Executive Intelligence Review
Subscribe to EIR


Euro-Exit Debate Becomes Official in Italy

May 18, 2017 (EIRNS)—Shockwaves are expected from Brussels, Paris, and the European Union's banking center in Frankfurt, when EU circles realize that in Italy a debate on "Italexit" has started, not among radical leftists or right-wingers, but at the most official establishment levels.

University of Chicago economist Luigi Zingales, who one year ago publicly endorsed the reinstatement of the 1933 Glass-Steagall banking separation law, has opened the debate in Il Sole 24 Ore, the daily owned by the Italian industry association Confindustria. Zingales has hosted articles by pro- and anti-Euro economists, including Prof. Alberto Bagnai, and yesterday drew the conclusions of the first round of articles.

Zingales wrote that "the main conclusion is that the euro is a political choice, not an economic one." In the debate, economists’ arguments have been rebuked: Advantages such as price stability and low cost for sovereign debt are offset by real economic results. "From 2008 to 2013, domestic demand in Italy has dropped 16%. How much more recession should we still undergo, before we are competitive again?"

Political considerations are two: European unity will prevent wars, and the euro has an "orthopedic" function, namely forcing economic policy choices.

Concerning the first consideration,

"do we really think that Italians and Germans feel they are closer to each other today, than twenty years ago, when the Euro was introduced? If we read the pages of this newspaper, there are some doubts."

Concerning the second consideration, the "institutional corset" "was exactly the reason why Argentina chose to peg its currency to the dollar at the beginning of the 1990s. It did not go well." On the contrary, the "institutional corset" might become too painful and the patient can rebel with a violent reaction. "This would be the worst of the possible worlds."


"It is not enough to state that the euro is irreversible. Italy faces the risk of being kicked out (as Greece was threatened with in 2015) or being forced to leave in the midst of a severe economic or political crisis. Thus, independently from our political opinions on the euro, it is important to understand not only what it costs for Italy to leave the euro, but how much those costs could vary as a function of how the exit occurs. The next interventions will be dedicated to this issue."