The Italians in Europe

G. Frederico Mancini

From Foreign Affairs, March/April 2000

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Summary:  Italy's entry into Europe's single currency was a triumph of fiscal displine over a long history of profligate spending. But Italy's embrace of European institutions is driven by more than just economics. "Europe" has helped Italy cement its national identity, clean up its politics, and modernize its laws. Although the European Union will never replace Italians' regional or national allegiances, it will always find its staunchest supporters in Rome rather than in Paris, Brussels, or Berlin.

G. Frederico Mancini, who planned to deliver this essay as the Robert Schuman Lecture at the University of New South Wales in Sydney, Australia, died last July. He had been the Italian judge at the European Court of Justice since 1988, taught at the Bologna Center of Johns Hopkins University's School of Advanced International Studies, and was Professor of Law at the University of Bologna. It is Foreign Affairs' honor to run this essay in his memory.

THE ITALIAN MIRACLE

Now that the euro has been launched, it is a good moment to step back and remember just how European economic and monetary union (EMU) came into being. Fearing that German reunification would jeopardize the "Rhenish" balance on which Europe had rested until then, French President Francois Mitterrand and German Chancellor Helmut Kohl decided in 1990 that the only credible guarantee of an ongoing German allegiance to European unity would be the immolation of the deutsche mark -- and with it the almost totemic reverence it elicited from the citizens of the Federal Republic -- on the altar of a common European currency. To this effect, a committee chaired by the president of the European Commission, Jacques Delors, unearthed a long-forgotten report drafted in the early 1970s by the prime minister of Luxembourg and made the recommendations ultimately leading to the adoption of EMU in the 1992 Maastricht Treaty. It was a laborious compromise that the central bankers, with the German Bundesbank in the vanguard, did not welcome at all. They eventually resigned themselves to it, but only on one condition: the crossbar that EMU candidates needed to vault would be set so high that it would be inaccessible to those not blessed with a strong and stable currency. Thus EMU was effectively conceived as a dress made to measure for a hard core of virtuous states: Germany, France, Luxembourg, and the Netherlands. But it was precisely the crossbar's prohibitive height that made the countries doomed to exclusion aware of the depth of the pit in which they would be left to vegetate -- and prompted them to make extraordinary efforts to drag themselves out.

The effort made by Italy was more than just extraordinary; it was superhuman. It could not have been otherwise, given the gulf between the Maastricht requirements for budget deficits, national debt, and interest rates on one side and the corresponding indicators in that most fiscally profligate of European states on the other. But the Italians won their bet and stunned Europe in the process. If only for a few hours on Christmas Eve 1998, Italy, Europe's prodigal child par excellence, ranked as the thriftiest of the lot. When Italian Prime Minister Massimo d'Alema, an imperturbable former communist, announced that the Italian ten-year government-bond yield had dropped below that of its German counterpart for the first time in history, his voice rang with delight. That financial markets should regard Rome as tougher on inflation than the most reliable member states of the European Union (EU) was the sweetest reward for Italy's sacrifices that the country could have expected.

THERE'S NO PLACE LIKE ROME

Why have the Italians gone to such extremes to disabuse their fellow Europeans of their lack of confidence? Consider the hefty levy that the government christened "the Eurotax." Why did this tag, which in any other country would have induced a majority of citizens to take to the streets, persuade a traditionally evasion-prone people to fulfill its duty without ...

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