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The EU’s threat to impose failed economics on Italy shows exactly why Jeremy Corbyn has got it right over Brexit

The week after a yellow and blue star-spangled ocean of europhiles marched through London, heaving in support of a People’s Vote, the European Commission (EC) has cracked its knuckles, threatening fines against Italy if the country’s incumbent government doesn’t revise its own internal budget.

In a stark reminder of the cost of relinquishing sovereignty, financial as well as political, the EC this week took the as yet unprecedented step of rejecting Italy’s proposed budget and ordering a revision. 

The budget – produced by the populist Italian government comprised of the Five Star Movement and the far-right League – requires around £15bn in order to fund campaign promises. This would increase the country’s deficit to 2.4% of GDP which, while below the 3% cap, is above the 1.8% increase promised by the Italian government.

The EC wants Italy to rein in its proposed spending. Indeed, if Italy fails to amend its budget, then the EC can and will impose fines in 2019. Much like your bank when you’ve had a bad month and you fall into an unplanned overdraft, the EC seems to think what’s needed is for Italy to spend more money to stop it spending money.

The EC has influence and a certain level of power over individual member states’ budgets where they are members of the Eurozone. Following proposals in the 90s and further supplements to its powers in 2013, the-neither-directly-nor-indirectly-elected body can exert a lot of weight on a country’s national budget.

The move highlights the constrictive effect of an unelected, supranational body’s use of power over a member nation state, as well as the folly in unqualified EU-loyalty. It makes noticeable, also, the hypocrisy of liberalism.

Deficit hawkery is inbuilt into the EU’s monetary and financial machinery. The European Central Bank (ECB), which is the only institution that can generate euros, and the Eurosystem beyond it – the institution of governance of the eurozone comprised of the ECB and national central bank – have as their main aim the maintenance of currency stability of the euro. 

The EU is willing to inflict immense suffering on people within its borders if it means continuation of its failed economic orthodoxy – that of austerity and the aspiration to public budget surpluses. One need only look at Greece to see as much.

Over 8 years, around €230bn of the €290bn bailout package delivered to the apparently profligate country has been received by European banks, who then lend the money to Greece. Its debt to GDP ratio as a result is looking to increase from 120% in 2010 to 180% by 2060. This debt loading on the already overburdened country is coupled with demands at the EU-level of austerity and privatisation in order to make public costs savings. Any and all of these savings have been pledged to the EU to repay the national debt over the next 50 years.

Meanwhile, Greece’s population is diminishing, its youth unemployment is skyrocketing, its people are fleeing,and  its finances are wrecked – all in service of the EU’s adherence to failed neoliberal economics.

For those among British punditry most visceral and most emotive on the subject of the EU, the Italian and Greek examples show that the EU can be, and is, Janus-faced. It is the inevitable eventuality of any largely undemocratic, massive supra-national body. 

The violent economic trauma exacted upon Greece and now being threatened on Italy shows that the EU demands, above all, strict adherence to the now completely discredited neoliberal economic orthodoxy. It is not the shining light of socialist utopia that it is professed to be, and its authoritarian interference within member states internal economic plans belie the claim by many that it is some kind of liberal paradise. It is an institution responsible for ostensibly sovereign nations, willing to sacrifice those nations for the good of its own economic model.

When a numerically tiny body politic sits so high above the people over whom it has power, that detachment leeches into its actions. It cares more for its ideal than it does for its people. Whether or not socialist progressivism could be achieved within that paradigm is highly doubtful. The sacrifice of political and economic sovereignty in the service of a notion can come back to bite, as indeed it appears to be doing. 

Jeremy Corbyn is right in his apparent indecisiveness over the EU. He was right when he said that it is neither “the root of all our problems” nor “the source of all enlightenment”. The situation in Italy perhaps helps explain Corbyn’s long-held Euroscepticism

It is the action of a liberal to want to ensure the longevity of neoliberalism, hover over the deficit and impose austerity, all to ensure that public spreadsheets look amenable to the eye; to the sufferance of the people.

Despite having governments keen on servicing Italy’s debt and to toe the EC line, Italy’s economy remains smaller than it was in 2008 before the crash. Just as in the UK, constraining sensible public expenditure has seen a constriction on the economy – it has not helped growth. Italy’s new government hopes to stimulate growth by increasing spending. However, this flies in the face of the bureaucrats now threatening fines if Italy goes ahead with the budget.

This is the result of Italy having given up the sovereignty of its own central bank to the ECB, which now has monetary control over the county. 

Politically, certainly, the EU has been the bearer of unprecedented peace and unity in Europe, it has brought through regulations and directives that serve to protect Europeans and it has enabled people to move freely and trade freely, yet the benefits of such a union are not limitless. 

Indeed, none of this is to support Brexit. The UK, of course, is not a member of the eurozone and the EC would be incapable of placing such oppressive measures on us. It is, though, to say that the path to a better future is not the proprietary interest solely of the EU. Italy’s experience provides a damning glimpse into the typicality of liberal superficiality, and the rod the EU is willing to wield. 

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