How Italy got hammered by COVID-19

After two months of ambulance sirens, mourning and isolation, this is the damage report from Italy:

The novel coronavirus death toll has surpassed 30,000. The country is hurtling into its steepest recession in modern times. Tourism has gone bust. Many restaurants and shops lack the cash to ever reopen. The government’s brittle finances are becoming ever more stretched.

All the while, many Italians feel embittered and alienated. They are disappointed in the continent’s early response to the pandemic and its fallout. Anti-European sentiment has spiked. So has the uncertainty about what might happen next in Italy’s topsy-turvy politics.

Even before it was hit by one of the world’s deadliest outbreaks, Italy was seen as the wild card of Western Europe — flirting on-and-off with populism, sometimes seeming to be only one mismanaged crisis away from becoming the continent’s next Brexit or Greek-style debt disaster. Now that crisis has arrived, and what hangs in the balance is not just Italy’s stability but that of Europe, as well

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The coronavirus has altered almost every hard-hit country in deep and lasting ways. But the changes are particularly perilous in Italy, where the virus struck at pre-existing economic frailties and played on a sense of abandonment that had started during the Eurozone and migration crises.

Even before it was hit by one of the world’s deadliest outbreaks, Italy was seen as the wild card of Western Europe — flirting on-and-off with populism, sometimes seeming to be only one mismanaged crisis away from becoming the continent’s next Brexit or Greek-style debt disaster. Now that crisis has arrived, and what hangs in the balance is not just Italy’s stability but that of Europe, as well.

Severe contraction

“This idea that Italy can follow the UK in an anti-European mode is something that is concretely happening,” said former prime minister Enrico Letta, now the dean of the Paris School of International Affairs. In economic terms alone, Italy is in peril.

On a continent facing its worst recession ever, Italy is forecast to have one of the most severe contractions of any single country, at 9.5 per cent this year, according to European Union projections. Its debt is projected to rise to 158.9% of its gross domestic product, one of the highest rates in the world.

Italy is vulnerable not just because of the scale of its outbreak and the length of its lockdown, but because of the nature of its economy. It depends heavily on tourism, which accounts for about 13 per cent of its GDP. It also has a high proportion of small-business and off-the-books workers — some of the groups hit hardest by the downturn.

The risk for Europe is that inequality within the single currency zone will deepen, bringing to a boil long-simmering tensions between northern countries and those in the south, including Italy.

Already, north and south have fought over a coordinated response to the coronavirus pandemic. France and Germany were initially reluctant to share medical equipment, leaving Italy to turn to China for help.

Then, last month, Germany and the Netherlands effectively struck down Italy’s proposal for “corona bonds,” which would have seen EU countries pool together debt to fund the continent’s recovery.

European financial crisis

Discontent in the wake of the European financial crisis, and later the migration crisis, led to the first major upswing in anti-euro sentiment in Italy and began a chain of events that led to rise of Brussels-bashing, anti-migrant nationalist Matteo Salvini and his far-right League party.

The League lost its place in Italy’s government last year after Salvini’s attempt to vault from interior minister to prime minister backfired spectacularly. It remains Italy’s most popular party, though, and many political analysts have believed Salvini would eventually stage a comeback.

But Salvini’s messaging during the pandemic has swung erratically. First, he criticised Italy’s lockdown for being too loose. Now, he is criticising Italy for not reopening fully and quickly enough. Italian media outlets have started speculating on who might replace him as the party’s torchbearer.

Another far-right party, the Brothers of Italy, has been siphoning support away from the League. Measured together, the two far-right parties have almost exactly the same share of support — 40% — that they did before the crisis.

Anti-euro sentiment, rather than directly helping any one party, has bled across the political spectrum and has not yet fed changes in party policies.

“There is no possibility for Salvini. Zero,” said former prime minister Matteo Renzi, who leads a small party that is a part of the governing coalition. “The next election will be in 2023. And in Italy, three years are an era.”

“We are in a very dangerous zone,” said Sandro Gozi, an Italian politician who represents France in the European Parliament. “If Europe is effective, you can even think that this can be a new era [for Italy].

It can be a new positive phase. On the contrary, if the union pretends but doesn’t really act, and the economics goes really bad in Italy, Italy could shift totally on the nationalistic side. I don’t think there will be a middle ground.”

Chico Harlan and Stefano Pitrelli are journalists

(WaPo)