Will Italy vote to leave the euro?

"Dear EU, it is too late"

In the middle of the pandemic, Italy feels abandoned and resentment against the EU is growing. Much of this is due to poor communication

Language is powerful, it not only depicts reality, it creates reality. This also applies without compromise to the stage world of the financial markets, especially when it comes to decisive appearances. Even the slightest nuances and accentuation can then trigger an earthquake that sends the stock exchanges downhill.

The tragic figure was named Christine Lagarde on March 12th. The expectations of the ECB boss were high, the disappointment after her rejection of monetary measures to cope with the crisis was only all the greater and the boos were loud, especially from Italy. The boot state naturally has a strong sense of drama, but the stock market crash triggered by Lagarde's words (minus 17 percent on the Milan stock exchange in a single day) went too far.

After the ECB crisis meeting, the stock exchanges around the world rushed into the depths, and the DAX also lost around 12 percent in the meantime, but in Italy Lagarde's rejection was taken personally. There will be no "whatever it takes 2.0", said the head of the ECB, thus disappointing the Italian Prime Minister Giuseppe Conte, who had hoped for a new version of Mario Draghi's expansive ECB course. "We are not here to close the spreads," added Lagarde, a statement actually addressed directly to Italy.

In Italy, the term "spread" is the difference in interest rates between German and Italian government bonds. The closer you are to the German interest rate, the better. The German interest rates are namely at a notoriously low level, the risk premium is zero. Italy, on the other hand, with its national debt of over 130 percent of GDP, pays around 65 billion euros annually for its interest, which is as much as the state spends on the entire school system.

The reactions in Italy were correspondingly hostile. Giorgia Meloni, leader of the national conservative Fratelli d’Italia (FdI), turned to Italian citizens in a "J'accuse" video shared millions of times on social media, accusing Lagarde of deliberately causing the Milan stock market slump. In complete neglect of the fact that the key interest rates of the ECB are already at zero and therefore there is no scope for further cuts, Meloni accused the ECB of inaction and demanded rate cuts based on the American and British models. Because this was not granted, Meloni suspected dark machinations at the expense of Italy. "You want to bring Italy to its knees," rumbled the woman, whose popularity ratings were already on par with Matteo Salvini in February and whose party recently received 13 percent of the vote in election polls.

That subjugated Italy

The cancellation of the ECB is just one of several events that have been seamlessly integrated into a narrative over the past few days in the wake of the corona crisis, which depicts Italy as the powerless plaything of the "poteri forti", i.e. overpowering elites, and a Franco-German EU. In Italy of all places, which until the financial crisis of 2008 was still one of the most enthusiastic supporters of European integration, this view has become the dominant narrative after more than ten years of economic stagnation, which has now been adopted by almost all media and parties. Even the protest movement of the "Cinque Stelle" hardly directs its criticism against the "casta", the privileged and often corrupt Italian political class, but mainly against an overbearing and lacking solidarity in Europe.

This narrative has seen renewed upswing over and over again in recent years: After the "merciless austerity policy of Brussels" had restrained the Italian economy for years so that the GDP per capita is still below that of 2000, Italy is also in the refugee crisis of Rest of Europe been abandoned.

Of course, there is also something to both allegations: the guiding principle of austerity did indeed hit the Italian economy hard, and the controversial Dublin regulation meant that Italy had to deal with the influx of refugees from Libya on its own for a long time. But the fact that corruption, the Mafia and excessive bureaucracy are damaging the Italian economy far more than the austerity measures imposed by Brussels is hardly discussed. The difficulties with refugees were also less due to the Franco-German dominated EU, as Salvini, Meloni & Co. claim, but rather to allied nationalist governments such as Poland and Hungary, which opposed a fair allocation of refugees from the start.

For many Italians who have followed the right-wing view of the world (but not only for them), the corona crisis is now just further proof that the EU is in reality nothing more than a hollow bureaucratic association, the stronger member states such as Germany or France use them to enforce their own interests. How else would the silence of the EU institutions, which lasted for days, even weeks, could have been explained, while Italy's neighboring countries unilaterally closed borders at the beginning of March and some countries such as Germany even prohibited the export of medical material to needy EU countries and thus effectively the European principle of infiltrated the free movement of goods? It was not until March 11, as soon as other countries were also increasingly affected by the rampant virus, that EU Commission chief Ursula von der Leyen criticized the export bans and called for such practices to be stopped.

Speaking of Germany: This is particularly criticized in Italy due to its handling of the SARS-CoV-2 virus. The Italians are particularly suspicious of the German figures: How is it possible that 6,012 laboratory-confirmed COVID-19 cases (as of March 16) are known in Germany, while the deaths have so far only amounted to 13? Calculated, this would result in a mortality of around 0.2 percent. Italy, meanwhile, has to contend with 27,980 confirmed cases, of which 2,158 have already died. This would result in a mortality rate of 7.7 percent, 38 times (!) Higher than in Germany.

The curious differences can only be explained by the fact that Germany carries out at least 38 times more tests than Italy. But that is unlikely - and hardly to be checked, since Germany is one of the few countries that does not centrally record and publish the number of tests carried out.

MEPs of the FdI therefore suspect a system behind the blatant disparity and submitted a corresponding request a week ago in order to gain clarity on the riddle, whereby they provided the answer themselves without further ado: "There is a suspicion that you are in Germany Sick of Covid-19 and dies, but that the authorities do not know - or that they do not tell ".

The EU needs more symbolism

In this misery and left in the lurch by its European partners, an unlikely savior rushed to help Italy. Ironically, a team of doctors from China landed at the airport in Rome on March 12th and had over 30 tons of medical material, including masks and resuscitation devices, in their luggage.

The action had already been announced in the media by Foreign Minister Luigi Di Maio several days beforehand and immediately made waves: "You can recognize friends in need" was the headline of the online portal OPEN of the left-wing star journalist Enrico Mentana. "Thank you! In contrast to Europe, you show your solidarity!" Was to be read in the comments under a corresponding Facebook post from the Chinese embassy.

While Di Maio propagated the delivery as a solidarity-based aid measure by the Chinese government and this version was also picked up by numerous Italian media, the center-right newspaper IL FOGLIO revealed that the delivery from China was actually commissioned by the Italian state through the intermediation of private foundations and was paid. At best, China's benevolence towards Italy consisted of being the first to deliver - at the same time as Italy, France had also requested protective masks and medical material. Apart from that, as Il Foglio found, the deliveries in question were at best symbolic quantities in relation to the total demand.

But too late: The corrections were lost in the Italian reporting and China is currently preparing the next PR prank: Around 400 doctors and nurses are to be flown to northern Italy in the near future to support their Italian colleagues. Good for China, bad for the EU's image.

It is hardly relevant anymore that on March 11th, the EU Commission chief Von der Leyen made a comprehensive statement on Italy's situation for the first time, even in Italian: "In questo Momento in Europa siamo tutti italiani" (Now we are in Europe all Italians). In view of the critical situation, it promised more flexibility with regard to balance sheet deficits and promised 25 billion in aid money to support affected member states in the fight against the virus.

The reaction of the Italians? Behave, if not hostile. In the comment columns under the corresponding reports - regardless of the political coloring of the respective medium - skeptical and malicious comments overturned: "Are they kidding us now? Patient Zero came from Germany, then they hide their cases so that we are ultimately the infected and now they're making fun of them too. " Or something more matter-of-factly: "Dear EU, it is too late. We have been in quarantine for 15 days and had to fight our way alone. Never before have we felt so abandoned. But we will rise again - with or without the stars blue background. "

Undoubtedly, billions of aid money from the EU and more flexible guidelines regarding government spending are consequently more helpful than the more symbolic aid deliveries from China. But as long as this is not communicated effectively, little will be gained for the European future. Every serious economist knows that Italy would be economically ruined without EU membership. That is also the reason why right-wing extremist politicians like Matteo Salvini are first demanding to leave the EU during the election campaign and then limit themselves to rhetoric as soon as they are in government. But if the PR field is now completely left to the Chinese government and local right-wing populists in the wake of the corona crisis, this could have unforeseen consequences for Italy's status within the EU. (Teseo La Marca)

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