The Wall Street Journal claimed that the Italian election results are weakening aspirations for reform in the eurozone because the emergence of anti-establishment groups is making the likelihood of reform at the June summit increasingly remote.
The key debate among European policymakers over the past year, according to a story on the newspaper’s website published on Monday, has been whether to implement changes aimed at fortifying the eurozone before or after the Italian crisis. Of course, no one has ever used this terminology in public. Instead, they conceal themselves behind jargon, debating whether the eurozone should put more emphasis on risk sharing or risk reduction. However, this is clear to all.
Or should the eurozone prepare weapons to combat and possibly even avert an Italian debt crisis in the mould of the Greek one? Or should you wait to clean up the mess until the markets determine that the debt of the third-largest economy in the European Union is unsustainable?
Last week, Italians gave their own opinion on the matter by voting to fill more than half of their parliament with members of anti-European establishment groups, effectively destroying any chance that eurozone leaders would have reached an agreement at the June summit on a comprehensive set of reforms to the way they operate.
which oversees the eurozone. This includes suggestions to construct a coordinated plan to guarantee deposits to support the entire eurozone banking system as well as a joint budget to be managed by the eurozone finance minister.
Since their arrival, proposals for a common budget to be managed by the eurozone finance minister or even the impending establishment of a shared deposit guarantee programme to protect the banking system appear to be dead.
The European Commission and French President Emmanuel Macron are particularly hurt because they put a lot of political capital in these proposals.
However, a new administration in Italy is likely to take office without jeopardising the encouraging rebound. It is yet unclear how the newly elected legislators of the Five Star Movement, which won the election with 32% of the vote, would behave because they are not a conventional populist party.
Additionally, the Northern League, a hard-right party that received 18% of the vote, has teamed up with the center-right. The Democratic Party, despite its significant defeat, now has a power balance and will continue to hold office until a new administration is elected. An influential Italian politician claims that Italy is stable despite its volatility.
However, the likelihood of an Italian crisis has increased in the wake of the elections, not least because Italians continue to wonder what the causes of their nation’s issues are.
.
Wall Street Journal: Italian elections undercut expectations for eurozone change.
About Author
