“The European Union is based on the principle that all of its members can perform at roughly the same level,” if not economically, then in basic governance, said Daniel Gros, head of the Center for European Policy Studies, a Brussels think tank. “What do you do when you have a failed state? The E.U. is not made for that.”
In fact, aggressive remedies for Greece may have worsened Italy’s situation this week. The never-before-voiced suggestion that countries weren’t forever bound to the euro may have scared Greek leaders into submission, but it also scared bond markets into raising the price that Italy pays to borrow money to levels that forced Greece, Ireland and Portugal to take bailouts.
That’s precisely what European leaders didn’t want. Problems in the peripheral countries were always manageable — in the worse case, France and Germany’s hulking economies could swallow the cost of paying off the tiny ones. Italy, however, owes creditors $2.6 trillion — far too large an amount for France and Germany to backstop.
Hence the new pressure. When Merkel and Sarkozy broke protocol by smirking and rolling their eyes when asked about Berlusconi last month, some Italians thought it highly inappropriate, even insulting. But others insisted that Berlusconi deserved it and that the leaders’ reaction had served as a wake-up call to the Italian public. Berlusconi is deeply unpopular at home.
The dire situation calls for tough measures, but Berlusconi has little grounds on which to push back against Europe, some in Rome said.
“I think that if you are credible, it is possible to be aggressive,” said Giuseppe Mussari, president of Italy’s banking association. “If you are only arrogant, however, you should not be.”
Some suggested that international dismay over Italy’s situation played a role in Berlusconi’s pledge on Tuesday to resign after passage of key austerity and economic measures, as domestic support drained away in recent days.
“Thank you, G-20, thank you, E.U.,” said Beppe Severgnini, an Italian journalist and commentator.
Faiola reported from Rome.
Loading...
Comments