We publish below the speech to the Leopolda by Franco Bassanini, president of Astrid and adviser to the Prime Minister.
"Right at the beginning of his government adventure, and also here, Renzi said:"precisely because we are Europeans and pro-Europeans, we want to change Europe”. The claim was met with many skeptical smiles. One of your predecessors at Palazzo Chigi told me: “he's a rookie, he'll soon realize he's one mission impossible!".
It's been a year and a half. Has Europe changed? I'd say no, and besides, no one would think it could happen in such a short time. But some positive signs can be seen.
Meanwhile: there are more and more people who have understood that, if the European Union is not changed, Europe risks being overwhelmed by populism. French elections teach. (By the way and by the way: I have many French friends, including entrepreneurs, bankers, politicians; and more and more often, recently, they have told me: “Do you know Franco what is our problem? that neither the right nor the left have yet found a Matteo Renzi”; I don't know if it's true, but I confess that, as an Italian, I felt proud…).
But also in practice, some changes, almost unthinkable even a year ago, are starting to emerge. I'll quickly mention a few:
– Budget flexibility. The flexibility clauses are in the Fiscal Compact, but the majority of Governments, with Germany in the lead, firmly excluded its application. Simona Bonafé will recall that the question was at the center, in the European Parliament, of a conference organized by the Italian Presidency just a year ago. In my report, I compared the European institutions to a judge who, in adjudicating a murder case, refuses to consider whether the preconditions for self-defence are met. Just as in the penal code there is the penalty for murder, but also the exemption from legitimate defense, so in the Fiscal Compact there are flexibility clauses, I said then, and they must be applied. In vain. But today, the clauses are valid, for us as for other European countries: reforms, investments, migrants. We discuss as are worth. For us 10 or 15 billion? Are they many, are they few? They are still billions, not motes.
Golden Rule for investments. Proposing it seemed blasphemous to the ears of the Germans and Nordics. Today we have the first examples of them: they are not counted towards the tax compact the financial contributions of the States to the Strategic Fund of the Juncker Plan, and also, far more importantly, those that the States will place in the thematic or regional platforms of the Plan, for example in the platform for credit and guarantees for Italian SMEs, and in that for the financing of Italian infrastructures. And then there is the investment clause. Ce n'est qu'un début? Yes, but a taboo has been broken.
– Migrants and refugees. Renzi was almost alone, a year ago, in maintaining that it was a European question, not an Italian one. Today, Angela Merkel is on the same positions (and she does so by risking her popularity and even her position); and the conviction is spreading in Europe that the management of the external borders of the Union, as well as that of the reception, identification, recognition and possible refoulement of migrants and refugees should be the common task and responsibility of the European institutions, not of border countries only.
– Growth and employment. For years, but still a year ago, growth and jobs in Brussels they were the subject of major declarations of principles and recommendations to national governments, but nothing more; while for stability (and therefore for the reduction of the budget deficit and public debt) binding objectives, sanctions and controls were foreseen. A few days ago, the Council approved the Action Plan for the Capital Market Union which, not only elevates "growth and employment to absolute priorities for the Union", but launches a large number of interventions and measures for the financing of innovation, research, venture capital, infrastructure, business investment. Will they be implemented effectively and quickly ? Let's hope so.
More I could remember. But I stop here. Not without underlining that these are all changes triggered by the initiatives of the Italian Government. But these initiatives have been successful for only one reason: the successful recovery of international credibility and authority of our country and its government: the most important result obtained on the European side by Renzi (and by Piercarlo Padoan); achieved thanks to the structural reforms carried out and the decision to continue along the path of reforms. I experienced this in my capacity as president of the Long-Term Investors Club, a sort of federation of the large development banks of the G-20 countries (I am talking about institutions that together have assets, i.e. investments and loans, for 5 trillion dollars !). I saw it in my last year of presidency of Cassa depositi e prestiti, in which I concluded co-investment agreements in Italy for over 6 billion euros (invested by foreign banks in Italian companies and infrastructures), while in all previous years no I didn't even sign half of it. I see it in the constant requests from international funds for advice and guidance on investing in Italy.
However, much more is needed to change Europe. We are only at the beginning. But now Renzi and our government are able to do more, obviously by forging the appropriate alliances. Even with Cameron, in whose letter to the European institutions there are points that can be shared (especially in the initial three pages).
An ambitious program has already been defined with Sandro Gozi. However, allow me, in conclusion, to add or underline some difficult but decisive structural changes on which I hope Matteo will want to commit himself.
1. The review of Stability pact. It is not a question of canceling it or weakening it, nor of reducing the commitment to fiscal consolidation. What's wrong is his asphyxiation annual logic: set binding targets year by year. That's good for current expenditure, not for public investment, the positive effects of which (such as for structural reforms) can be measured over the years. What private company that needs large investments to grow and compete (as all European states need them), being able to borrow finance on the markets at a fixed rate of just over 1% for 10 years, would not do so and would you give up investing instead? It is sacrosanct for us to aim not to burden future generations with the weight of an unbearable public debt, but it is even worse to unload on them the weight of crumbling and obsolete infrastructures, of a declining or stagnant economy, of a devastating youth unemployment?
2. The completion of the Single market: at the origin of the European construction there was the idea that in a large market, competition between all European companies would produce innovation, efficiency, competitiveness and growth (and, marginally, "creative destruction"). Therefore it was necessary to "level the playing field", to put everyone in a position to compete on an equal footing. But the playing field is now anything but level, given that an Italian company that competes on international markets has paid on average, in recent years, much higher costs than its competitors, eg. Germans: for energy (35%), for credit (200 basis points), for logistics, for bureaucratic and social security charges, etc. The Capital Market Union is a first answer, but we also need the Energy Union, the Digital Union and so on.
3. We must also go back to the origin in the application of ban on state aid. That prohibition was intended to prevent a State from leveling the playing field from leveling it again, creating favorable conditions for its enterprises: nothing less, but nothing more. Today it risks becoming, in the interpretations of DG Competition, an obstacle to any industrial policy; and even to virtuous national interventions, aimed at reducing competitive disadvantages, not increasing them.
4. Last but not least. The European economy is under the weight of a series of international and European rules which, in the name of financial stability, penalize the financing of business investment, research, innovation and infrastructure. New rules, equally penalizing for the real economy, are arriving, from Basel but not only. Those who produce them pretend to ignore that the relationship between financial stability and growth is bidirectional (there is no financial stability if a cycle of recession or stagnation is prolonged); and pretends to ignore that these rules have asymmetrical effects: they penalize Europe much more (because it is more bank-centric and because it usually applies the rules more disciplinedly) than the USA, China or India. The rules are therefore, let's be clear, the weapons of the wars of the XNUMXst century, which are increasingly (also) financial wars. We need to review these rules, harmonize the needs for financing the real economy and those for financial stability: needs that are, on closer inspection, convergent, non-conflicting.
And it is necessary for political decision-makers, in Brussels and at the G20, to regain possession of the decision-making role of politics. Political choices are not up to the Basel Committee, the IASB, EIOPA, the Brussels technocracies, the rating agencies. They belong to governments, democratically elected and accountable, and to international political institutions. Strengthened by its recovered credibility and authority, Renzi's Italy, with the right allies, must - I think - also wage this battle. It will be hard and long. But he can win it."
