EU faces disintegration unless…
European leaders must resist the temptation to make Italians pay for the sins of their government. It is smarter to offer help.
After the crisis of the past three months, Italy now has a government based on an uneasy coalition between the Five Star Movement and the League.
The two parties will have difficulty agreeing a budget, but the budget they eventually propose is likely to exceed limits imposed on Italy as a member of the eurozone.
This would result in a renewed political crisis. The government may well fall, so we could be facing elections later this year or, more likely, early next year.
The populist answer to Italy’s woes? Bring back the technocrats.
The outcome of the next Italian elections will greatly depend on how the EU responds to the turmoil in that country. There is a strong inclination in Europe to use the occasion to teach Italy a lesson.
If the EU follows this line, it will dig its own grave by provoking a negative response from the Italian electorate, which would then re-elect the Five Star Movement and the League with an increased majority.
Rather than try to teach Italy a lesson, the EU should ask itself: what can Europe learn from the upheaval in Italy?
Historically, Italy has always been the strongest supporter of the EU because Italians didn’t trust their own governments.
And with good reason: those governments had a tendency to be corrupt and to follow policies that didn’t serve the interests of the people. But the EU must not punish the Italian people for the sins of its governments.
What were the legitimate grievances that caused Italian voters to opt for Five Star and the League? First and foremost, it was Europe’s flawed migration policies that imposed an unfair burden on Italy.
The EU does not have a common migration policy. Each member state has its own policy, which is often in conflict with the policies of other member states.
But the EU does have the so-called Dublin III regulation, which applies to everyone. This regulation holds that refugees are the responsibility of the country where they first land. This means there is a disproportionate impact on Italy because of the international norm that requires ships rescuing refugees from the sea to land them at the nearest safe port, which in practice means Italian cities.
Until recently, most refugees could move on to northern Europe, where they wanted to go. But since September 2015, both France and Austria have closed their borders, and rescued migrants have been stuck in Italy.
This situation has been not only unfair but also financially very burdensome at a time when Italy was lagging behind most other European countries economically.
In my opinion, this was the main reason why the League, in particular, did so well in the recent elections.
In addition to this, there are economic worries. Italians are, by and large, pro-Europeans, and they don’t want to be left out of the European project or the euro.
The Italian government needs to find a better narrative than threatening to leave the euro: if the coalition introduced any innovation that could be seen as a parallel currency, it would trigger a run on government bonds and a flight of deposits from Italian banks. But there are reasonable complaints as to the way the euro area is being managed.
What can Europe do, then, to influence the outcome of the next Italian elections in its favour? It must alter the Dublin III regulation and pay the lion’s share of the cost of integrating and supporting migrants in Italy.
Forcibly relocating them elsewhere is neither possible nor desirable. Other countries, particularly Poland and Hungary, would strenuously resist.
Indeed, Viktor Orbán, the Hungarian prime minister, won the last elections by basing his campaign on the false claim that I wanted Hungary to be flooded with Muslim immigrants.
I have always advocated that the allocation of refugees within Europe should be entirely voluntary.
It follows from the voluntary principle that the problem of the Dublin III regulation cannot be addressed by forced resettlement, but only by the EU financially compensating Italy for the migrants who land there.
Historically, Italy has been very welcoming not only to political refugees but also to economic migrants.
This changed only when France and Austria closed their borders and the League leader, Matteo Salvini, earned his electoral victory by inciting anti-immigrant sentiment.
As a matter of fact, migrants impose a financial burden on the recipient country only until they are integrated. In the long run they make a much larger contribution to the recipient country than the cost of integrating them.
I wonder how long inciting the public against migrants will remain a surefire way to win elections. Eventually people will realise that they are being misled by unscrupulous politicians.
For instance, Salvini’s friend Orbán is directly hurting Italy’s interests by refusing to accept any refugees. By contrast, the EU would render Italy a great service by pursuing a Marshall Plan for Africa by utilizing its largely unused borrowing capacity.
Reforming the Dublin III regulation will be a long, drawn-out process. In order to constructively influence the next Italian elections, the EU must make a firm commitment at its June summit that it will compensate Italy even before the process has been completed.
This will require Emmanuel Macron and Angela Merkel to take the lead and persuade the dissenting forces within the EU to follow.
The European Union has many problems to deal with at the summit. But Italy has become the most pressing one, because it is threatening the very values on which the EU was founded.
In this context, I should also mention a Marshall Plan for Africa, variations of which have been supported both by Germany and France. A meaningful Marshall Plan would require at least €30bn additional a year for a number of years.
This is far in excess of what member states are willing or able to put up. But it could be financed by tapping the largely unused borrowing capacity of the EU.
Right now, the future of the EU is too uncertain to launch the financing scheme, but if Germany and France undertook to pay the out-of-pocket expenses for the first year, which are bound to be minimal, it would go a long way to reestablishing confidence in the future of the EU.
The amount invested would be small potatoes given what is at stake, namely the disintegration of the union. The disintegration of Europe is no longer a figure of speech: it is a harsh reality.
The EU faces a wide range of threats, external and internal. From the outside, the EU is menaced by Trump’s US, Putin’s Russia, Erdoğan’s Turkey, Assad’s Syria, and Libya, which is a failed state.
Inside, Poland and Hungary are undermining the values on which the EU is based, but Italy is emerging as the most pressing challenge to its sustainability.
The EU has little chance of avoiding disintegration unless the Franco-German alliance holds together. But that alliance is endangered by the elections for the European parliament in 2019, where they will be opposing each other in order to control the selection of the next president of the European commission.
It is important to recognise problems in order to resolve them. Those who are trying to destroy the EU don’t realise what they would lose if they succeeded.
An Italian-language version of this piece was published in Corriere della Sera.
•George Soros is chairman of the Open Society Foundations