'Something has to give': Italians back euro but rail against EU’s rules

Ever since the inception of the EU, Italians have been among the staunchest defenders of the European project. But the political crisis that engulfed the bloc’s third largest economy this week, centring on a debate over Italy’s commitment to the eurozone, has spooked investors and worried Brussels.

It has raised a question that just a few years ago would have seemed unfathomable: are Italians ready to ditch the euro?

The answer, like most aspects of Italian politics, is complicated.

Opinion polls show that a majority of Italians – 59%, according to Eurobarometer – support the country’s continued inclusion in the eurozone. But that does not mean they want to continue to abide by the rules set by Brussels, which Italy agreed to when it adopted the currency.

Instead, more Italians are seeking a tougher and more antagonistic approach towards Brussels, after years of frustration over fiscal constraints set by the EU coupled with a feeling that Europe has abandoned Italy to cope on its own with the migration crisis. The latest Eurobarometer survey found that only three in 10 Italians believed their voices counted within the EU.

While a full break from the EU – an “Italexit” – is not a matter of public debate (such a move is considered implausible even among the most hardline Eurosceptics), surveys show Italians generally have a dim view of the bloc. Eurobarometer found that 39% believed Italy’s inclusion in the EU was a “good thing” and 44% believed Italy benefited from being in the EU.

In March, stagnant economic growth and concerns about immigration drove voters across Italy to vote in large numbers for two populist parties – the Five Star Movement and the League, formerly the Northern League – while the most pro-EU party, the Democratic party (PD), suffered a humiliating defeat.

Josef Janning, a senior policy fellow at the European Council on Foreign Relations, said: “There is no desire to exit. But there is a willingness to follow the League and the Five Star Movement and to say ‘we don’t want to follow the rules’. That seems to be the new consensus.”

Research by Roberto D’Alimonte, a political scientist at Luiss University in Rome, shows that among Italy’s biggest political parties, only the far-right League, which used to be a secessionist party, has a majority of supporters who want Italy to exit the single currency. More than half (56%) of all M5S supporters and 91% of PD voters want to remain in the eurozone, compared with 38% of League supporters.

Italians’ views on the eurozone are difficult to correlate with age or other demographics. D’Alimonte said the biggest indicators were employment status and education, with unemployed people – especially young people in the poorer southern regions of Italy – more inclined to have negative views about the euro.

It would be very difficult for Italy to exit the eurozone. Currently the constitution states that referendums cannot be held to change international treaties. The constitution therefore would have to be amended to allow for a referendum on a departure, and this would require the support of two-thirds of both houses of parliament.

The constitutional court would probably weigh in, and the process could take years. In the eventual event of any referendum, most analysts agree that voters would strongly favour keeping the euro – driven perhaps more by fear than love.

The complication in Italy is that Europe is not seen as the most important issue for voters in a general election. Domestic issues take precedence.

“If there were a referendum, I am pretty positive that the euro would prevail,” said D’Alimonte. “But in a general election, where the euro is one issue but there are others like immigration, pension reforms, cost-cutting issues, it becomes less clear what the outcome becomes.”

Both the League and the M5S insisted this week that they had never called for an exit from the euro. But top officials from both parties have called in the past for either an exit or at least a referendum on the issue.

For supporters of the EU, the worry is how far sentiment has shifted in Italy. “The politicians will probably keep their ambivalent stance,” said Wolfango Piccoli, an analyst at Teneo Holdings in London. “But we know they want a confrontation with Brussels. We should not expect that relationship to stay the same. Something has to give. A compromise is possible but so far there is no indication from Brussels that there is one.”

At the centre of the dissatisfaction with Brussels is the view that Italy has, as a net contributor, given more than it has received, with funds being diverted to eastern Europe while southern Italy has languished.

Janning said: “The deficit rules and the fiscal constraints that the eurozone applies are a source of frustration. Italy is a wealthy and large country, so they feel that they should be treated differently, and that they should not be bound by rules that they perceive to be dysfunctional.

“There is a view of a north/south divide, of the rule-makers and the rule-takers. And that the success of economic change in the east has created the neglect of southern Europe.”

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