain growth (compare Italy’s minus 0.1 percent growth rate to Germany’s 2.5 percent for the last quarter). European foreign policy also faces challenges, especially in its southern and eastern neighbourhoods.

Despite all this, Italy still matters in Europe because of its critical mass. The latest Eurostat figures suggest that, with a population of 59.7 million, Italy accounts for 12 percent of the European Union’s GDP. Italian GDP per capita is 25,600 euros compared with an EU average of 25,700 euros while Italian inward investment represents 19.6 percent of GDP compared to an EU average of 19.1 percent.

But can Matteo Renzi’s recent electoral victory help turn him into an economic and political force at European level?

However Italy will have to work hard in several key areas. It needs to get its public debt under control (at 132.6 percent of GDP compared to a European average of 87.1 percent). It must increase investment in R&D (which currently stands in Italy at 1.27 percent of GDP compared to a European average of 2.07 percent). Finally it has to increase employment (in Italy at 59.8 percent compared with an EU level of 68.3 percent).

But can Matteo Renzi’s recent electoral victory help turn him into an economic and political force at European level? The Italian media already applaud his very distinctive and sometimes assertive approach which they describe as “first the agenda, then the names”. He doesn’t suffer from an inferiority complex with his European partners - he once reminded Angela Merkel that, unlike Germany, Italy respected European pacts - and he has a very clear set of priorities at the core of which is a vision of the kind of Europe in which he would like to live.  Renzi’s ultimate goal is a United States of Europe as “a dream of a generation that on the ruins of the war began the creation of a new entity”.

Tomorrow he presents those priorities to the new EU Parliament’s first plenary session. They include growth and employment, changing the European discourse and European external action.

  • Growth and employment: Europe needs action on structural reform, better use of the Single Market (especially in services and energy) as well as financing growth, deepening European Monetary Union, increasing employment and the digital agenda.
  • Changing the European discourse: by governments moving beyond simply advocating more austerity towards rebuilding trust between member states and their citizens.
  • Relaunching Europe’s role at regional and global level: In Ukraine, the Middle East and North Africa (particularly in relation to migration), in relations with the US and the TTIP, the enlargement process in the Balkans, boosting negotiations with Turkey and fostering macro-regional strategies.

Italy doesn’t want to change the EU’s rules during its presidency but it does want to change the EU’s priorities. At the last European Council, Matteo Renzi had a chance to demonstrate this with flexibility. He wanted decisions driven not just by budgets but by growth and investment and he wanted a softer fiscal compact for those willing to reform. Angela Merkel didn’t exactly respond with greater flexibility on these issues but at least she displayed a willingness to use what flexibility there was to better effect. It wasn’t a huge victory for the young leader but the fact that he even managed to get Chancellor Merkel to look at the proposal is considered a success. Angela Merkel called her Italian counterpart “Mr. 40 percent”, a reference to his relatively high poll in the European elections. 

Relations between Rome and Berlin do seem to be improving. Italy no longer sees Germany as the main cause of its misfortune and now considers it an ally. Berlin seems to be responding to this change in tone.

Matteo Renzi’s priority after the new EU agenda will be the new EU names and the appointment of an Italian to one of the top jobs. Given that Mario Draghi’s Presidency of the ECB would appear to rule out a top economic post for Italy such as Trade Commissioner, it looks as if Rome may end up chasing the job of EU High Representative for Foreign Affairs.

However, faced with the weeks of delay that the process of deciding top EU appointments will cause, the Italian presidency must ensure it doesn’t make the mistake of delaying its own vital EU reforms. The next six months will be a credibility test for Italy.

 

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