Lorenzo Marsili: Europe is not in Crisis Because of Putin

The next European elections are going to be a litmus test for the state of democracy worldwide—says Lorenzo Marsili in an interview with Jakub Majmurek.

JAKUB MAJMUREK: Italy has elected a government supported by the Five Star Movement (M5S) and Lega Nord—two political parties generally regarded as dangerously populist and more or less anti-European. How were the populist forces able to win the support of the majority of the Italians?

LORENZO MARSILI: Italy has experienced twenty years of economic stagnation. Despite boasting a nearly uninterrupted trade and primary surplus since the mid-1990s, the economy has been underperforming in comparison with European partners. Following the 2008 crisis, the situation worsened considerably, and today the country’s output still remains below pre-crisis levels. Over 4 million Italians live below the poverty line, while in excess of 200,000 are leaving the country each year in search of better prospects. Successive governments have blindly, and badly, implemented austerity measures, while doing virtually nothing to actually change the economic fundamentals of the country. The result is that Italy today is an unsustainable economy sitting within a dysfunctional Eurozone. The entire ‘traditional’ political spectrum—from the center-right to the center-left—is, with some justification held accountable for this predicament. Voters have shown a preference for the unknown over continuity.

The Communist party has morphed into today’s Democratic Party, the party that, prepared the victory for the Five Star Movement and the League.

Why are there no “Italian Podemos”? Why didn’t the anger and the disenchantment of Italians with traditional political parties help create a new leftist force? Those times when the Communist party in Italy used to be a second political force seem to be the very distant past, don’t they?

The Communist party has morphed into today’s Democratic Party, the party that, led by Matteo Renzi, prepared the victory for the Five Star Movement and the League. Before Renzi came to a leadership position, and following a path familiar to most social democracies, the party was instrumental in implementing the largest privatization drive in Italy’s history and in significantly weakening labor protections. Around 2011, Italy—just like Spain with the Indignados or the UK and USA with Occupy Wall Street—was crossed with lively protest movements. That year, over 27 million Italians demanded, obtained, and then won a referendum demanding the removal of the water provision from the market and a ban on nuclear energy. This might have formed the base for a “new left” in Italy. 2011 was the year, however, when the newly founded Five Star Movement successfully ran in local and regional elections and intercepted much of that protest vote. Don’t forget that the key discursive apparatus of Podemos— the people versus “la casta”—comes straight from Italian politics and was first pioneered by the Five Star Movement.

What kind of party is the Five Stars Movement actually? Can it justifiably be labeled as one of the forces of a new right-wing populism? Does it have something in common with the radical left?

The Five Star Movement represents a new kind of centrist populism. It mixes right- wing and left-wing messages, depending on the circumstances and political opportunity. It is, for instance, to the right of center on migration policy, while being to the left of the Democratic party on the issue of privatizations or extending welfare protection. It is a catch-all party, and as such works much better in opposition or during election campaigns than in the government. It is no surprise that it is now being overshadowed by its junior coalition partner, the far-right League. The League knows exactly what it wants. The Five Star is mostly interested in being in power, without any particular vision as to how to actually use that power.

Both M5S and Lega Nord used to express their skepticism toward Italian participation in the Eurozone. Now they seem to have made some kind of truce with the euro, haven’t they? Do you think that the issue of the costs of the euro for the Italian economy is going to return to Italian political debate?

Both parties realized there is no appetite in the country for an euro exit. Italians still have high savings, about 80% home ownership, and the country is dotted with SMEs demanding financial and political moderation. Above all, both parties realized that any attempt to exit the Eurozone would have to be sold to the electorate as a reaction to external events and not as a policy objective. While the Five Star Movement stops short of a full-blown confrontation with the EU, the League would be much happier with a show-down leading to a speculative attack on Italy’s debt that would prepare the political terrain for an euro exit. In the midst of a financial attack like that of 2011, it would be reasonable to expect this government to introduce capital controls and a parallel or fiscal currency.

Matteo Salvini—leader of Lega Nord and the current Italian Minister of the Interior—is known in Europe primarily for his ardent opposition towards EU policy regarding refugees and migration. How will the new Italian government be able to influence European politics in that area?

Salvini cannot be against EU migration policy as such a policy does not exist. And that is precisely the problem. Salvini has put himself in a win-win situation. His strong-arm policy—essentially taking human beings hostage at sea to demand redistribution within the EU—can lead to two outcomes. Either some EU states cave in and accept redistribution, or they don’t and continue keeping their ports shut. In the first case, Salvini will be able to argue that his policies worked and forced other partners to share the burden. In the second, he will be able to accuse all the EU countries of hypocrisy, showing that they’re implementing exactly the same policy of closure he has brought to Italy.

The party was instrumental in implementing the largest privatization drive in Italy’s history.

Mr. Salvini has also been less than shy about his admiration for Vladimir Putin. How might his stance on Putin affect Italian and European politics regarding Moscow?

There is an instinctive proximity between new far-right leaders the world over: they all share a penchant for authoritarian, xenophobic, and mostly illiberal governance. But we have to be clear: Europe is not in crisis because of Putin. It is undergoing a self-made political and economic crisis due to misguided policies, the inability to deepen integration through a democratization of the EU, and adherence to a failed economic model. Putin’s strength is a symptom of European weakness, not its cause.

The Great Recession of 2007-2008 revealed the weaknesses of southern European economies. Do you think that the politics of austerity which followed the crisis managed to help address the inherent problems of economies of such countries as Spain, Portugal, or Greece?

Spain is experiencing moderate economic growth mostly due to a rising level of private debt. Greece remains mired in a humanitarian crisis with 20% unemployment and an output one quarter below 2008 levels. Italy has insignificant growth and no improvement in its fiscal stance. Austerity policies have been a failure in all ways except one: in fueling the rise of extremist politics.

Do you think that Lega and M5S will be able to repeat their success in the European elections next year?

That depends on what political alternative is presented to the electorate. Sadly, at the moment there is nothing to stand in their way.

The pan-European movement DiEM25, which you represent, is far from being a Eurosceptic force, but none the less it’s extremely critical of the politics of contemporary European elites. What are the main problems with the current EU?

The EU is victim to its own undemocratic nature. The inter-governmental system—pitting government against government in the secrecy of the European Council—is structurally unable to guarantee the common interests of Europeans. Think about this: would it really be difficult for a Union of 500 million people to humanely and effectively manage migration flows of a few hundred thousand people? Or: why do EU countries have to lose €1trillion in taxable income due to tax competition and tax havens within the EU itself? The answer is short-sighted, and ultimately self-defeating: national interest. Whether it is Hungary blocking migrant relocations or Ireland blocking actions against tax havens. What’s holding Europe back, and what ultimately will cause its demise, is our collective inability to create a functioning transnational democracy.

DiEM25 has been vocal in its criticism of the current form of the Eurozone. What are the main problems with the monetary union as it is now?

There has never been so much liquidity sitting in Europe’s financial system. And yet, several parts of Europe suffer from significant under-investment: from German ports to Italian industrial districts to Eastern European railways. More worryingly, Europe is falling behind in the race for the future. While China is investing in excess of USD150 billion to become the world’s leader in Artificial Intelligence by 2025, the EU barely has any digital company to speak of. Before getting bogged down in the complexities of Treaty change, Europe needs investment. And this can be done immediately, without any institutional change. One proposal: the European Investment Bank should issue up to 500 billion of investment yearly, equivalent to 5% of the EU GDP, for a continent-wide project of industrial and ecological transformation. With a ECB guarantee—a better use of funds than QE— such resources would come at zero cost.

Is any real reform of the Euro probable, considering how the current state of eurozone seems to suit the interest of such strong European players, like Germany?

Short-sighted economic nationalism leads to disastrous consequences. Germany risks trading short-term financial gain—notably, easier exports with a devalued currency and near-zero refinancing rates—for political turmoil across the EU and in Germany itself. I am convinced that there are still enough people in strong European countries like Germany who understand that.

Do you think that the next European elections can significantly change the politics of European institutions and bring about any vital reform to the EU? Or is the reform only possible through national elections and the politics of national governments?

It is hardly coincidental that Steve Bannon, Trump’s former chief strategist, has decided to set up a new foundation to support far-right parties in advance of the May 2019 European elections. This will be a litmus test for the state of democracy worldwide, impacting nearly 500 million people in 27 democracies. The plan is simple. Turn the European elections into a confrontation between status quo politics and a new, nationalist far-right: a strategy that worked so well in the race between Trump and Hillary Clinton. In order to break out of this trap there is only one way: presenting a groundbreaking program of political and economic change across 27 European countries.

From the Central-Eastern European perspective, new movements on the left often seem quite frivolous on issues of European security. What do bodies such as DiEM have to say on such issues as the crisis of NATO under Trump’s presidency, Russia’s meddling in European affairs, or the situation in Ukraine?

There is an instinctive proximity between new far-right leaders the world over: they all share a penchant for authoritarian, xenophobic, and mostly illiberal governance.

It actually seems to me that it’s Eastern European far-right authoritarians that are rather frivolous on security. Viktor Orbán and Jarosław Kaczyński should be careful what they wish for. If their actions do bring about a structural weakening and fragmentation of the EU, then the first countries to suffer in terms of security will be their own. Europe needs a shared defense and a shared diplomatic voice. But with one, fundamental caveat: there can be no shared defense system without the democratic accountability that goes with it. And that is why, again, European democracy is the premise of it all, including the security of Eastern Europe.