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IAI COMMENTARIES 20 | 90 - DECEMBER 2020 ISSN 2532-6570 © 2020 IAI 1 2020, 2020 Autunno europea. 2 iai.it/en/node/11775 2020 estera 1 be notedthat anabsolute majority must be put into perspective. It should 2020 it was44percent), thispercentage in theEUFall 2020survey (inApril of the interviewees wanted to “remain” Even ifit isgood news that 56percent robust. although thischangeisnotparticularly Italian popular appreciation for theEU, early November 2020 a second between late October and of thepandemic inApril 2020 conducted during the initial outbreak in two different surveys –afirst comparison betweendata collected main point that emerges from a country’s relations with theEU. The insights on how Italians view their Union” provides some interesting The survey “Italians andtheEuropean ’s Foreign Policy programme at IAI.Views expressed are theauthor’s alone. Paper prepared with thesupport of theCompagnia San Paolo Foundation in theframework of Olimpia Fontana isResearch Fellow at Centro Studi sul Federalismo (CSF). by Olimpia Fontana COVID-19 Pandemic: Survey Insights Italian andthe

DISPOC/LAPS and IAI, IAI, and DISPOC/LAPS DISPOC/LAPS and IAI, IAI, and DISPOC/LAPS https://www.iai.it/en/node/12406 , Rome, IAI, June 2020, June 2020, IAI, , Rome, . , Rome, IAI, November November IAI, , Rome, Gli italianiGli politica ela Gli italianiGli el’Unione 2 –isanincrease https://www. . 1 and EU membership, still considered EU going sofarastoquestion Italy’s (55 percent) of thesample, without March, the reaction by the European consequences from thepandemic. In suffered themostserious economic is among the countries that have to behardhit byCOVID-19 and Italy wasthefirst European country is quite telling. since the first poll hadbeen conducted persisted in Italy a full seven months to the EU’s handling of the crisis still inadequacy andinjustice with regards understandable, thefactthat asenseof Although theresults of April may be by threequartersof thepopulation. pandemic, thisopinion wasshared In early 2020,at thebeginningof the in termsof budgetary policy. and othermemberstates, for example was beingtreated “unfairly” bytheEU plurality (49percent) believed that Italy crisis as “inadequate”, while a high support to Italy during the COVID-19 Italian Euroscepticism and the COVID-19 Pandemic: Survey Insights

Commission was rather modest, with The way the EU reacted to the the implementation of the Coronavirus early phases of the pandemic had Response Investment Initiative worth an important impact on Italian 37 billion made available through perceptions of the EU’s handling a reshuffling of unused cohesion of the crisis. Although COVID-19 policy funds from the EU budget. This is an unprecedented symmetrical measure was considered insufficient and exogenous crisis, significantly by many experts and was criticised for different from the 2008 financial

© 2020 IAI not involving a mutualisation of risks, crisis, the old contrast between “frugal” while the situation was also worsening and fiscally conservative countries, in other member states. willing to show mostly in the form of loans through the European Moreover, the statement in March Stability Mechanism (ESM) adjustment 2020 by , the new programme, and “profligate” countries, (ECB) president, which call for mutualisation of risks and that “we are not here to close spreads” a relaxation of fiscal rules, resurfaced as far as sovereign debt markets are during the early months of the crisis. ISSN 2532-6570 concerned,3 added to the feeling of abandonment by EU institutions in Italy Indeed, early in the crisis, Italy, together and other highly indebted countries in with other eight member states, . Indeed, the contrast with the quickly focused on the need to issue statement by Lagarde’s predecessor so-called “coronabonds”,4 a common Mario Draghi, who had promised to do debt instrument issued by a European “whatever it takes to preserve the euro” institution to raise funds on the market in 2012 could not be more evident, for hard hit member states. underscoring the importance of words in preserving financial market stability The debate significantly hampered the in the . EU’s response to the crisis, delaying reaction times in . This, in turn, Acknowledging the misstep, the ECB influenced perceptions in Italy, as many subsequently corrected its pitch, feared that a new era of and unveiling the Pandemic Emergency structural reforms would commence, Purchase Program (PEPP) on 18 leading to a spike in anti-EU sentiments March 2020, a 750 billion euro public and dissatisfaction, as also recorded in and private sector asset purchase the April 2020 poll. programme aimed at supporting struggling economies in Europe What is surprising is the fact that these to handle the economic impact of perceptions were still present in Italy COVID-19. in October, despite the fact that the EU had significantly stepped up its action

3 Christine Lagarde and , 4 Letter to , President of the Introductory Statement. Press Conference, , by nine eurozone countries, Frankfurt am Main, 12 March 2020, https:// 25 March 2020, http://www.governo.it/sites/ www.ecb.europa.eu/press/pressconf/2020/ new.governo.it/files/letter_michel_20200325_ html/ecb.is200312~f857a21b6c.en.html. eng.pdf. IAI COMMENTARIES 20 | 90 - DECEMBER 2020 IAI COMMENTARIES

2 Italian Euroscepticism and the COVID-19 Pandemic: Survey Insights

to support national economies, with support domestic financing of direct particular attention to the needs of Italy. and indirect healthcare, cure and prevention related costs due to the The survey’s data shows, however, COVID-19 crisis”.6 that those who considered the EU’s action inadequate come mainly from This new temporary instrument within -wing and anti-migrant the ESM, made possible also thanks League party, a traditional Eurosceptic to the contribution of the Italian

© 2020 IAI party, and other right and centre-right government during difficult European parties. A large portion (79 per cent) negotiations, is very appealing for of the respondents who identified as a country with a health sector that League party voters believed the EU’s is under severe pressure due to the action to be inadequate in the October pandemic and years of declining public 2020 poll. Conversely, strong approval investment, not to mention the problem for the EU’s action was recorded among of Italy’s high public debt (close to 160 -leaning electorate (76 per cent), per cent of GDP at the end of 2020). led by the centre-left Democratic Party ISSN 2532-6570 (Partito Democratico – PD), which Nevertheless, concerns coming mainly presently sits in government. from the second governing coalition party, the 5 Star Movement (Movimento Survey results also reveal an interesting 5 Stelle – M5S), that signing a contractual divergence of opinions among left- agreement with the ESM would be and right-wing electorates on the the prelude to a macroeconomic two main EU instruments to confront adjustment programme involving the crisis, namely the new European austerity measures – as seen during the Stability Mechanism (ESM) COVID-19 sovereign debt crisis – are preventing loan programme and the Next the government from resorting to the Generation EU (NGEU) plan attached to ESM. the Multiannual Financial Framework 2021–2027. Survey results differ significantly from the official positions expressed by As far as the ESM is concerned, the political parties with regards to the ESM. discussion in Italy on the possibility of A cross-section of society spanning requesting the Enhanced Conditions both the right- and left-wing electorate Credit Line made available for the is in favour of resorting to the ESM COVID-19 crisis (Pandemic Crisis Pandemic Crisis Support, ranging from Support) has been very lively.5 As the high support from the PD electorate (84 said, “the only requirement per cent) to the medium support from to access the credit line will be that euro League voters (54 per cent). Conversely, area Member States requesting support only the M5S and centre-right Brothers would commit to use this credit line to of Italy (Fratelli d’Italia – FdI) voters are

5 Paolo Guerrieri, “I fondi del MES sono un’occasione importante e non rinviabile per 6 Eurogroup Statement on the Pandemic l’Italia”, in Europea, 24 November 2020, https:// Crisis Support, 8 May 2020, https://europa. euractiv.it/?p=16755. eu/!HF67wJ. IAI COMMENTARIES 20 | 90 - DECEMBER 2020 IAI COMMENTARIES

3 Italian Euroscepticism and the COVID-19 Pandemic: Survey Insights

opposed to the ESM (49 per cent and 47 digitisation of public administration per cent respectively), but not in high and services, European industrial numbers. data cloud capacities); and social issues (education in support of digital Indeed, increasing financial support for skills and educational and vocational the Italian healthcare system is a priority training at all ages). for Italians, as also demonstrated by responses on the use of European funds. With regards to country-specific

© 2020 IAI When asked about the use of European recommendations, the Commission funds which Italy would receive from invites Italy to take two specific the “Recovery Fund” (Recovery and measures, among others: (i) strengthen Resilience Facility – RRF, the main the resilience and capacity of the component of the NGEU), the absolute health system, in the areas of health majority across political parties opted workers, critical medical products and for the health sector. This consensus infrastructure,7 (ii) shift the tax burden would seem to justify an Italian request away from work and contrast tax for the ESM pandemic funding, albeit evasion.8 ISSN 2532-6570 the issue remains politically sensitive. Therefore, support for the healthcare The second most favoured use of system and a reduction of tax evasion European funds is tax reduction. While and the tax burden on the labour market no doubt legitimate, the demand must would be highly appreciated by the be put into perspective with what the EU, although the NRRP should mainly RRF really foresees. When requesting focus on other sectors, closely linked to RRF funds, member states should the EU’s carbon neutral growth strategy present a recovery and resilience (i.e. the ), with plan (in Italy National Recovery and minimum thresholds of 20 per cent for Resilience Plan – NRRP), outlining digital and 37 per cent for the national investment and reform the green transition. agenda. This plan should be both in line with the EU policy agenda and address These expenditure lines are only national economic challenges, as partially consistent with the results of already indicated in the Commission’s the survey when it comes to priority country-specific recommendations issued in the context of the European 7 , Recommendation Semester. for a Council Recommendation on the 2020 National Reform Programme of Italy and delivering a Council opinion on the 2020 The Commission has been very Stability Programme of Italy (COM/2020/512), clear in its guidelines for the RRF 20 May 2020, https://eur-lex.europa.eu/legal- in encouraging member states to content/EN/TXT/?uri=CELEX:52020DC0512. 8 European Commission, Recommendation address three specific areas: climate for a Council Recommendation on the 2019 transition (clean technologies and National Reform Programme of Italy and renewable energy, energy efficiency delivering a Council opinion on the 2019 Stability of buildings, smart ); digital Programme of Italy (COM/2019/512), 5 June 2019, https://eur-lex.europa.eu/legal-content/ transformation (broadband services, EN/TXT/?uri=CELEX:52019DC0512. IAI COMMENTARIES 20 | 90 - DECEMBER 2020 IAI COMMENTARIES

4 Italian Euroscepticism and the COVID-19 Pandemic: Survey Insights

areas for the future: while the green response to Italian needs and the economy and are alleged unfair treatment suffered by considered a priority by 36 per cent of Italy could increase in the future if respondents, digital infrastructure is national expectations deviate too much only mentioned by 12 per cent. from the long-term political agenda of the EU and its instruments. As far as the desired tax reduction is concerned, the way the NGEU will be In view of the significant support (and

© 2020 IAI financed could allow to shift the fiscal trust) the EU is providing the Italian burden from labour income to other economy, Italy is expected to do its part, sectors. In fact, the Commission and using the available funds efficiently and the have made a in the right direction. When presenting sensible proposal (not included in the the National plan, Italian and European survey and surprisingly not receiving priorities will have to converge and find much attention in Italian debates a balance, also to avoid delays in the thus far): to repay the large amount of disbursement of funds that may occur common European debt issued on the in the event of serious deviations from ISSN 2532-6570 market to finance the two programmes a satisfactory fulfilment of Commission linked to the COVID-19 crisis (SURE guidelines. All this at a time when the and NGEU, 850 billion euro in total) economic challenges caused by the through the gradual introduction of pandemic are likely to add to Italy’s new genuine European resources, long-standing problems, with the risk instead of contributions coming from that climate and digital challenges will individual national coffers. be overshadowed.

The means proposed to raise these resources are taxes in those areas 12 December 2020 where negative externalities arise, for example in the environment sector ( tax and carbon border adjustment) and fiscal avoidance behaviour by digital companies (digital tax). Revenues from these levies, which are considered efficient from a social welfare perspective, would flow to the EU budget and be used to repay the Recovery Fund in the medium term. This could allow to reduce national contributions providing some fiscal room that could allow an easing of tax burden on labour income.

In conclusion, while it is true that Italexit is becoming less attractive, the narrative of Europe’s inadequate IAI COMMENTARIES 20 | 90 - DECEMBER 2020 IAI COMMENTARIES

5 Italian Euroscepticism and the COVID-19 Pandemic: Survey Insights

Istituto Affari Internazionali (IAI) The Istituto Affari Internazionali (IAI) is a private, independent non-profit think tank, founded in 1965 on the initiative of Altiero Spinelli. IAI seeks to promote awareness of international politics and to contribute to the advancement of and multilateral cooperation. Its focus embraces topics of strategic relevance such as European integration, security and defence, international economics and global governance, energy, climate and Italian foreign policy; as well as the dynamics of cooperation and conflict in key geographical regions such as the Mediterranean and Middle East, Asia, Eurasia, Africa and © 2020 IAI the Americas. IAI publishes an English-language quarterly (The International Spectator), an online webzine (Affarinternazionali), three book series (Global Politics and Security, Quaderni IAI and IAI Research Studies) and some papers’ series related to IAI research projects (Documenti IAI, IAI Papers, etc.).

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