Europe betrayed: lessons of the single currency is the title of the most recent work by Professor Giuseppe Di Taranto, who teaches History of Economics and Business at the Department of Business and Management at our University. Published by LUISS University Press, the book discusses the decline of confidence in the Euro and possible prescriptions to guarantee the future of the single currency.
This betrayal dates back to the creation of the European Monetary Union (EMU) with the Maastricht Treaty on February 7, 1992, which fueled expectations that later turned out to be false promises. For example, says Di Taranto, "according to the agreement we should have had revenue growth of around 3% per year, an increase of two million jobs and a sharp reduction in prices to the benefit of consumers. All of this not only never happened, but starting in 2007-2008, that is, from the beginning of the crisis, conditions for families have significantly worsened."
These betrayed hopes, continues the professor, “were made possible by what Jacques Sapir calls the Religion of the Euro: a sort of taboo that inhibited or silenced any criticism, even constructive criticism, of the single currency." The explosion of populist movements in Europe are the consequence of this denial which, according to Di Taranto, the various EU countries have exacerbated by adopting policies that are excessively bureaucratic and hardly democratic: "For example, in Italy, citizens have never been able to express their opinions on European economic policies because Article 75 of the Constitution prevents the possibility of having a referendum on international treaties. Under the Monti government we have changed the Constitution to include a balanced budget, but nothing was done to change the article that would have given Italian citizens the possibility, enjoyed by other Europeans, of expressing their views on fundamental issues such as the Fiscal Compact."
Italy now has the opportunity to take the first steps towards change, thanks to the forthcoming European Semester. To this end, the professor lists various proposals at the end of the book. One of these is an immediate change in the European treaties and the Statute of the European Central Bank, which should become the lender of last resort: "In 1998, when the ECB was established, a group of Nobel laureates signed a manifesto against unemployment in Europe, which denounced the decision to limit the actions of the ECB to fighting inflation. Now it is 2014, and the ECB still has to resort to ‘borderline’ operations that fall outside its mandate because it is not allowed to lend money."
In addition, the Euro needs to be given a certain flexibility, "both to address internal problems such as the recovery of competitiveness in countries with a trade deficit, and to unblock exports to countries outside of the Euro zone.” Essentially what needs to change are the formulas that penalize the countries who have spent less because of a lack of resources (like Italy, Spain and Greece) and benefit those that have invested more, like Finland and Germany. "We need to reverse this tendency, otherwise the gap between rich countries and poor countries within the EU will never decrease."