Simone Romano: A protest EU vote would not surprise me

The incapability of current politicians to lead is frightening

The EU is more accustomed to respond to various emergencies rather than address the underlying structural issues. The next EU multi-annual financial framework will be very important, above all in light of the growing Euroscepticism, Simone Romano, Italian economist says in an interview with Europost.

Mr Romano, we are on the eve of Brexit, with deal or without deal. But would you not agree that this divorce process has dangerously pushed aside other important for the EU themes such as economic growth, social justice, reforms, etc.? Discussions on those have been relegated to the background.

It is not a novelty for the EU: we have always been much more accustomed to respond to various emergencies rather than address the underlying structural issues. As a matter of example, suffice to think about the migration issue: each week there is a discussion about how to handle the arrival of new immigrants, how to redistribute them, but there is not the political will to treat the issue as it is: a structural problem that is destined to stay, rather than a temporary emergency. Brexit is even worst: it is a self-imposed and unnecessary emergency that has certainly hogged the discussion for years now, shrinking even further the space to address key issues such as completing the reform of the EMU governance and the Banking Union or finding a common strategy to fight tax avoidance or promote a EU-wide innovative labour policy.

Are you concerned by the fact that populists and Eurosceptics are expected to have more seats in the next European Parliament compared to the current one?

The tide of populism and the general resentment towards elites and institutions has to be seen from a wider perspective, being a widespread phenomenon - well beyond the EU borders - and having deep-rooted origins. The key global transformations of the last 35 years - globalisation, technological progress and the dominant role of finance over real economy - have all hit the lower-middle class, which happens to be the backbone of our societies and the majority of voters as well. In this sense, a protest vote not only does not surprise me, but it can be seen as a positive sign of reaction. Mind you, with the sole exception of the increased role of finance in modern economy, both globalisation and technological progress have had a positive impact, spurring global economic growth through a better allocation of resources. Nonetheless, as all deep transformations, these phenomena imply strong redistributive effects that we should have handled in a better way. It is not a matter of refusing globalisation or technological progress, it is a matter of governing them so as to make them favourable for the society as a whole, not just for the few.

On top of this, it is undeniable that the EU has contributed to this resentment making mistakes, repeatedly, above all in handling the 2011 crisis and its legacy. The incapability of thinking and acting as a proper union, with short-sighted policies that still look at national convenience over the union-wide interest has ended up fuelling Euroscepticism.

Of all this what scares me is that the new political forces do not seem to have any clear plan about how to improve the situation, they are good in criticising and in sympathising with people's resentment, but they lack practicable long-term solutions: they do not have a shared diagnosis and treatment, so I am afraid there will not be a concrete improvement.

Lastly, what disappoints me is the incapability of the EU and the pro-EU forces to communicate all the positive things that the EU has brought to our daily lives and, believe me, they are so many, from the little and practical details, to much more advanced improvements.

The Brexit saga has seemingly tamped down other Member States' desire to leave the Union. Now, Eurosceptics are talking about change from the inside, but what would it actually involve?

It is not clear at all since many Eurosceptic forces are nationalists and lack a common view of how to change the EU. I can guess that they can find an agreement to push back the EU towards a more intergovernmental approach. The main problem is that, in the present times and above all among Eurosceptic and populistic forces, what lacks the most is the consideration and understating of complexity. I am sorry to say it, but reality is in general complex and international economic relations are pretty complex. Brexit is the clearest demonstration: leaving the EU does not just mean signing a document and having 200,000 less immigrants from Eastern Europe (if that is felt as a problem), it means having to renegotiate every single agreement that, for example, regulates the international flow of intermediate goods. Many could not care less or think it is just a secondary issue. They are absolutely free to do so, but then they have to accept the fact that a relative or a friend could lose his/her job or that the car that they wanted to buy could suddenly cost considerably more.

In general, what frightens me is the incapability of current leaders to lead. They follow their electorate to gain consensus rather than leading it through the complexity of this delicate moment with the aim of crafting a better future. This can have a high cost, above all for younger people.

As an Italian, what is your take on the exchange of sharp remarks between leaders of France and Italy? Does this not undermine unity among countries in the heart of the EU?

What I criticise about what the Italian government did is not so much the dispute with its French counterpart, it is the manner: diplomacy has its own rules and you have to be careful. It is not unusual for two powerful countries - such as France and Italy - to confront each other on many issues in the attempt to defend their national interest, even though they are long-standing allies. It happened also in the recent past for key industrial interests, just think about the Fincantieri-Stx issue or the intricate Vivendi-Telecom-Mediaset matter.

It is undeniable that France is not showing its best on issues like migration management and also that President Macron has his own advantage in openly criticising a populist government. Nonetheless, this does not imply that someone who has the honour to be a Minister of the Italian Republic can embrace this role without the maximum respect and responsibility. It can be legitimate to sympathise with a political initiative - such as the 'gilets jaunes' - but you always need to be aware that if you officially and openly meet a representative, you are not doing so as a member of a party or a private citizen, you are doing so firstly and foremost as a high representative of the Italian Republic. Unfortunately, this seems not to be always clear to some honourable high-level officials.

The gap between living standards in the countries of Western Europe (known as the core of the EU) and most countries in Eastern Europe remains vast. Why is that?

Surely the EU membership had fostered some form of catching-up. Looking at the data, central, eastern and south-eastern Europe economies have seen significant improvements in living standards over the past two decades, with growth in real GDP per capita averaging 3.8% in the region as a whole since 2000, while the EU-28 has registered only 1.4%. Obviously, this convergence process has not been homogenous over time and between countries, but this is due also to national factors. In general, the two crises (2008 and 2011) and the long recession that followed had played a key role in slowing down the process and maintaining the gap a bit wider.

 Is the next multi-annual financial framework of the EU anticipated to somewhat narrow the existing chasm in that area?

The next EU multi-annual financial framework will be very important, above all in light of the growing Euroscepticism. Despite its inadequate dimension (just 1% of the EU-wide GDP), it is called to respond effectively to new and complex challenges that range from digitalisation of the economy to migration management, passing through the enhanced need of European public goods. Moreover, the pot will shrink even further considering that the UK - a net contributor - is leaving the EU. Against this background, I do not think the next MFF will be the key element in reigniting the convergence process but some elements can certainly help, above all the greater attention to the provision of EU-wide public goods.

Recently, MEPs proposed that countries that violate the law and do not combat corruption should be penalised by cutting European funding to them. How would subjectivity be eliminated from this process?

A conditionality that goes beyond macroeconomic standards that can be modelled on the basic principles of the rule of law and the respect of the agreed commitments should be implemented. How? Agreeing on precise benchmarks regarding national commitments, exactly as it is done with macroeconomic objectives. Some examples: regarding immigration management, it could be decided that each member country is called to welcome on its national soil a part of immigrants that is proportional to its share of EU inhabitants. This way you have a precise number. If you reject to comply with your commitments, you shall be penalised somehow because you are acting in a way that is detrimental for the Union as a whole and so against the interest of the other members. Another practical example could be the corporate tax: if your rate is lower more than xx percentage points than the EU-wide average, you are not playing fairly and you are damaging the other members in a harmful race to bottom. If you refuse to change it, then the EU should have the power to penalise you.

What do you see as a realistic date for the next enlargement of the EU, and which Balkan countries do you think it will include?

Being optimistic, I would say that the next enlargement will happen in 2025 with Serbia and Montenegro being the first and more likely candidates.

Close Up

Simone Romano is senior fellow and head of the International Political Economy programme at the Istituto Affari Internazionali (IAI), Rome. He is also researcher and adjunct professor at Roma Tre University. Previously he was visiting professor at the Freie Universitaet in Berlin. He holds a PhD in Economics from Roma Tre University and a Master in Macroeconomic Policy and Financial Markets from the Barcelona Graduate School of Economics (BGSE). He graduated with a BA in Political Science and an MA in International Relations from Roma Tre University (all cum laude). His research interests lie in the fields of global and European economic governance, international macroeconomics and geo-finance.



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