For those who haven’t been following the extraordinary events roiling Italian politics, here’s a quick recap: On March 4, the two biggest vote-getters in Italy’s national elections were a left-populist party known as the Five Star Movement and a center-right coalition led by the right-populist League party. When the two groups attempted to form a left-right coalition government, Italian President Sergio Mattarella nixed their choice for economy minister — a distinguished, 81-year-old economist named Paolo Savona — because he (Savona) has been critical of the euro currency and has urged Italian policymakers to develop a euro exit plan just in case some future crisis demanded it. Thus, the would-be coalition government collapsed before it could even take power. Mattarella then asked former IMF economist Carlo Cottarelli to form a temporary government until new elections could be held.
As I write on Wednesday evening, Cottarelli and others are signaling that the Five Star Movement and the League might still be able to form a coalition government. But it’s unclear how the negotiations will turn out, or when fresh elections would take place.
For now, I wanted to highlight this Guardian op-ed by former Greek finance minister Yanis Varoufakis, who explains just how misguided it was for Mattarella to block Savona’s appointment because of his euro-skepticism.
“What is so striking,” Varoufakis writes, “is that there is no thinking economist anywhere in the world who does not share concern about the eurozone’s faulty architecture. No prudent finance minister would neglect to develop a plan for euro exit. Indeed, I have it on good authority that the German finance ministry, the European Central Bank and every major bank and corporation have plans in place for the possible exit from the eurozone of Italy, even of Germany. Is Mattarella telling us that the Italian finance minister is banned from thinking of such a plan?”