There is a weariness to the coterie of diplomats and officials based in Brussels intimately involved in the negotiations over the United Kingdom’s withdrawal from the European union. Privately they describe it as “Brexit fatigue”, the result of second-guessing a chaotic situation in Westminster for two years, and working through the summer in response to the demand from the Brexit secretary, Dominic Raab, for continuous negotiations. These officials from the 27 other EU member states were picked as the brightest and the best for the existential crisis of the time, but the hard truth for these ambitious men and women is that the crisis in question is no longer Brexit.
“You go to the capitals, you can see that, because no one talks about it any more,” said Fabian Zuleeg, chief executive of the leading EU thinktank, the European Policy Centre. Speaking to his parliament on his return to Madrid from the recent leaders’ summit in Brussels, Spain’s prime minister, Pedro Sánchez, put it succinctly: “The British spend 24 hours a day thinking about Brexit and the Europeans think about it for four minutes every trimester.” While the UK’s chaotic withdrawal has become a dreary process to be managed, the EU is being dealt hammer blows from elsewhere – from crises that really could make or break the bloc, along with many diplomatic careers.
Foremost on the list of problem zones right now is Italy. “Nothing and nobody, no big or small letter will make us backtrack,” the country’s deputy prime minister, Matteo Salvini, and leader of the far-right League, told his followers in a Facebook video made in his office in Rome on Friday. “Italy will no longer be a slave and will no longer kneel down.”
Last month the European commission took the unprecedented and high-risk step of rejecting the draft budget of the third-biggest economy in the eurozone, in a move designed to force the country’s democratically elected government to rein in its spending.
With borrowing at 130% of gross domestic product, second only to Greece in the EU, Italy is said to be a danger to financial stability across Europe. Its government has been told to come up with a revised financial plan by 13 November, or face huge fines.
The potency of the Italian problem is that it perfectly encapsulates the central, and potentially fatal, issue that the European Union member states and Brussels have repeatedly failed to grapple with in any meaningful sense, either from political cowardice or lack of will.
When Ireland, Greece and Portugal were plunged into severe crisis as a result of the global recession, where they might once have changed their interest rates, or devalued their currencies, to get themselves back on their feet, instead their governments were simply forced to watch their young flee overseas.
Because they were eurozone countries, they had lost those crucial monetary levers. They were simply put on an austerity diet by Brussels in return for loans, and told to get their house in order at a brutal cost.
And for all the later admissions that the EU itself had been at fault in allowing such divergence in the fortunes of European economies in the first place, there has been little attempt since to build the institutional structures that could now help to promote growth in the poorest parts of Europe or respond to future economic shocks.
Jean-Claude Juncker, the president of the European commission, has called for a eurozone treasury and finance minister. There are repeated calls for the completion of the banking union, under which savers’ deposits, wherever they are held, would be guaranteed in times of crisis. But while prevarication has ruled the day, the wealth divide between the north and south of the eurozone has deepened.
According to International Monetary Fund data, the GDP per capita in Germany jumped 19% in 2016 from 2010 levels and 14% in the Netherlands and France.
In southern countries, where the GDP per capita was already lower to start with, it grew much more slowly. In Italy it rose only 6%, in Portugal 10% – and it fell 7% in Greece in the same period.
There is, meanwhile, a stench of double standards about the enforcement of the growth and stability pact under which governments have been obliged since 1997 to ensure budget deficits should be no higher than 3% of gross domestic product and that national debt is below 60% of GDP.
Loopholes and exceptions have traditionally ruled the day. “France is France”, Juncker said in 2016 of turning a blind eye to the debt levels being amassed by presidents in the Élysée palace.
Little wonder then that the new Italian coalition government of the populist Five Star Movement and the rightwing League has balked at the attempt to force such an economic strait-jacket upon Italy. And offered others encouragement.
Fabio Massimo Castaldo, a Five Star MEP who is a vice-president of the European parliament, told the Observer: “After some threats to cut the European funds, in 2016 the commission has pardoned Spain and Portugal for their public spending budget.