Storm clouds gathering as Rome takes the helm

Date: 04/01/1996

“Maastricht is a machine for producing unemployment” was the judgement passed by Italy's leading economist, Nobel-prize laureate Franco Modigliani, on the EU's plan for a single currency.

His remark has set the tone of the debate currently catching the limelight in Italy at the start of the country's presidency of the Union.

Maastricht and the economic convergence criteria that the catchword implies, spells sweat, blood and tears for the Italian in the street.

He is incessantly told that it is in the name of those criteria, which the country must meet in order to qualify for Economic and Monetary Union, that further sacrifice will be requested from him over the next two years.

He is still to be convinced that the effort is worth the promised prize. All the more so as this final reward for the country's budgetary efforts is largely uncertain. Italy, a founding member of the EU and the world's fifth largest industrialised economy, sees its future role as a leading member of the Union increasingly questioned and is struggling to live up to the requirements of the international standing to which it aspires.

The first slap in the face was delivered last September by German Finance Minister Theo Waigel, when he publicly stated that Italy would be excluded from the first batch of EU Members to join the single currency.

The most recent humiliation came during last month's Madrid summit, when French President Jacques Chirac put pressure on fellow EU leaders to downgrade the planned summit to launch the Intergovernmental Conference in Turin on 29 March to a simple meeting of foreign ministers.

But the worst damage to Italy's European credentials has not been inflicted on the country by outsiders, but by its own political class.

The prolonged infighting among the major political forces over the government's programme for the EU presidency, the 1996 budget and, in particular, over the date for the next general election, lasted until the very first day of the Italian presidency and is now spilling over into its “European semester”.

In the run-up to the presidency, the technocratic government of Italian Prime Minister Lamberto Dini was surviving one vote of confidence after another, almost on a daily basis. The country's European responsibilities became hostage to domestic or party interests.

Everyone agrees on the importance of the country's stint at the helm of the EU, from the Italian in the street to politicians right across the political spectrum. It is widely accepted that the next six months offer an opportunity not to be missed to restore the country to the position it has lost on the European scene.

In addition, a number of policies crucial to Italy's national interests are to be defined precisely under its chairmanship: the implementation of the peace agreement in neighbouring ex-Yugoslavia; the revision of the Maastricht Treaty; the move towards a single currency; the accession of new member states; the opening of the Mediterranean market; the reform of the Common Agricultural Policy; and the Common Foreign and Defence Policy (CFSP), to name but a few.

Unfortunately, this acknowledgement of the importance of the presidency is where agreement ends.

The new Italian electoral system, based on a combination of the first-past-the-post system and a vestige of the old proportional representation system, has failed to bring about political stability and effective governance and has spawned, once again, a fragmented and precarious political landscape.

The centre-right coalition (known as “Il Polo”), led by media-magnate Silvio Berlusconi's Forza Italia, and the centre-left bloc, led by the former Communists of PDS (Democratic Party of the Left), hold divergent views on almost every one of the dossiers the presidency will have to tackle.

The Dini government and the parties of the centre-left favour economic and monetary union and are committed to enabling the country to meet the Maastricht criteria, while Forza Italia publicly questions the need for a single currency at all.

On foreign policy, the centre-left advocates the strengthening of the Common Foreign and Security Policy, while the centre-right calls for a more intergovernmental approach.

EU relations with Slovenia offer a good example of the divergence of views. While the former Berlusconi government blocked the small alpine country's association with the EU, the Dini government is endeavouring to bring Slovenia into the Union's fold.

Other key EU issues, from media concentration to television broadcasting and cable and satellite transmissions of television signals, are all battlegrounds in Italian domestic politics.

The scene is also set for a number of clashes between Brussels and Rome over the next six months, which could sour relations between the presidency and the European Commission.

One potentially explosive dispute which could have made for an uneasy relationship between the two, over a violation by Italy of competition rules in the mobile telephony sector, was settled just before Christmas.

Italian Minister for Posts and Telecommunications and Berlusconi ally Agostino Gambino had threatened to take the Commission to the European Court of Justice over the dispute, but announced on 22 December that an accord had been struck.

However, other contentious issues remain on the table. The liberalisation of the European electricity market is one area where Italy's tenure of the EU presidency could cause problems. Spain's failure to wrap up this highly controversial dossier, which sees France pitched against most of the other member states, means it is now up to Italy to forge a compromise.

UNICE, the European employers' federation, is pushing for the liberalisation of the market and the European Commission agrees. But Italian Minister for Industry Alberto Clo has a plan for privatising ENEL, the State electricity holding, which although liberalising electricity generation and supply, would preserve the latter's monopoly on the transport of energy and is therefore likely to infuriate Competition Commissioner Karel Van Miert.

Against this gloomy background, some observers believe the prospect of an early general election in Italy in February, just two months into the country's presidency of the Union, might almost be preferable to delaying those elections until the end of the presidency - provided that those elections lead to a stable government.

A vote in February would limit the impact of fierce electoral campaigning on EU affairs to two months, while elections in May or June would turn the Italian presidency into just another bone of contention on the domestic scene.