Future of the EU: Italy's dream of Europe

The stability pact of the monetary union is dead and should never return even after overcoming the corona crisis: This principle is now invoked by all politicians in Italy.

The populists promise limitless deficits and tax cuts, in short a departure from any austerity policy. The ideas for Europe's budget policy that are being brought out from Italy's government circles still sound more subtle. After all, Prime Minister Mario Draghi and his Treasury and Finance Minister Daniele Franco are seasoned economists. But behind considerations that are ascribed to the two of them, there is a fundamental departure from the rules that were agreed at the beginning of the European Monetary Union.

After the general election in Germany, Italy will present ideas, writes Federico Fubini, Deputy Editor-in-Chief of the Corriere della Sera.

This includes the principle that in a recession in the EU, debt could be borrowed jointly.

It may be necessary to differentiate in the national budget of the individual countries between future-oriented investments and current expenditures.

What was laid down in the Maastricht Treaty 29 years ago or in the Stability Pact for the monetary union 24 years ago has lost all legitimacy from an Italian perspective.

The agreements were finally 19 or 14 governments back - a fitting excuse to sweep everything off the table as outdated.

It remains to be seen how Draghi and Franco want to deal with the legacy of their predecessor and role model Carlo Azeglio Ciampi.

This former central bank governor enabled Italy to join the euro as treasury minister in 1998.

But after his tenure as President Ciampi wrote bitterly: "This spirit of solidarity and trust that had grown in Europe towards our new culture of stability did not deserve this betrayal."

"We have changed the basis for discussion"

From Ciampi's perspective, the problem was not only that Italy did not keep its promises, but that, based on economic logic, its country would have needed a solid budget policy and structural reforms in order not to be dangerously skidded later. In contrast, it has recently been argued in Rome that the ideas that Germany and northern European partners originally introduced into the monetary union are economically wrong. From the Italian point of view, a heroic conclusion can be justified: "We have changed the basis of the discussion on the negotiating table."

This point of view leads to the question of the foundations of the monetary union: Is its current basis a predominantly neo-Keynesian theory?

Is it simply pragmatic daily politics based on current needs and power relations?

Or finally a construction based on contracts and rules?

From a German perspective, a year ago the Federal Constitutional Court took the right to take a look at the original treaty rules, expressly without confronting the monetary union and the European Central Bank with insurmountable obstacles.

But Germany is now to be charged for this, many Italians think that's right.

As long as Draghi leads Italy out of the economic crisis, as long as prosperity grows in Germany and is not endangered by higher inflation, there will also be a modus vivendi in the European Central Bank. However, crises and inflation, and above all other opposing growth trends, could cause deep conflicts to break out. Because in Italy there are still politicians with an insatiable need for public money for their election gifts. The rest of Europe should vouch for it. From an Italian perspective, the ECB, as a repair shop, should compensate for everything that doesn't work in the real economy.

Something else would be more important in the interests of the country: It would have to be about resourceful entrepreneurs who want to invest in Italy in the future, the brightest minds stay in the country instead of emigrating, and that more permanent, well-paid jobs are finally created.

Germany's economic policy is based on such standards.

It does not need a hyperactive central bank for this.

German politicians, from Theo Waigel to Wolfgang Schäuble, from Helmut Kohl to Angela Merkel, have failed to communicate basic ideas of German economic policy towards Italy.

That could have dire consequences.