The ‘Fall of the House of Europe’

Beppe Grillo’s movement is not capable of governing Italy, but it has shown how ungovernable it is under austerity.

By voting to comedian-turned-political agitator Beppe Grillo, Italians voted an overwhelming "no" against austerity, against more taxes, against budget cuts in theory designed to save the euro [AFP]

The Enchanters came / Cold and old,
Making day gray / And the age of gold
Passed away, / For men fell
Under their spell, / Were doomed to gloom.
Joy fled, / There came instead,
Grief, unbelief, / Lies, sighs,
Lust, mistrust, / Guile, bile,
Hearts grew unkind, / Minds blind,
Glum and numb, / Without hope or scope.
There was hate between states,
A life of strife, / Gaols and wails,
Don’ts, won’ts, / Chants, shants,
No face with grace, / None glad, all sad. 

                                  – WH Auden, The Golden Age  

We have, unfortunately, no post-modern version of Dante guided by Virgil to tell a startled world what is really happening in Europe in the wake of the recent Italian general election.  

On the surface, Italians voted an overwhelming “no”: against austerity (imposed the German way), against more taxes, against budget cuts in theory designed to save the euro. 

There are four main characters in this morality/existential play worthy of the wackiest tradition of commedia dell’arte

The Pyrrhic winner is Pier Luigi Bersani, the leader of the centre-left coalition: he’s unable to form a government. 

The undisputed loser is technocrat and caretaker Prime Minister Mario Monti. 

And the actual winners are – from a German point of view – “two clowns”, maverick comedian Beppe Grillo’s 5 Star movement, and notorious billionaire and former Prime Minister Silvio “Bunga Bunga” Berlusconi. 

There’s much more. These four characters also happen to be at the heart of a larger than life phenomena: the political failure of the troika (European Commission, European Central Bank and International Monetary Fund), which is leading to the politics of the European Union being smashed to pieces.  

Meet ‘Absurdistan’

Why did things happen in Italy the way they did? There is scarcely a better explanation than Marco Cattaneo’s, expressed in this blogwhere he tries to understand “Absurdistan”. 

It all started with an electoral law that even in Italy was defined as una porcata (a load of rubbish), validating a “disproportional” system (political scientists, take note) that could only lead to an ungovernable country. 

In Cattaneo’s matchless depiction, in the Senate the One For All, All For One coalition (Bersani’s) got 31.6 percent of the votes. The Everyone For Himself coalition (Berlusconi’s) got 30.7 percent. And the brand new One Equals One All The Others Equal No One movement (Grillo’s) got a surprising 23.8 percent.

And yet, defying all logic, in the end Everyone For Himself got 116 seats, One For All, All For One got 113 seats, and One Equals One All The Others Equal No One got only 54 – less than half.

At street level, from Naples to Turin and from Rome to Palermo, there’s a parallel explanation. As many as 45 percent of Italians, from retired civil servants living on 1,000 euros a month to bankers making 10 million euros a year, don’t want any change at all. Another 45 percent – the unemployed, the underpaid – want radical change. And 10 percent don’t care – ever. That’s another recipe for ungovernability. 

Inevitably this had to lead to a nugget of cappuccino-at-the-counter wisdom. Absurdistan’s finances will soon be in a state as dire as Hellenistan – those neighbourly descendants of Plato and Aristotle. And then Absurdistan will become a model to Europe and the world – where 1 percent of the population will control 99 percent of the national wealth.   

Tried to death (including being convicted for tax fraud in October 2012): beneficiary of dodgy laws explicitly designed to protect himself and his vast businesses empire, and the endless Bunga Bunga saga. He beat them all. Silvio Berlusconi may be the ultimate comeback kid. How did he pull it off this time? 

It’s easy when you mix a billionaire’s media wattage (and control) with outlandish promises – such as scrapping a much detested property tax. How to make up for the shortfall? Simple: Silvio promised new taxes on gambling, and a shady deal to recover some of the funds held by Italians in Swiss banks.

Does it matter that Switzerland made it clear it would take years for this scheme to work? Of course not. Even Silvio’s vast opposition was forced to admit the idea was a “stroke of genius”.

Nearly 25 percent of Italians voted for Silvio’s party. Nearly a third backed his right-wing coalition. In Lombardy – informally known as the Italian Texas – the coalition smashed the centre-left to pieces; Tuscany on the other hand votes left, and Rome is a swing city. 

Silvio’s voters are essentially small and medium-sized business owners. They are all tax-crazy, ranging from a horde of tax evaders to those who are being asphyxiated by the burden. Obviously they couldn’t care less about Rome’s budget deficits. And they all think German Chancellor Angela Merkel should rot in Dante’s ninth circle of hell.   

Frau Merkel, for her part, had been entertaining the idea of quietly cruising through the eurozone waters towards her third term in the coming September elections. Fat chance, thanks to Silvio’s – and Beppe Grillo’s – voters. 

Talk about a North-South abyss in Europe. The EU summit this month is going to be – literally – a riot. 

Those sexy polit-clowns

All hell is breaking loose. And yet Brussels (the bureaucrat-infested European Commission) and Berlin (the German government) simply have no Plan B; it’s austerity or bust.

Predictably, Dutch Finance Minister Jeroen Dijsselbloem – the new head of the spectacularly non-transparent political committee that runs the euro – said that what Monti was doing (and was roundly rejected by Italians) is “crucial for the entire eurozone”. 

In 2012, Italy’s economy shrank 2.2 percent, over 100,000 small businesses went bust (yes, they all voted for Silvio), and unemployment is over 10 percent (in reality, over 15 percent). Italy may have the highest national debt in the eurozone after Greece. But here Absurdistan manifests itself once again via austerity: its fiscal deficit is much lower than France’s and Holland’s. 

France is in vertical decadence: it’s not only the industrial decline, but also the perennial recession, social turbulence and public debt beyond 90 percent of GDP. Paris, the second largest eurozone economy, asked the European Commission for an extra year to lower its deficit below 3 percent of GDP. Jens Weidmann, president of the Bundesbank, roared “forget it”.  

Portugal is also asking the troika for some room. Portugal’s economy is shrinking (by 2 percent) for the third year running, with unemployment rate at over 17 percent.    

Spain is in a horrendous recession, also under a monster debt crisis. GDP fell 0.7 percent in 2012 and according to Citibank will fall a further 2.2 percent this year. Unemployment is a horrendous 26 percent, with youth unemployment over 50 percent.

Ireland has the eurozone’s highest deficit, at 8 percent, and has just restructured the debt of its banks.  

Greece is in its fifth recession year in a row, with unemployment over 30 percent – and this after two austerity packages. Athens is running around in circles trying to fend off its creditors while at least alleviating some of the draconian cuts. Greeks are adamant; the situation is worse than Argentina in 2001. 

Even Holland is under a serious banking crisis. And to top it off, David Cameron has thrown Britain’s future in Europe in turmoil.

So once again it was Silvio’s turn – who else? – to spice it all up. Only the Cavaliere could boom out that the famous spread – the difference between how much Italy and Germany pay to borrow on the bond markets – had been “invented” in 2011 by Berlin (the German government) and Frankfurt (the European Central Bank), so they could get rid of himself, Silvio, and “elect” the technocrat Monti. 

 Italy’s president seeks to reassure Europe

German media, also predictably, is taking no prisoners. Italy and Italians are being derided as “childlike”, “ungovernable”, “a major risk to the eurozone”. 

The ultra-popular tabloid Bild even came up with a new pizza: not a Quattro Stagioni (Four Seasons) but a Quattro Stagnazioni (Four Stagnations).  

The verdict is of an Italy “in the hands of polit-clowns that may shatter the euro or force the country to exit”. Even the liberal-progressive Der Tagesspiegel in Berlin defines Italy as “a danger to Europe”. 

Peer Steinbrueck, Germany’s former finance minister and the Social Democratic candidate against Merkel next September, summed it all up: “To a certain degree, I am horrified that two clowns won the election.” 

So whatever government emerges in Italy, the message from Brussels, Berlin and Frankfurt remains the same: if you don’t cut, cut and cut, you’re on your own. 

Germany, for its part, has only a plan A. It spells out “Forget the Club Med”. This means closer integration with Eastern Europe (and further on down the road, Turkey). A free trade deal with the US, more business with Russia – energy is key – and the BRICS in general. Whatever the public spin, the fact is German think-tanks are already gaming a dual-track eurozone. 

No more austerity inferno 

This movie, Girlfriend in a Coma, directed by Annalisa Piras and co-written by former editor of The Economist Bill Emmott, did try to make sense of Italy’s vices and virtues.  

And still, not only via Prada or Maserati, Parma ham or Brunello wines, Italy keeps delivering flashes of brilliance: the best app in the world – Atooma, which allows the personalisation of functions on a mobile phone even if one is not a computer programmer – was created by four twentysomethings in Rome. 

Philosopher Franco Berardi – who way back in the 1970s was part of the Italian autonomous movements – correctly evaluates that what Europe is living today is a direct consequence of the 1990s, when financial capital hijacked the European model and calcified it under neoliberalism. 

Subsequently, a detailed case can be made that the financial Masters of the Universe used the aftermath of the 2008 financial crisis to turbo-charge the political disintegration of the EU via a tsunami of salary cuts, job precariousness for the young, the flattening of pensions and hardcore privatisation of everything. No wonder roughly 75 percent of Italians ended up saying “no” to Monti and Merkel. 

The bottom line is that Europeans – from Club Med countries to some northern economies – are fed up of having to pay the debt accumulated by the financial system. 

Grillo’s movement per se is obviously not capable of governing Italy. What he has done is to show how ungovernable it is under the Monti-Merkel austerity mantra. Now the ball is in the European financial elite’s court. Most wouldn’t mind letting Italy become the new Greece. 

So the “Fall of the House of Europe” might turn into a horror story beyond anything imagined by Poe – displaying elements of fascism, neo-Dickensian worker exploitation and a wide-ranging social, civil war. In this context, the slow reconstruction of a socially based Europe may be no more than a pipe dream. 

What would Dante make of it? The great Roberto Benigni, a native of Tuscany, is currently reading and commenting in depth 12 cantos – from the XI to the XXII – in Dante’s “Inferno”, a highlight of the Divine Comedy.  

I watched it on RAI – the square in front of the fabulous Santa Croce church in Florence packed to the rafters, the cosmic perfection of the Maestro’s words making sense of it all. 

If only his spirit would enlighten “Inferno dwellers” from Monti to Merkel, from Silvio to European Central bankers – aligning Man with the stars and showing troubled Europe the way.

Pepe Escobar is the roving correspondent for Asia Times. His latest book is named Obama Does Globalistan (Nimble Books, 2009).