Italy’s Role in a New Europe

The election of Francois Hollande in France will usher in a new phase in European policy which will have implications for Italy and other EU countries who have been forced down the path of austerity.

The period of German-French hegemony is over.  Angela Merkel has lost her major ally and will have to rely on the support of the small northern European countries who have nothing like the weight of France.

Hollande’s election sends another clear message to the EU leadership that alternatives to austerity must be found. It is simply unsustainable to continue with unemployment levels in many countries around 20 per cent and 50 percent among the young.  Civil unrest cannot be far away if populations are given no reason for optimism.  This should be avoided at all costs.

The rejection of the two parties supporting austerity in the weekend’s elections in Greece is another sign that people want politicians to find another way.

Growth was the word most used by Hollande as he campaigned for the French presidency.  He understood the crying need for job creation and offered an alternative to the bleak future Sarkozy was offering the citizens of France.  Hollande’s initial solution of creating 60,000 new jobs in the education sector and lowering the retirement age for some long term workers may not be the best answer but at least there is an emerging counter to the dominance of the German solution.

Hollande has already foreshadowed that he will seek to form a new coalition of European countries that will seek to define alternative policies that will promote growth and negotiate with Angela Merkel for a modification of the austerity package.  However, to a large extent, Germany still holds the purse strings and will not be easily swayed from its course.


Italy’s Mario Monti should have a major role to play in the developments we can expect to see in the coming months.  Monti understands that a further debt blowout to finance recovery (as with Roosevelt’s New Deal) is simply not a possibility even if the markets would allow it.

A new way must be found and that is where Monti’s instinct for reform will be important. Reform will have to be the key to the next recovery. Monti’s labour reforms should become a blueprint for Europe and all countries should pursue policies designed to eliminate blockages in the way of productivity increases, business (particularly small business) confidence in order to get job creation moving.  Bureaucracy would be a good place to start.

These reforms should be accompanied by opposing barriers to the growth of trade. Europe’s recovery will depend to a large extent on growth in exports.  Hollande appears to have protectionist instincts and these would be entirely counter-productive to recovery.  Again, Mario Monti will have a major role to play here.

France and Italy can lead a new force for reform, growth and recovery in Europe. They should bring Britain back to the table and together these three great economies can lead Europe to a new and optimistic future.

By Stephen Lusher

Stephen Lusher

Stephen Lusher

Stephen Lusher served five terms in the Australian Federal Parliament. He worked around the fringes of politics before setting up Lush on Bondi, a trendy bar on Sydney’s Bondi Beach.

Frequent trips to Italy led to an inevitable love affair with Tuscany. He and his wife Cathy sold up in Sydney and purchased Il Mulinaccio in 2008.

Within two months of moving to the Chianti Hills he was diagnosed with throat cancer. The experience led to him re-focusing his life and priorities. After a few uncomfortable years he thinks he has it beaten.

His interests include wine, food, history, culture and travel.

He struggles with the Italian language and indulges himself in some occasional writing.


Europe image by: Europe_(orthographic_projection).svg: Ssolbergj

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  1. paciscor says

    Good food for thoughts! Anyway to discuss it all, one would need a whole night with several bottles of wine…

    • says

      More than a few nights and several crates of wine!
      It does provoke a few good thoughts. A shame Mr Lusher can’t nose his way into Italian politics – Australians are down to earth practical people, which is exactly what Italy needs.
      Talking is always good, but both Europe and Italy need action and soon.



      • paciscor says

        Well let’s put some items on the table…
        I don’t see growth any time soon regardless what kind of policy you’ll try to put in place. At best, we can work to keep the actual levels of GDP (btw, the GDP indicator is loosing sense every second that passes by).
        During the ’60ies in the times of Italian “economic boom” there were some 24 millions people actually working out of a populace of some 40+ million. Nowadays, with a GDP I think 3 or 4 times bigger, and a population of 60 million people the people working are… 24 millions! And we are still talking about increasing productivity, working in more people, harder and longer for less remuneration? I myself have 2 cars and a scooter in the family: should I buy a Fiat Panda for pillow in order to keep the system running? We have to find other ways.
        Protectionism: eminent classic British economist “founding fathers” of modern economy had always the concept in mind, that however free the markets and trade between nations could be, they would trade “excesses”, say surplus, and items they would not be able to produce by themselves. Thus we should revert to an idea of globalization and free trade that focuses on full employment of local resources first (also because petrol won’t last forever and transport costs are steadily increasing)

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