WikiLeaks reveals Italian officials had serious concerns about Italy's ability to participate in the monetary union already since the late 70s
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holds
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A 1978
cable from the US Bureau of Economic and Business Affairs to the
Secretary of State, was monitoring in detail the Italian serious
concerns on the perspective of Italy joining the European monetary
union. It describes an atmosphere of anxiety inside the Italian
political elite who wanted Italy to join the union because, otherwise, the
country could be left behind concerning the European integration.
However,
a significant number of Italian economic and political figures (among
them top executives of the central bank), had serious concerns about
Italy's ability to join a monetary union based on a hard currency
like the German Mark.
It seems
that the Italians were looking for a special deal that would secure a
kind of flexibility for the Italian currency inside the European
Currency Unit (ECU) that was about to be established less than a year
later. ECU was formed on 13 March 1979 and replaced by the euro
currency on 1 January 1999.
In the
summary we read:
The
relaunching of the process of European monetary union at Bremen has
raised both hopes and doubts about Italy's role in such a scheme.
While the government has reservations about many aspects of the
Bremen proposal, it sees important political and economic benefits
deriving from participation in a European currency bloc. In essence,
the GOI [Government Of Italy] fears the consequences of being "left
behind" by non-participation in a new European monetary scheme
and believes that participation would reinforce government efforts to
bring about structural changes in the economy. Therefore, the
attitude of the GOI has been one of acceptance, tempered by clear
indications that it will work to influence the final shape of the
agreement - hoping to assure that the system is compatible with
Italy's economic structure. The government has received
significant political support for its position.
However,
a number of people, including the top echelon of the Bank of
Italy, looking at the proposal in purely economic terms, have very
serious doubts about the feasibility of Italy's participating in a
new European monetary system under present domestic economic
conditions.
Key
parts:
Italians
have few illusions about their economy's present capacity to remain
in a system which would rigidly tie its exchangeurr rate to a strong
currency like the Deutsche Mark. Hence, the GOI
will try to negotiate an arrangement which would be both gradual in
implementation and flexible enough to allow Italy to participate from
the start. This is necessitated by the weakness of the Italian
economy relative to those of the other potential participants in the
monetary scheme, especially as regards the rates of inflation and
economic growth. As Pandolfi indicated to the ambassador, Italy
ideally would like to see an arrangement where the parities could be
changed at the discretion of individual members.
There
is also some dissent on the ground that European monetary union is
not in the best economic interests of the country. These
dissenters include Luigi Spaventa, a well-known economist and an
independent deputy elected on the PCI list in the last election, who
is one of few to have publicly criticized Pandolfi's promonetary
union stand. We understand that the Bank of Italy, particularly at
the top echelon, also has serious reservations but, in accordance
with bank practice, has not made them public. The Bank of Italy will
undoubtedly be working behind the scenes in coming months, trying to
extract the best conditions for Italy in any new monetary
arrangement.
Those
who dissent argue as follows: pegging the Lira to the European
Currency Unit (ECU) means, in effect, tying the Lira to the DM. The
Lira would tend to appreciate and Italy would thus lose
competitiveness since relative inflation rates are not likely to be
equalized the the near term. Accordingly, if Italy is to remain in
the system, it must either support an unrealistic exchange rate or
run its economy in lower gear. On the other hand, they maintain,
keeping the Lira pegged to the Dollar gives Italy the best of both
worlds. It gives the country a stable Lira-Dollar rate, which has
both economic and psychological significance, while gaining
competitiveness against Germany and other strong currency countries.
Full
cable:
A few
decades later, the fears of the Italian economists and politicians
about Italy joining the monetary union have been actually proved
quite modest. Italy has been trapped inside the eurozone, exhibiting
nearly zero growth for years and facing an enormous debt. Moreover,
Italy was one of the first members that was unfortunate enough to
experience
the undemocratic nature of the eurozone, through which the union
dictates austerity and sado-monetarism in favor of Germany's
surpluses.
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