China and the EU find common ground on investments: the CAI

Differences in time zone and the epidemiological emergency still underway at the global level have not prevented the signing of an epochal agreement for economic relations between China and the EU. On 30 December 2020, the online meeting between Chinese leader Xi Jinping, the President of the European Commission Ursula von der Leyen, the German Chancellor Angela Merkel, and the French President Emmanuel Macron, officially marked the signing of the Comprehensive Agreement on Investment (CAI), a bilateral agreement, in the works since 2013, for investments between China and the EU that opens the Chinese market to companies from the Eurozone countries.[1] After negotiations that lasted seven years, although it is still necessary to work on the details, Beijing and Brussels seem to have finally reached an agreement about the framework of this pact aimed at ensuring greater reciprocity and interdependence between the two economic blocs.[2] Although the approval of the European Parliament is still required, the agreement was welcomed as a success by both sides and comes at the very appropriate time, in time for the end of the German EU presidency semester, 45 years of China-EU diplomatic relations, and three weeks since the new Joe Biden administration took office.[3]

As reported in an EU note, this agreement has great economic significance, binds the two parties to a value-based investment relationship based on the principles of sustainable development.[4] Among the key sectors covered by the CAI, stands out the automotive sector, as well as that of electric and hybrid cars, to which the Asian power would be willing to open up with greater transparency and ease. Health, energy, and telecommunications would also experience substantial removal of obstacles. European companies interested in competing in the Chinese market will be able to do so independently, without necessarily join a local partner (joint venture); furthermore, there won’t be technology transfer from European companies.[5] The Eurozone countries have always denounced the severe restrictions imposed by Beijing on entering its market, especially in terms of high-tech sectors’ forced transfer of know-how and technologies to obtain the necessary administrative authorizations from the Chinese authorities.[6] China, therefore, has ensured unprecedented opportunities and conditions for its European counterparts in return for accessing the European energy market. Furthermore, renewed importance has been given to the adjustment of regulatory contexts related to the transparency, predictability, and legal certainty of investment conditions, just as environmental standards.[7] In this perspective, the CAI could represent the first step towards a broader free trade agreement with the inclusion of commitments in the sectors of public procurement and industrial overproduction.[8]

For Beijing, the signing of the CAI constitutes a reconfirmation of the openings already permitted with the introduction, in January, of the Foreign Investment Law.[9] Also, from a European perspective, the agreement lays the foundations for further strengthening the economic interdependence between the two players. According to Eurostat, in 2019 the EU exported goods worth € 198 billion to China and imported goods worth € 362 billion, with bilateral trade worth € 560 billion. In the first 10 months of 2020, the volume of EU-China trade settled at € 477 billion, 2.2% more than in the same period of the previous year. The Asian power, therefore, still represents an essential destination for European FDI, especially those of a commercial nature and in support of market action, characterized by a strong penetration capacity in foreign markets.

Beyond strictly economic reasons, the importance of the CAI also sinks into the ground of geopolitics: the signing of the pact, in fact, follows the conclusion of another important commercial agreement, the Regional Comprehensive Economic Partnership – signed between the Association of South-East Asian Nations (ASEAN) plus China, Japan, South Korea, Australia, and New Zealand.[10] The greater commercial, financial, and investment influence guaranteed by these two agreements in their regional areas clearly has a strong impact also on global geopolitics. The detente of relations that China has started – first with the ASEAN bloc and then, in the specific case of the CAI, with the Eurozone countries – not only puts Beijing back at the center of economic dynamics but above all increases its political weight. This is even more true in terms of competition with the United States;[11] the Biden-Harris administration has publicly expressed its opposition to the conclusion of the agreement, as well as reluctance about Chinese economic practices, urging “European partners to discuss US concerns more[12]. The controversial support of the European part to the agreement, therefore, seems to underline the different views with which the EU and the US have approached the Chinese dossier: Brussels while remaining within a transatlantic framework, is well aware that the center of the world growth has now moved to the East.[13] The conclusion of the CAI, therefore, is a very important diplomatic achievement for China: the Asian giant, despite being considered a “systemic rival”, remains an essential European partner, not only in the fight against Covid19 and climate change.[14]

Beijing’s enduring human rights violations have been one of the main obstacles to concluding the investment agreement. The European Parliament recently voted a resolution[15] so that the CAI would induce greater respect for international conventions against forced labor. The reference to the Xinjiang’s Uyghurs Muslim minority, concentrated in detention centers and subjected to forced labor and degrading treatments is clear right away – although Beijing defends itself by speaking of “vocational training centers”, useful to hold back poverty and extremism, considered as the main threats to national stability and security. In this regard, China has agreed to “make continuous and sustained efforts” to carry out the ratification of the fundamental conventions of the International Labor Organization against forced labor but without any specific commitment, it is therefore not excluded that, in the future, the EU can introduce new sanctions for violations carried out by the regime in question.[16]

One Belt One Road China EU
The OBOR project was connecting China with some European countries, leaving some others out. Wikimedia Commons Attribution-ShareAlike 3.0 Unported (CC BY-SA 3.0)

All that glitters is not gold: the agreement between China and the EU may cause a controversy within the European Union

Net of the historical importance of the agreement, Italy has been excluded from the negotiating table. Despite signing of the 2019 Memorandum of Understanding to join the New Silk Road – Italy is the first and only G7 country to take part in the One Belt One Road (OBOR) – and the hope for future stronger Sino-Italian relations, today Italy is just a spectator and the negotiations are led by the Franco-German format.[17] Despite having invited France and Germany to greater transparency by sharing the draft agreement, Italy has not achieved any results. Above all, the presence of Macron, said Undersecretary for Foreign Affairs Ivan Scalfarotto, was considered a real setback: if the Chancellor Merkel was able to attend the videoconference as President of the EU Council, the presence of the French leader, on the other hand, has shattered the European protocol, bypassing the other member countries. The CAI thus seems to cast the specter of failure also regarding the agreement on the Silk Road concluded in 2019: “a failure – said Scalfarotto – both commercially and politically. If the Italian logic behind the signature was to increase commercial and economic relations with China, this consideration turned out to be at least optimistic, if not completely fallacious, depriving our country also of the necessary credibility to play the leading role in the negotiations”.[18] The prevailing fear is that new power relationships are emerging and Italy is seriously in danger of being ousted, especially considering the opportunities deriving from its participation in the CAI – the automotive sector constitutes 7% of Italian GDP, just as the leading companies Enel and Eni could benefit from the greater opening in Beijing.[19]

Antonella Iavazzo









[9] The “Foreign Investment Law” is a law aimed at protecting the interests of foreign investors in Chinese territory. Among the measures, it allows foreign companies to access public procurements through fair competition and the inability to use administrative sanctions and licenses for technology transfer. More info on


[11] ibid.









The Minority SafePack: union in diversity and protection of minorities

The languages we speak lay the foundations of the societies with which we identify. We form cultures: communities connected by tradition and tongue. Thus, Europe, and indeed more or less every European country, has always been multicultural. Today, with the EU boasting a membership of 27 States, Europe is a continent of far more cultures than that. To get a feel for just how diverse Europe is, one can look at the truly staggering number of languages spoken within the European Union. Two dozen languages are listed as the official ones of the EU, but we find sixty minority and regional languages within the very same Union (1). Among these are the languages of the sorbs, the frisians and the roma, all spoken in states of other majority cultures. 

Some minority languages – and with them their cultures – are given different levels of autonomy in the states they inhabit. To that category, we can count for example the Ladin-speakers of South Tirol who enjoy a certain devolution of normally regional political competences down to their province of Trentino/Trentin, wherein they also enjoy a designated provincial assembly seat.(2). Other groups maintain their local customs without any additional political privilege. As many of these groups face extinction (3) , Europe both can and must act. 

The Minority SafePack

To this end, the Minority Safepack (4) was conceived. It took the form of a European Citizen’s Initiative [ECI] and was launched by FUEN – the Federal Union of European Nationalities. An ECI is a petition to the European Commission for which you need to collect a million signatures to call for legislation. FUEN is an NGO dedicated to representing the interests of the autochthonous minorities of Europe, and as such the ECI brought forth policies on that topic.

The associated package of reform proposals offers many tools with which Europe can defend the rights of its minorities. Among its specific policies, you find a European Language Diversity Center, a decentralised agency that can foster linguistic and cultural diversity by supporting the efforts of EU Member States. 

The Minority SafePack also proposes taking into consideration the presence of minority languages and cultures as an important added value when earmarking regional development funds from the EU. Beyond this, the package includes copyright reform and freedom of service and reception measures, which would ensure people’s access to audiovisual content without fear of geoblocking and other hurdles on the path to enjoying culture in their language of choice. An example, if banal, would be sports broadcasts, where minorities would like to watch the game in the language of another state, but which due to geoblocking is made unavailable. A more hurtful example is the difficulty to access education in your mother tongue, putting minorities on the track of linguistic assimilation. There are, of course, many more examples of issues where the Minority SafePack will have a tangible impact.

Nobody at Risk

The proposals of the minority safepack have several things in common. Firstly, they offer improvements in the everyday lives of the country’s minorities. They address real problems, and offer a chance for the EU to have tangible impact on the ground. Secondly, they are all deliverable by the current European Institutions – here, the EU has not only the popular backing, but the concrete capacity to do good.

Lastly, and most importantly: no proposal in the Minority SafePack poses the slightest risk for the majority cultures of the member states. The Minority SafePack will not bring about the fragmentation of the member states, but rather the opposite. By embracing the minorities of our continent, we can bring about deeper, more stable unity for future generations. With minority rights ensured on the European level, it takes the wind out of secessionist movements who feed off feelings of discontent and being down-prioritised..

The Minority SafePack has been presented to the European Commission

Indeed, the EU was built to transcend country-internal grievances and for the good of all its peoples, without sacrificing the wellbeing of others. It is thus not only a legal duty and a moral good to work for the vision of the Minority SafePack, it is inextricably linked to the purpose of the Union as a whole. That is the basic idea upon which the European Union is based: the knowledge that we are stronger when banding together. Thus, the EU emerges as the dutiful would-be guarantor longevity of minority languages – and by extension, cultures.

With the Minority SafePack, the European Union can protect cultures that would otherwise risk withering over the course of history, while at the same time not undermining the majority-language institutions of the member states. It is a win-win, and presents a way to foster genuine unity and true diversity. 

Over a million European citizens offered their names to support the European Citizen’s  Initiative (5) , and almost three-quarters of the European Parliament voted to adopt a resolution calling on the Commission to act. For the fifty million Europeans who speak a minority language (6), such resounding political unity spells hope. We can only hope that Commissioner Věra Jourová heeds the call, and that the European Commission decides to draft legislation to protect the abundance of minorities who all inhabit the Union.. 

Joel Boehme









what is the ESM?

The European Stability Mechanism (ESM) is a financial institution founded by the Euro area countries in 2012, during the sovereign debts crisis. Its objective is to support the member States, ensuring them financial assistance in hardships, when they can’t finance themselves on the markets or the cost of issuing debt is unsustainable[1]. Nowadays, 19 countries contribute to the ESM.

To provide assistance to the Eurozone States in case of need, the ESM does not draw financial resources from the taxpayers. It raises funds directly from the markets, issuing debt securities. Its creditworthiness is proven by its own capital endowment, which is jointly guaranteed by the 19 States. Establishing the ESM, the member States have decided to commit a capital of 704 billion for it, a share of approximately 80 billion euro was paid directly and the remaining of 624 billion was subscribed by each State and it is callable by the ESM, if needed[2]. Normally, the callable part of the capital serves only as an additional guarantee for the lenders and testifies both the solidity of the ESM and the commitment of the countries. The actual contribution of these resources could be requested only in extremely serious situations. At this point, it is crucial to have clear in mind that the ESM finances the countries with resources borrowed from the markets and not using the capital contributed by the States.

graph contribution mes per country

Every country contributes to a share of the capital, determined considering its population and its GDP. Figure 1 shows the percentage of the capital provided by each country. The fact that its capital is financed and guaranteed by all the Eurozone countries makes it extremely safe to lend money to the ESM. For this reason, it currently issues securities with a triple A rating, the highest in the rating scale (for more information see the article What Is The Role Of Credit Rating Agencies In The Economy?).

 Moreover, its financial strength allows the ESM to borrow at a lower price than any State in financial difficulties. [3]The cost of debt does not depend only on the borrower’s creditworthiness, but it is linked also to the duration of the loan. A three-year fixed-rate loan costs less than a 10-year loan with the same counterparties and conditions. Indeed, in a longer period of time, one or more fundamental variables of the financing, such as the market conditions or the stability of the debtor, are more likely to change and this could negatively affect the lender. Therefore, the lender requires a higher remuneration to bear the additional amount of risk given by the higher uncertainty.

To minimize the cost of funding, the ESM finances with short term loans, exploiting its large liquidity. This facilitates cheap lending to the Euro area countries in hardship. In addition, to make sure that the supported State has the time to recover, the loans distributed by the ESM have longer maturities than any other financing that the State could obtain directly on the markets[4].

The decisions on conceding financial support and on eventual additional contribution to the capital are taken by the Council of Governor of the ESM. The Council is a decision-making body composed of the ministers of finance of every member state. The individual ministers do not have the same voting power. The weight of every vote depends on the share of the capital owned by each state. This system allows the States that bear more risk to have a bigger impact on decisions too.[5]


The European Union is incomplete. Its member States have a large exchange of resources, goods and capitals, and they share a part of their economic and financial risks too. Some of them have a deeper cooperation and use the same currency, however it does not exist any sort of fiscal union yet. Decisions on the taxation systems, economic policies of any individual country  and other economic interventions are taken at national level. Even if there is coordination at European level on these issues and a set of common rules, there is nothing like a European Ministry of Finance. This absence is even more significant in times of crisis, when rapid and joint reactions can avoid major problems. Thus, the ESM was created as a defensive instrument to increase the power of intervention of the EU. However, this instrument is still far from being perfect. Long and hard negotiations have been necessary before reaching an agreement on its foundation. The main concern was preventing some countries from increasing their debt more than they could actually sustain only with their own public finances, just because they felt safe relying on the financial commitment of the other European partners. To avoid this misbehaviour, the ESM adopted precautionary and strict rules of intervention. The rules of intervention and the conditionalities attached to ESM programmes varies according to the type of support needed by the State in every specific case. We will deepen the analysis on the conditionalities directly analyzing the programmes of intervention of the ESM in a specific article (The ESM Programmes).

Therefore, the ESM has been created for sure to support the Euro Area countries during a financial crisis, but its role is also to defend the other Member States that are not directly affected  from a possible contagion effect.
Hopefully the severe rules and conditionalities will be reduced in the future, increasing the solidarity among the States. However, this will be possible only proceeding on the path of European integration, because the unique way to reduce conditionalities is increasing the trust among Eurozone countries and to achieve it a major coordination is needed.




[4] Maturity transformation.

[5] (Chapter 2 article 4)

EU needs a joint reaction against the covid crisis

The covid-19 pandemic hit Europe violently. The new coronavirus, which infected the first human in the Chinese region of Hubei, is changing our lives, subverting the political and economic framework. In the initial phase, the response of the European countries was scarcely coordinated and, often, late. The impact of the virus has been particularly severe in the economically most developed regions: Lombardy, Emilia-Romagna and Veneto in Italy; the Community of Madrid and Catalonia in Spain; the region of Paris, Ile de France; Bavaria, North Rhine Westphalia and Baden Württemberg in Germany; the Stockholm’s county in Sweden; Flanders in Belgium. Inevitably, the deep integration among the economies of the various EU countries was also an efficient vehicle of transmission for the virus. In absence of a joint strategy for the reopening, at European level, the risk of new spreading of the infections through these paths will be even higher in the next weeks.


Here you can see the diffusion of the virus on the interactive map


The most affected countries, Italy and Spain, have adopted very strict measures. They allowed to continue to carry out the production only to the companies producing essential goods and services or involved in strategic activities for the management of the crisis. On the other hand, the majority of EU countries chose a softer lockdown, closing commercial business in contact with the public, leaving most of the production companies open[1]. However, these restrictions, necessary to reduce the sanitary emergency, risk to undermine the European economy. The dimension of the crisis will diverge country by country. Indeed, the strictness of the measures, the direct and indirect damages of the epidemic and the financial capacity of each country to support its economy will make the difference. A precise and punctual intervention from the State is needed, providing the required liquidity to make it through the crisis.


The necessity to finance the spending with debt and its critical issues.


The main sources of financing for a State are taxation and the issuance of bonds on the markets. In the midst of a pandemic, a short-term increase in taxation is not a sustainable tool. The objective is to safeguard firms and to keep the productive and economic system alive. Instead, it is inevitable to increase the public debt to reduce the impact that an announced economic recession will have on every citizen’s life. As they demand loans on the markets to finance their spending, the States issue debt securities. Like any other loan, also government bonds embed the market risk – a reduction in the market value of the bond may cause losses to the holder – and, in extreme cases, the risk that the capital lent will not be completely reimbursed.
Generally, the more investors – banks, financial institutions, pension funds and households – will find it likely that the loan will not pay off, the more they will demand a high yield for the risk they are bearing. At the same time, the cost of the debt for the State will increase as the risk perception of the investors increases. Political and economic events together with the amount of debt outstanding affect the finances of the States. Moreover, they influence also the investors’ expectations and bond yields. A typical unit to measure the risk on public debt is the spread between a safe asset – usually in EU the reference is the German bund – and another government bond. Besides, to evaluate the dimension of a public debt it is common to use the Debt/GDP ratio (this topic was also discussed here).

The current situation of Public debt in the main EU countries;jsessionid=3EE7A0FCAD10FF1B716097B51DEA188E

It seems clear that the European States are not all in the same condition. Spain and Italy currently are facing the hardest consequences from the pandemic, but they are also the States with the highest debt. In the last years Italian GDP grew slowly[2], and its debt reached 134% of GDP in 2018[3]. Similarly, Spain had a Debt/GDP ratio equal to 97.6%[4] in the same year. However, recently Spanish GDP had a consistent growth, 2% in 2019 and an average growth of 2.8% per year since 2015[5]. Nonetheless, before the financial crisis in 2007 Spain had a debt/GDP ratio equal to 35%[6]. The huge increase in debt due to the crisis forced the Spanish government to reduce the public spending and to enforce several additional reforms to increase its competitiveness and maintain the possibility to raise funds issuing debt on the markets.


Therefore, Spain and Italy are caught in the crossfire. On one side they are facing an unprecedented sanitary crisis, on the other they have to spend massive amount of money for the reconstruction of their economies. In addition, they may not be able to benefit of cheap borrowing on the markets.


Already as 21st April, the yield on 10 years Italian government bond (BTP) was 2.02%[7]. The equivalent yield on Spanish bonds was 0.97%[8]. As a comparison, it is interesting to see that the yield on 10-years German bonds is negative, equal to -0.481%[9]. Germany had a Debt/GDP ratio of 61.9%[10] in 2018. While, Netherlands has a yield of -0,177%[11] and France has 0.06%[12]. Following the increase of these debts, also the related yields will grow. The cost of financing will increase for all the EU countries, but this effect will be much bigger for the States that already have a high debt.;jsessionid=3EE7A0FCAD10FF1B716097B51DEA188E


The debate about the EU measures against the crisis


The sanitary crisis is a global emergency. In front of covid-19, there is no virtuous country, nor vicious. It makes no sense to blame the most affected countries with moral judgements. This crisis is symmetric, differently from the financial crisis of 2008. Notwithstanding, its impact and the timing will be different country by country. Since the beginning of the emergency, there has been a hard debate in the EU. The two factions were the supporters of a joint issuance of debt as common response to the crisis – among them Italy, Spain, France – and the opponents – among them Germany and Netherlands. At least in the initial phase, the opponents, confident on their ability to face the economic crisis on their own, were available to help the other countries only under strict conditions. Their proposal involved rigid rules on the repayment of the public debt and on the duration of the loans – European Stability Mechanism (ESM) with enhanced conditions credit lines.
Meanwhile, the European institutions gave their support to the most damaged countries with the specific Pandemic Emergency Purchasing Programme (PEPP) of the European Central Bank (ECB). So far, this intervention allowed to all the countries to maintain a low yield rates on their bonds. This is especially true for Italian BTP. Additionally, EU allocated other 540 billion euro to support the economy (more info here). Unfortunately, the dimension of the crisis requires further interventions. Issuing common debt – Eurobond or European recovery bonds – to finance the economic reconstruction can be the correct solution. Eurobonds would allow to the countries in difficulty to borrowing low cost from the market, making a step further in the European integration process.


Why a joint intervention is in the interest of the whole EU?


It’s not only a matter of European solidarity. Facing a recession of Eurozone GDP estimated as 7.5% by the IMF[14], no one is stable. There are not solid countries and individualism is not a feasible option. Furthermore, the European Union is a supranational organization that has shared for many years the benefit of being an open economic area. Freedom of movement for workers, goods and capital generated an interdependence among the member States. This is also confirmed looking at the destination countries for the export of Netherlands, Spain, France, Germany and Italy in the figures below.;jsessionid=3EE7A0FCAD10FF1B716097B51DEA188E

The export is a fundamental component of the GDP for all the countries above. Especially for Netherlands that accrued an export/GDP ratio of 82.5% in 2019. Instead, Germany had a export/GDP of 46,9%[15]. Analysing the destination of this export it is extremely evident that the biggest share is directed to other EU countries. Italy is the fifth country for the percentage of goods and services received by the Netherlands and the sixth for Germany. While, Spain is the seventh destination country by dimension of export for Netherlands and the eleventh for Germany. Moreover, Germany and Netherlands are also destination of a significant share of Italian and Spanish export[16].

The European economies are deeply connected. Now it’s time for the European leaders to find an agreement for common and strong measures against the crisis. It will take time. It may require changes in the treaties and the EU budget has to be increased with additional contribution from every single country. This is in the interest of all the member States. Otherwise, the economic crisis will follow the same paths as the epidemic. The risks are an economic depression and the rise to the power of Eurosceptic parties, which may lead to the end of the European project.


Michele Corio



































EU and the virus: what did actually happen?

Dear readers, at this moment in history it is very difficult to keep a clear head and analyse facts with reason. It is difficult not to be influenced by natural concerns, which in some cases evolve into real family dramas. However, I believe that, today even more than yesterday, it is necessary to make a critical effort and evaluate the facts outside of rhetoric or, even worse, propaganda.

Italy’s relationship with the European Union in these weeks of health emergency has been severely questioned and Eurosceptics are on the rise [1]. Undoubtedly Europe plays a fundamental role in the society in which we live, as well as in the political and economic current affairs of our beautiful country, whether we like it or not [2].

©️ Comitato Ventotene
Italy export worth 533 billions €, of these 52% is towards EU, 2% Russia, 3% China, 5% UK, 9% USA, 20% other countries, 9% towards countries that have commercial agreements with EU

Since the beginning of the crisis, the European Union has responded in a fragmented and inconsistent fashion. For this reason, last Thursday the President of the European Commission publicly apologized to Italy on the behalf of the European Union as a whole. A powerful as much as a necessary political gesture. In the last two months, there have been unpleasant episodes, not up to a Union whose founding values are respect and solidarity between peoples. Let us think of the case of the medical devices blocked at the border by Germany and France, the unfortunate phrase Mrs. Lagarde said that sent the FTSE MIB index nosedive, or the inappropriate comments from the Dutch Finance Minister [3]. It is clear that the European Union project is still far from being completed.

In the same way, however, we cannot forget everything that has been done at the European level to help Italy and how much is now under study. Since the beginning of the epidemic, the EU has proposed the suspension of the Stability Pact and it has given the green light to state aid. Both initiatives have been widely approved by the Eurogroup. Moreover, the European Central Bank has launched the Pandemic Emergency Purchase Programme for an amount of 750 billion euros, substantially lowering interest rates [4] on Italian treasury bonds. In addition, the re-use of unused European funds in 2019 has been authorised, freeing up a fund of 37 billion for businesses in the fight against the virus. All this while Germany started receiving Covid-19 patients in its hospitals, taking care of transportation, and becoming the first country in the world to help the Lombardy region (even before many other Italian regions). Sure, an airplane with the Chinese flag printed on the side is more impressive, but the EU has never been very good at communication (perhaps because of the bad memories that propaganda evokes among its Member States).

Picture by DAVID ILIFF. License: CC BY-SA 3.0 The European Parliament in Strasbourg

Let’s now turn to the proposals that are being prepared and the negotiations underway in Brussels.

On 9 April, the Eurogroup approved a coordinated response at the European level for about 540 billion, with the commitment to implement a Recovery Fund for the future economic restart which would amount to about another 500 billion once this first phase is over. The first tranche of aid approved is divided into 200 billion for companies to be disbursed through the European Investment Bank, 240 billion through the European Stability Mechanism (with the only condition of being spent on the health emergency) and 100 billion of a European fund to support workers who risk losing their jobs (the SURE fund). Once we sum these instruments to the responses taken at the national level by individual member states, we obtain an amount of 430 billion in fiscal stimulus and 2,240 billion in liquidity injections [5].

As Adriana Cerretelli writes on -Il Sole 24, April 15th edition- “In simple terms, this means that Europe is ready to help Italy with 80-82 billion in loans from the EIB (20), Sure (15), unused structural funds (10-11) and Mes (36, with savings of 1.5 billion interest rates). All of this while waiting for the European relaunch plan which, with or without Eurobonds, it is known that it will take time to build. Hard not to call it solidarity.”

But let us return for a moment to the instruments agreed by the Eurogroup. Last April 17, the European Parliament approved both the Recovery Fund and a new credit line of the European Stability Mechanism (ESM), while it was said no to the Corona Bonds. As Carlo Cottarelli points out in the press, these instruments (SURE and EIB loans included) are all based on a concept very similar to that of the Corona Bond. That is, the disbursement of common debt, guaranteed by a fund made available jointly by all Member States, basically a mutualisation of debt. This is also written black and white by the Italian Office of the European Parliament [6].

Last Friday’s vote is also important for another reason. With its vote against Corona Bonds, the League party has made its position clear before the eyes of the Italian electorate. After weeks of bitter controversy over the ESM, the League refuted any doubt that the problem is not the ESM, but solidarity within the European Union. For a certain kind of rhetoric to continue, the EU must show no signs of solidarity. Not even if such gestures are directed towards our country. Unfortunately, the idea of blaming Europe for all Italian evils and the nostalgia for a weak currency, which would be catastrophic for Italy at this time, remain very much in vogue among many Italian voters – and the two main opposition parties are well aware that such beliefs must not be contradicted -. Their political future would be at stake. Be very well aware, dear readers, of alleged economists who call for a return to monetary sovereignty and at the same time speculate on the condition of political instability in our beautiful country, perhaps while they are in government [7].

To save itself from this health emergency, which is quickly turning into an economic drama, Italy must instead hope for a stronger, more supportive and more united Europe. Within this European Union we not only have our shoulders covered by a central bank that is doing our interests and a single market that will soon allow us to return exporting without duties and customs, but also, and above all, the political and economic support of 26 other friendly countries thanks to which we can jointly face the difficulties we are facing. Of course, some of these countries are not living up to the enormous crisis that has hit us. That is why we hope that we will continue to work towards the development and profound renewal of the European Union, which is an enormous guarantee for the well-being of all of us citizens. We should probably take as an example the 136 teams of international researchers who, funded by the EU, are joining their forces in trying to synthesize a vaccine against the virus.

I do not know what will be decided at the European Council on the 23rd, but I know for certain what to hope for.

Giovanni Sgaravatti

Chronicle of the EU and its approach to the coronavirus

  • On January 29th the first two cases of Coronavirus were reported in Italy (in Rome)
  • On 21 February, the first cases of local broadcasting (from people who had not recently travelled to China) were recorded
  • On March 4, the painful threshold of the first 100 deaths is crossed
  • On 6 March at an extraordinary European Council the Italian Minister of Health denounced some countries, including France and Germany, to prevent the export of health equipment
  • On 6 March the EU announces a package of 140 million, of which 47.5 million for 17 research projects involving 136 teams of scientists focussed on the development of a vaccine and 50 million for Italian companies producing medicinal products
  • On 9 March the Prime Minister signed the decree (Dpcm) “I stay at home”, asking all Italian citizens not to leave their homes except for compelling reasons
  • On 10 March the EU allocates a 25 billion euro fund to counter the emergency (10 billion SURE guarantee).
  • On March 11 the President of the European Commission publicly condemned the behaviour of some Member States to restrict the free movement of goods and in a video she addressed the European citizens saying “Today we are all Italians”.
  • On March 11 China sends a team of doctors to Italy
  • On 12 March Lagarde says that it is not within the ECB’s mandate to decrease spreads (the Italian spread soars)
  • On 13 March, the European Commission announces 37 billion in public investment using EU structural funds
  • On 15 March, the single market returns to be a de-facto single market again and shipments are allowed to transit freely
  • On 16 March the Eurogroup meeting happens online
  • On 16 March the “Cura Italia” was approved, with which the government authorized 25 billion in debt to deal with the emergency
  • On March 17, the USA NGO Samaritan’s Purse installs a field hospital in Cremona with 60 beds, 8 of which are equipped for intensive care and 60 doctors and health personnel
  • On 18 March the European Central Bank launches the Pandemic Emergency Purchase Programme for an amount of 750 billion euros (the spread returns to normal levels)
  • On 19 March, the European Investment Bank announced that it was working on a pan-European investment plan worth 250 billion euro for companies and especially SMEs. The underlying guarantee should be a fund of 25 billion euro
  • On March 20, the Stability Pact is suspended
  • On March 22, the government closes all non-essential production activities
  • On March the 22nd, 52 Cuban doctors land in Malpensa
  • March 24th, Germany is the first country in the world to receive COVID-19 Italian patients
  • 24 March, the European Commissioner for Economic Affairs confirms that the member states that will be able to use European funds to deal with the emergency 
  • March the 25th, China sends 30 lung ventilators, 20 sets of health monitors, 3,000 protective suits, 300,000 masks (plus another 20,000 of type N95) and 3,000 face shields
  • On March 26, 120 doctors, equipment and pharmaceutical products and 122 military personnel arrive from Russia. A journalist from “La Stampa” is later threatened by a spokesman of the Russian Ministry of Defence via Twitter for an inquiry into the type of aid granted and the reasons behind it
  • On 26 March the European Council meets to put in place a joint fiscal response to the pandemic. The first opponent of this response is the Netherlands, whose Finance Minister asks why countries like Spain cannot respond independently after 7 years of economic growth in the eurozone. The Portuguese Prime Minister will label the phrase as “repugnant”
  • On March 27, French President Macron gives a series of interviews to Italian newspapers where he publicly sides with Spain and Italy in favour of the Corona Bonds
  • March 28th Von Der Leyen gives an interview to the German newspaper DPA where he defines the Corona Bonds a slogan
  • 29 March, Albania sends a medical-health team to Italy to reciprocate gestures of solidarity of the past
  • On 2 April the European Commission formally proposes the SURE, a 100 billion euro fund to support unemployment caused by the emergency.
  • 8 April, Mauro Ferrari leaves the European Research Centre
  • April 8th, Schroder opens Eurobonds
  • 9 April, the Eurogroup agrees on the measures to be taken (ESM, SURE, EIB, Recovery Fund)
  • 10 April, Conte announces that Italy will be locked-down until the 3rd of May
  • On 17 April, the European Parliament approves the Recovery Fund and the new ESM credit line, no to Coronabonds

[1] Coronavirus: Is Europe losing Italy?

[2] Economics – Let us trade



[5] Economia | Commissione europea)


[7] Italy’s Top Euroskeptic Made Hefty Profit From Salvini’s Bad Bet

Further readings

Riprende l’export di mascherine verso l’Italia: Germania e Francia costrette a piegarsi alla Ue

Artificial Intelligence: should it get regulated?


Artificial Intelligence is developing in several fields such as the energetic, the educational, and the financial services.  One of its most interesting applications is within sanitary services for the diagnosis of pathologies or the treatment of chronic diseases[1]. These technologies are reshaping our world, like a real human revolution. The way we will regulate them will certainly change our way of living. Therefore, it is not surprising that approaches to realize this  regulation have  been highly debated. Indeed, the regulation would give us more control over the evolution of this enormous (yet fascinating) unknown world called technology. However, there is no shortage of interventions arguing that it is impossible to rule a phenomenon of this magnitude. Even though also these people acknowledge that it is typical of the human nature to try, to question, to make predictions and keep safe from the future. The European Commission also stated that a reflection over new technologies and how to proceed with their regulation cannot be postponed[2] any longer. Some aspects of it need an immediate regulatory action.  As a matter of fact, some fundamental rights are at stake; rights that are protected not only by member State constitutions but also protected by the Charter of Fundamental Rights of the European Union[3].

the Charter of Fundamental Rights of the European Union signed on 2007

Among these fundamental rights, the most discussed is the one concerning the access to these technologies. The access to the Internet can allow an individual to join public life, to get and broadcast information, as well as to vote and to get access to Public Administration services; so to say, it would allow to use all those rights and freedom included in many Constitutions. Therefore, it is important to grant the access to every person and to avoid any discrimination between those who can have access to these technologies and those who cannot have it.

Let’s suppose that a person does not have the financial means to purchase the  necessary equipment to access the network or does not have the basic skills for a correct usage of the technology (for example, let’s think of many elderly people), in this case s-/he would find himself discriminated in the exercise of many of his or her rights. This would result in a huge gap within the population: in fact, only a part of it would be able to exercise the freedoms connected to the new technologies[4]. For example, supposing the vote switch to an online modality, it would be allowed, only some citizens would be able express their opinion.

What are the proposals concerning the regulation of these new technologies?

The main proposals presented so far in Europe can be easily found in the Resolution of the European Parliament of 16 February 2017. A first step should be the extension of the current existing legislation to Artificial Intelligence. In addition, it is necessary to accompany it with specific adjustments related to this sector[5]. For example, the directive on liability for defective products could be extended[6]. This legislation, already in force in Europe could regulate the Artificial Intelligence System when it is considered as a “product”. However, it would be appropriate a priori to clarify complex notions such as defect, product, robot, to understand “how” and “in what terms” to extend the directive to the technological sector. These notions still pose numerous and unsolved questions at both jurisprudential and doctrinal stages.

Another possible solution concerns the creation of an ad hoc insurance system that could cover and conduct the entire technological development, a sort of lex generalis for new technologies[7]. It would consist of a universal law valid only for the entire technological sector: to date, there are only theoretical proposals in this regard.

A third solution presented at European level is to introduce an “electronic personality”, that is a real new legal entity in the regulatory system. Nevertheless, this solution is still very vague and the effect that it could have in disciplining the phenomenon is not clear. Although the solutions analysed are all different one from another, they all need a careful and accurate analysis before their implementation takes place . For this reason, specific studies to be carried out sector by sector must be encouraged[8]. They must be appropriately initiated to avoid that the answer to these questions arrives “too late” and that future interventions become a mere attempt to repair – and not to prevent – problematic situations in which enormous damage could occur.

A preferable solution is still to be found, but what we can do at this initial stage is to outline the primary elements for the legislation that will come. For certain, a careful regulatory intervention should not stifle the technological development and it should flexible. Otherwise, the risk is to have rules that either require to be continually reviewed or that end with being always in delay with technological development. Besides, the intervention of the legislator must reflect the fundamental rights declared in various constitutional papers and by national and European jurisprudence. Just think of the aspects relating to security, privacy, bioethical issues. On the last aspect, the European Parliament in the 2007 Resolution pointed out that an ethical-legal framework of orientation is necessary both in the production or programming phase and for the usage of the Artificial Intelligence System in question.

Whatever the choice will be, the regulatory solution to be adopted must ensure a fair balance between technological progress and respect for fundamental human rights.

written by Martina Gualtieri

[1]                               N. Musacchio, G. Guaita, A. Ozzello, M.A. Pellegrini, P. Ponzani, R. Zilich, A. De Micheli, Intelligenza Artificiale e Big Data in ambito medico: prospettive, opportunità, criticità, “The Journal of AMD”, 2018, vol. 21-3, pp. 4-5

[2]                               Communication of the European Commission “Artificial Intelligence in Europe”, Brussels, 25.4.2018 COM(2018), p. 1.

[3]                               The Chart of the Fundamental Rights of the European Union also called the Cart of Nice, gathers and fix in a unique text, a series of civil, politic, economic and social rights, recognized in the constitutional traditions and by international obligations among member states.

[4]                               Indeed, at the European level, there is talk of “AI responsible”. To this point, the Commission promotes the area “Responsible Research and Innovation”. To go further, take a look at the RRI dedicated website, 15 December 2018.

[5]                               Resolution of the European Parliament of 16 of February 2017, providing recommendations to the Commission concerning civic rights norms on robotics, in

[6]                               Directive n. 85/374/EEC, implemented in Italy with the D.P.R. n. 224/1988, then merged in D.Lgs. n. 206/2005 and successive modifications, otherwise known as the Consumer Code (artt 114-127 del Titolo II, Parte IV).

[7]                               U. Pagallo, Intelligenza artificiale e diritto. Linee guida per un oculato intervento normativo, “Sistemi Intelligenti”, vol. XXIX, 3, 2017, p. 624.

[8]                               It is not a case that in Japan created an area called “Tokku – Special Zone for Robotics Empirical Testing and Development”. Back in 2002, the Japanese Government has adopted a law which provides a specific regimentation in several areas to allow experimentation of Artificial Intelligence in specific areas. In detail, experimentation on public streets is encouraged.

Let us trade

Giovanni Sgaravatti

Giovanni Sgaravatti

The European Union was built to restore peace and equilibrium in a continent wounded by the two World Wars. However, a second objective simplified the path towards the Union: the ambition of creating a European economic area. These two goals are the foundations of the EU. As Churchill emphasized, they are deeply connected with each other. The direct evolution of the second objective is the European Single Market (ESM). Having a GDP of 13 trillion euro and a population of 500 million people, it represents the largest economic area without barriers in the world. The abolition of customs duties, legislative obstacles and restrictions on the quantities of goods and services that can be exchanged, allowed to the EU member states to grow in synergy. 

The economic benefits directly related to the European Single Market are estimated at 8.5% of the EU GDP. These have generated an increase of the employment rate, creating 2.8 million jobs and stimulating the birth of 21 million new companies. The cornerstone of the European Single Market is the free movement of goods, capital, services and labour. In fact, the ESM is not just an efficient tool to strengthen the relationships and the cohesiveness among the countries, it also guarantees a regulated market with high standard of quality for the products exchanged. The European Commission establishes the safety and quality standards of the products to safeguard the consumers, taking care also about the protection of the environment.

The EU is also continuously changing and updating its regulation to follow the main social and economic needs of its citizens. For this reason, recently the debate has focused on technology, data protection (GDPR) and e-commerce. Today a relevant portion of the exchanges of goods are made online and this trend will grow in the next years. Therefore, the EU has devoted explicit attention to such sector, creating the Digital Single Market. The intention is reducing legal obstacles and inefficiencies that condition e-commerce performances, but also contributing to a fair legislation of the web. In this debate crucial aspects are: copyright protection, online products’ quality standards and consumers’ protection. The European Commission evaluated the potential impact on the European economy of the Digital Single Market at 415 billion euro per year.

The fundamental role of the EU to support the economy of member States is not limited to the European Single Market and internal synergies. Belonging to the Union, European countries have a significant power on the global market and they can defend their interests negotiating with the other world’s super powers such as the US and China. Some examples are anti-dumping measures, the rules on foodstuffs quality standards, on children’s toys or on pharmaceutical products and pesticides.

The volume of Italian exports between 2002 and 2018 rose from 266 to 463 billion euros, which (discounting for inflation) is equivalent to an increase of 44%. Of these 463 billion, 202 account for exports destined for countries outside the European Union (in 2002 they were 103 billion, which means an increase of 68%). Between 2002 and 2018, the EU negotiated and allowed the entry into force of 23 free trade agreements (FTAs) with as many countries. This type of agreements has often been criticized (with good reason) for the lack of transparency in the negotiations. The EU responded becoming the first institution in the world to publish all the approved chapters, whilst the whole agreement is still being negotiated. 

Furthermore, the highly controversial mechanism for resolving disputes regarding investments has also been completely revised, guaranteeing a high level of investor protection and at the same time maintaining the full right of governments to regulate and pursue legitimate public interest objectives such as the protection of health, safety or the environment (see the most recent agreements, such as CETA or the one with South Korea). 

Finally, one of the fears of skeptics is that of facing unfair competition for products protected at the EU level, such as indications of origin (IG). This fear is mostly unfounded since the EU has always fought to defend all the characteristic products of its territory, especially the Italian and French top products. With CETA, Italy obtained the recognition of as many as 41 IG (corresponding to 90% of the total), and in the first 5 months of 2019 the country saw an increase in exports of almost 13% (for a value of € 3.5 billions) with a strongly positive trade balance (import-export ratio of 1: 3), while with Japan, food exports grew by 80% with the recognition of 45 Italian excellencies (IGP).

Free trade agreements are often accused of being for the exclusive benefit of large companies and of hindering small businesses. In reality, FTAs benefit the most efficient exporting companies, be they large or small. Examples of Italian small and medium enterprises that have benefited from FTAs are: the family company of Crotone Astorino (which after the entry into force of the FTA with South Africa in 2015 began to export pasta for volumes greater than one ton, using ancient Italian grains); the Venetian design company Moving (that increased its turnover from the Chilean market by 51% between 2011 and 2015); the Trapanese company Graffeo Cravatte (nowadays enormously benefitting from the total abatement of customs duties with Canada, until yesterday at 16-18%). There are lots of success stories, please find some of those at this link.

Giovanni Sgaravatti and Michele Corio

References:*&c=#filter-countries-Italy [not mentioned] [not mentioned]

Banking Union: a step for more stability

Giovanni Sgaravatti

Giovanni Sgaravatti

The Banking Union is a set of rules, established to strengthen the European financial system. Its main components are the Single Supervisory Mechanism (SSM) and the Single Resolutory Mechanism (SRM). Their focus is on preventing and managing banks’ crises.

The Single Supervisory Mechanism monitors banking activity to increase the solidity of the financial system. It reduces the risk of banks’ crises, which are threats for the economic stability of the single States and the entire Union. Mainly, the SSM checks and guarantees that the Euro-Area banks have enough liquidity to absorb potential losses coming from wrong strategic decisions of the management or from crises.

European Central Bank in Frankfurt.

On the other hand, the Single Resolutory Mechanism is applied when a bank is already facing a crisis or financial distress is considered very likely. The objective is to manage the bankruptcy of a single institute in the least harmful way for the financial system and the people. The SRM functioning has been conceived to increase responsibility in the banking system. Banks must manage carefully their financial resources, maintaining a sustainable level of exposure to risk. Besides, it is crucial for the regulators to avoid contagion effects, namely the risk that the bankruptcy of a bank affects the stability of other banks and institutions.

A debated element of SRM regulation is the so-called “bail-in” mechanism that does not allow to the State, except for special situations, to buy out banks that are close to default. Under “bail-in” regulation, when a bank is going bankrupt the costs of the failure is not only paid by the shareholders, bondholders too may be involved if necessary. A reason in favour of “bail-in” is that it encourages banks to be prudent, reducing hazardous behaviours of the management. Indeed, the achievement of high returns in investments requires a higher exposure to risk. This does not always lead to positive outcomes, but if someone, external to the bank, is available to cover the losses or save the bank in hard times, then the drawbacks will be less harmful. Management can be less worried about losses and bankruptcy risk. “Bail-in” works exactly against this inefficiency.

The main alternative is the “bailout”. In this case, the State would intervene, using taxpayers’ money to fix the bank management inefficiencies and mistakes. Some countries, Italy is an example, could have a dramatic growth of public debt because of “bailout”, especially if the default involves big national banks. Another possibility to solve the crisis of a bank is the Deposit Guarantee Scheme, a fund created collecting capital from all the banks of the system. In Italy, such a fund, the Fondo Interbancario per la Tutela dei Depositi (FITD), is used to cover the depositors from losses in case of bank distress. Depositors are covered up to 100,000 euro. Theoretically, tools of this sort could be used also to prevent catastrophic effects deriving from big banks’ failures.

Banking Union: Member countries in blue.

Banking Union has faced many criticisms, especially raised by small and medium entrepreneurs, who blame it for the limited access to credit of these recent years. This is partially true. After the Basel agreements and the birth of SSM in 2014, banks have become more and more cautious in supplying credit. However, such inefficiencies are not completely ascribable to European regulation, for example, Italian banks were not always supplying credit in a transparent and trustworthy way. In 2015 in Italy, Non-Performing Loans (NPLs) (i.e. debts which are unlikely to be paid back) were as much as 16% of the total. The EU average is 3.4%. Moreover, 70% of these NPLs were distributed to 4.7% of debtors with an average value of 2.2 million euro per loan. Hence, small entrepreneurs have reasons to complain, the malfunctioning of the system is certainly not their fault.

However, it is important to stress that the drastic rules imposed on the banking system to increase capital reserves and creditworthiness’ standards have been crucial to increasing the solidity of the Italian economy. The failure of a bank causes damages to investors, depositors, entrepreneurs and (with “bailout”) also to taxpayers.
Finally, among the benefits of the banking union it is also worth mentioning the SEPA, Single European Payment Area, which involves 36 countries and allows to make bank transfers easily, only using the IBAN.

In conclusion, the banking union appears to be a source of advantages to the Italian economy much more than a cause of drawbacks. Restrictions are a requirement for stability, and recent history should have taught us that a stable banking and financial system should be preferred to one little regulated.

Michele Corio, Giovanni Sgaravatti
With special thanks to Beatrice Armanini

Saviour or traitor to the Fatherland? Tsipras, Europe and Greece after the political elections

Map of the cities founded by Ancient Greeks:
Fonte: My country? Europe

Zante. It is the first thing I remember of Greece, the island that in my imagination has always represented the most beautiful poetry of Italian literature, A Zakynthos, by Ugo Foscolo. The second, going a fragment ahead with the memory, are the endless expanses of olive groves that open from our bus. It’s the summer of 2009, I’m not even 18, and the first trip to the other Adriatic coast will be the first of a long series to discover the many fascinating places that Europe can offer. The guide, in his fifties, as well as a subtle indifference towards the Turks, introduces us to what is the temple of Greek civilization, where the first games, which later became the Olympics, were born. We are in Katakolon, a city in western Greece where a civilization is born, grows, and leaves many of its props in what is today’s society. Hellenia, Mediterranean culture, Europe. It is really a paradox that the same Olympic games of 2004, whose management – to use a euphemism – was not too clear [1] , were the spark that caused the economic crisis to explode, to then bear its bloodiest decade over a decade later.

Greece voted during this summer, and the political scenario was completely reversed compared to five years ago. The popular formation of Nea Dimokratia won the elections, reaching the threshold of absolute majority in Parliament, and relegating Syriza to the opposition after four years of government made of roller coasters and frontal clashes with the European Union.

There are many ideas that the Greek case can offer. After a summary of Greece’s relationship with the European Union in recent years, I will focus on two; the figure of Alexis Tsipras and his excellent political abilities, and how the Greek political system is structured following the political vicissitudes of the last decade.

Greece has experienced an era apart in recent years, constantly in the eye of the storm, with the default risk that has crossed it until it is on the verge of no return. But the problems of the Greek crisis have more distant roots, which sink in past decades. They have existed since the entry of Greece into the then European Community, born for political reasons, and it is paradoxical that its crisis was born exclusively for economic reasons [2] . After altering its accounts to enter the European Community in 1981 [3] , and still to be able to organize the 2004 Olympics, Greece has always had an uneasy relationship with the Union, exacerbated by the crisis of recent years.

In January 2015 Alexis Tsipras leads Syriza, an anti-capitalist leftist party, to a resounding success, touching the absolute majority of seats in Parliament (149 out of 300), and forming a Government with the Greek nationalists of ANEL highlighted its strategical capabilities. The scenario that Alexis faces is dramatic; the country is strangled by public debt, and is faced with its responsibilities by the austerity policies of the European Union. In this struggle between austerity and debt sustainability, Tsipras decides to hold a Referendum in which he asks whether to accept the agreement with Troijka, which provides for a debt recovery plan after implementing austerity policies. The Referendum was rejected in 2015 with over 60% of the votes. But the Union does not accept discounts, and threatens to kick Greece out of the eurozone if the pact is not accepted. Tsipras resigns, he goes to early elections, which once again reward Syriza who, again with the figure of Tsipras, will again form a government with ANEL. There is no way out. Tsipras finally decides to accept the austerity policies promoted by Brussels, disavowing a clear popular will. In the eyes of many it is an unprecedented reverse, a betrayal of the demos difficult to digest. And at this point I stop. Tsipras’ parable would open the doors to a debate as long as it is difficult to discern a univocal perspective; there are those who label him as a traitor to the homeland, as he who could have opened them leads them to a different type of leftist, rejecting the diktat of the Union and leading an alternative, and did not do so. As many, they welcome him as a wise, reasoned figure: one who, having experienced the complexity of a state and its objective responsibilities towards itself and towards the outside, has revised its positions in the most useful way to its country, to put him back on track, to give him sustainability, and to avoid a default that, among other things, Greece has definitely passed only a few months ago [4] .

Alexis Tsipras, leader of the extreme-left party Syriza

Whose responsibility was this crisis? Was it possible to manage it better? The austerity of the Union in wanting to submit Athens to its economic choices, or the negligence with which local politicians (who preceded Tsipras by a few decades) have faced expenses and tampered with public accounts, weighing everything on their citizens’ shoulders? Despite the attitude of Brussels towards Athens (although on the ways and attitudes there would be a lot to talk about) it was a strict but necessary plan to save the Hellenia from bankruptcy, but it also provided a formidable propaganda tool for all those Eurosceptic parties who oppose the Union and its policies. The image of a Union serving banks that puts at risk the lives of the European peoples in order to serve the interests of the power groups has now entered the collective imagination of all forces hostile to the Union, and to remove this label will not be simple at all.

You can choose the angle you want to observe the figure of Tsipras, of his widely disavowed values, and of his way of acting, pragmatic up to the unbelievable. The only thing that cannot be changed are the numbers: if so many observers foresaw a collapse of Syriza for these elections [5] , this was not the case. Despite highly unpopular moves, Tsipras remained standing, testifying to his exceptional political qualities. Syriza has lost so in the center, with moderate voters who have decided to move towards a political formation that gives them confidence and stability on the markets, but not on the left, where the PSOK remains distant the enormity of 20 percentage points. All this leads us to affirm that Syriza contained the defeat very well for 3 reasons: 1) it has recovered a million votes compared to the European Elections, and in general its result has gone well beyond the forecasts of all the research centers 2) It maintains the monopoly of the left electorate 3) It is proposed, if needed, as a possible government partner, given that the many souls that make up Nea demokratia leave more than a doubt about the stability of a single-color executive.

The Greek parliament after last elections:
Nea Dimokratia got the 39,85%, Syriza got the 31,53%.

Looking at the global, Syriza’s result pushes us to two other considerations. The first concerns the future of social democracy. What Syriza, the extreme left party, has given to PASOK, a party linked to the social democracy of the new millennium, is a historical lesson; they fell to around 10% of the vote and thus took the monopoly of the electorate of this area. From this overtaking “to the left” what derives from it? Can the electoral strategy of “extremization” of the left speech be replicated elsewhere with the same electoral results, or is Syriza’s unique situation facilitated by more circumstances? How much did Tsipras’ charisma and economic crisis affect his success? If we look elsewhere the only case where the left has outclassed social democracies and where it continues to have the pulse of that electorate is France with Mélechon (also a leader of extraordinary qualities). Elsewhere the Socialist Party, after a phase of decline, maintains the monopoly of the left world, as in Spain and Portugal. So does the strength of Syriza derive from the ability of the leader, from its contents or rather from the external context? A good question, to which only other empirical evidence will be able to provide more accurate answers.

On the other hand, the ideological barricades against extremist parties are more alarmingly confirmed, dictated more by a disproportionate fear of dissenting voices, than by the real consistency of phenomena destined for political marginality. The case of Golden Dawn, on which the media of half of Europe have focused, is the classic example. As the Greek elections have shown, the right-wing electorate prefers to merge votes on a more credible government alternative on all fronts, alias Nea Dimokratia, rather than on those who promote policy that is absolutely unworkable in today’s society. It is no coincidence that Golden Dawn has halved its votes compared to 2015, in favor of an ideologically moderate party that is actually more suited to dialogue with Europe and the markets. From the two points just taken, we derive a strong structuring of the Greek political system in a bipolar sense; a well-structured left-and-right alternative, which steals votes in the center, ready to capitalize on the mistakes of others, supported by other small parties that remain to watch, but which can always play a potential for government or blackmail [6] , like demonstrates Syriza’s alliance with ANEL in the past legislature, and how it could happen again.

What will be the future of Greece, the cradle of European civilization, is a puzzle that is difficult to solve. Difficult because the trust that the Greeks put in the Union is almost nothing, and given the disastrous turnout for the latest policies where one person out of two voted, it demonstrates precisely this dissatisfaction of the electorate 7] . Certainly, the clash with the Union has left bloody wounds at all levels, which only a generation of responsible politicians, we hope, will be able to heal.


Alessio Vagaggini

[1] On this topic: Il Sole 24 Ore, Le Olimpiadi in Grecia del 2004 furono l’inizio del default, Vittorio Da Rold, 14 Febbraio 201,  & Il Fatto Quotidiano, Quando Goldaman Sachs truccava i conti della Grecia per farla entrare nell’Euro, Leonardo Martinelli, 26 Marzo 2012.

[2] On how Geece entered in the European Community, please have a look at Limes, Tsipras, l’Europeista immaginario, Tra Euro e Neuro, n°7 – 2015.

[3] On these inconsistencies, one may observe, the European Community may have pretended not to see in order to ease the the access of Greece in the European Community and become part of the OTAN, with the scope of make it get far from Soviet Union’s influence

[4] Il corriere della sera, La Grecia esce dal programma di aiuti: addio alla Troika dopo 8 anni di crisi, Giuliana Ferraino, 19 Agosto 2018.

[5] The Guardian, Syriza betrayed its principles – and the Greek people. Its days are numbered, July the 5th 2019.

[6] According to Sartori’s definition, highlighting the importance of small parties on the decisions made by a given government. .

[7] Il Post, La crisi in Grecia spiegata in 12 grafici, 4 luglio 2015.

Monetary Union, the Italian case

In Italy, the monetary union is often taken as a scapegoat for all the ills of the last twenty years. To verify the factuality of this criticism we must weigh the disadvantages of the single currency with the advantages. Furthermore, a critical effort to verify the counterfactual (i.e. what would have happened if we had not adopted the euro) is paramount.

euro One euro Italian coin, picture by Alberto Moglioni

The disadvantages reiterated by the discontented is in having lost the monetary sovereignty and in the unfavourable exchange rate. Let’s start with the first topic. What was once the role of the Bank of Italy has now passed to the European Central Bank (ECB). The advantage of being able to print money lies in the possibility of using expansive monetary policies and devaluation. With the former, the central bank aims to lower interest rates, favouring consumption and investment. While with devaluation export is favoured and the cost of labour is lowered.



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