Executive Intelligence Review


Italy Government Seeks To Replicate FDR and New Deal To Stabilize Economy

Oct. 13, 2018 (EIRNS)—The Italian Parliament approved the government Document of Economy and Finance (DEF), which plans an increase of the budget deficit to 2.4% of GDP, on Thursday Oct. 11, violating EU austerity rules. Representing the government in the Chamber of Deputies was European Relations Minister Paolo Savona, standing in for Finance Minister Giovanni Tria who was at the IMF meeting in Bali. According to protocol, Tria should have been represented by one of his undersecretaries, therefore the choice of Savona has a high political significance. This was a slap in the face to EU institution leaders who had earlier vetoed Savona for the job of Finance Minister.

In his reply to critics from the opposition, Savona said that he personally would have liked to spend much more, but the decision was taken to proceed with “prudence” and nevertheless demonstrate that investments and not austerity improve fiscal stability.

“I insist much on the fact that it is necessary to replicate, a hundred years later, what Roosevelt did with the New Deal and his reforms. He put together the industrialized part of the northern United States with the agricultural part—which included serious flaws of racism—and he succeeded. Therefore, it is my belief that the experiment we are conducting in this moment is really a large effort of national unity, of coincidence between the interests of the advanced and the backward—economically speaking—parts of the country.

“The conclusions of the initial pages of the DEF are clear: They say that it is an ambitious program and we are therefore aware of that; but the New Deal program was ambitious too, even if in a different context ... it aims at responding to the increase of poverty since the crisis, especially among the youth and large families, and in the southern regions of the country.

“We all agree that the country needs investments. Therefore, let us start to build a New Deal. ... But the government program is very prudent, because we are aware that we must implement those reforms that Roosevelt started. Roosevelt made a substantial reform in the financial sector, on competition, on industrial relations [read: Glass-Steagall, anti-trust legislation, pro-labor reforms]. Those who know history ... know that he took very important initiatives.”

Savona pointed to the fact that Italy produces €50 billion per year in savings surplus that are not used. This defines a potential of up to €150 billion for the next three years (the span covered by the DEF), which could be used for investments. Italy is living “below its resources, contrary to what they say especially at European level,” Savona said. The government plans to increase investments by .01, .04 and .05 in the next three years and nevertheless, critics call this “unfeasible” and illusory, he said.

The Deputies approved the DEF by 331-191; the Senate by 161-109.