EUobserver

Why Europe Should Not Worry About Italy

Contrary to what many think, the sick man of Europe is Europe itself, not Italy.

While seemingly a threat to EU stability and at the heart of possible contagion, Italy is historically used to navigating through uncertainty, short-lived governments and catastrophic economic forecasts.

Yet, the world continues to wonder where the Belpaese is heading to with a divided center-left, a never ending dawn of Berlusconi’s political influence, and with the impressive rise of the protest-driven party of a former comedian.

Undoubtedly, Italy’s elections have produced an uncertain political situation, but the world should be aware by now that uncertainty is the norm, not the exception for Italy.

Italy’s case has time and again struck foreign observers. How is it possible that such a dysfunctional system, ineffective institutions, widespread corruption and generalised limited care for rules would allow the country to become the eighth economy worldwide?

Italy has developed in a constant state of emergency, short-term planning and flexible interpretation of laws. However inexplicable, this is the way it works in the peninsula.

There are three elements that should reassure the markets and the international community that Italy will emerge from this crisis once again.

The first element is the strength of two key characteristic, which allow for the continuity of the country, namely its bureaucracy and its small and medium enterprises. Let’s try to understand why.

Ironically, Italy’s national bureaucracy has ensured the continuity of the country’s central authority in the past 60 years.

With a new government every 11 months, bureaucracy has helped to maintain the system together by ensuring that the high political turnover did not affect the institutional continuity of government. Moreover, despite being harshly struck by the economic crisis, Italy’s small and medium enterprises, which account for 70 percent of Italian GDP, continue to represent the backbone of the Italian economic and social structure.

Second, the political rise of Beppe Grillo, the comedian-politician-entrepreneur who has shaken Europe’s economic and political certainties, should not be considered as a more destabilising political figure - if not in his personal style - than French leader Francois Hollande or British PM David Cameron.

Grillo’s political programme is composed of several common sense points, many of which have been advanced by other political parties as well and would only help to strengthen the bond between the citizens and the state.

Other points are tailored to address popular concerns fueled by the growing inequalities and resentment towards EU policies. Grillo calls for an increase of taxes on the wealthy and has questioned, under the current circumstances and EU obligations, Italy's membership of the euro.

He nevertheless re-affirmed the importance of building a truly united European Union and sees the future of Italy firmly anchored within a fairer and more democratic Europe.

To what extent is this different from Hollande’s 75 percent wealth tax or Cameron’s proposal to have a referendum on whether the UK should remain in the EU?

Grillo’s agenda is not scarier than theirs, and his 25 percent of the votes does not grant him with the majority.

Finally, despite enormous limits in their leadership and their shared responsibility for lack of reforms in the past years, the Democratic Party (PD) and the People of Freedom Party (PdL) reacted to the deadlock reached by the country in late 2011 and jointly supported Mario Monti’s technocratic government.

This experience, mainly aimed at reassuring international financial markets about the solidity of Italy’s budget and institutions, could be repeated if conditions in the eurozone require it.

Italy indeed is a difficult beast to understand – let alone tame - for the other European countries, but it is an anchor, not an iceberg, for the European integration process.

Obviously, Italy’s economic troubles should not be underestimated, but they should not raise greater concerns than those in Spain and France.

Italy will deal with its domestic uncertainties. Europeans should be more concerned about the lack of progress, beyond a useful and yet scarcely revolutionary banking union, of an EU austerity package which has failed to be coupled with the necessary social and economic growth measures necessary to jumpstart renewed trust in European institutions. The greatest dangers for the EU come from this, not Italian party politics.