Italy reopens its borders with controversy

On 3 March, Italy reopened its borders within the so-called Schengen' area, which, as we know, includes not only the Member States of the European Union but also some non-EU countries. But, of course, in order to make the reopening of a border effective, it is necessary for the country with which you have that border to do the same, and there the Italians have met with the closed opposition of the Austrian government of Chancellor Sebastian Kurz. The fact is that the border between both countries, with the beautiful passage of the Brenner River in between, has as its main protagonists both Lombardy and Veneto, precisely two of the regions with the highest number of people infected and deceased due to the coronavirus.

In this sense, this border is key to a fundamental element of the Italian economy: its export sector. And what is more worrying: rather than thinking about the German market, which is important in itself, the Italians have more in mind the countries of Eastern Europe, including a Russian Federation (with which Italy has had a very close trade relationship for decades) where the issue of EU sanctions against the Russians for their annexation of the Crimea and the war (which is not mentioned) is still alive, but it is still there) between the Ukraine that wants to remain an independent country, on the one hand, and the one that has territories that want to become part of the Russian Federation (self-styled republics of Donetsk and Lugansk), on the other.

As in many conflicts, each country has its share of reason in this dispute. The attitude of an Austria that has managed to contain the epidemic extremely effectively, and which is not in the least bit rushed or in need of opening the border with Italy, prioritising, at least at this stage, the health of its national population, is understandable. Italy, for its part, has made an enormous effort to control everything arising from the coronavirus, has subjected its population to a very harsh confinement, and now more than anyone else it needs to give a boost to an economy whose outlook is not exactly encouraging: a rise of more than twenty points in the debt as a percentage of national GDP, a recession of around 10 ten points of that same GDP, and a very substantial increase in unemployment (around four points up at least).

At the same time, Italy and Austria are two countries that are openly confronted by the way in which the European Union intends to finance the recovery of the economies of its Member States. While the Executive presided over by Prime Minister Conte has from the outset advocated the mutualisation of debt (through instruments such as the so-called "Eurobonds"), the Austrians constitute, together with the Netherlands, Denmark and Finland, the "hard core" of the states that think that all aid to countries such as Spain and Italy should be through the granting of credits, and not through money given in a non-refundable way (not even partially). And the fact is that, for the umpteenth time, two macroeconomic realities are once again confronting each other among the member countries of the European Union: if the national debt over GDP in Italy was, before the beginning of the confinement, 135%, the Austrian debt was only 70.5%; if the growth of the Italian GDP was 0% at the end of 2019, the Austrian one, on the other hand, was +1.6%; and if the level of unemployment in Italy was, only a few months ago, 10.8%, in Austria it is only 4.6%. This means two completely different realities between two border states and members of the same supranational and supra-state organization (the European Union).

This conflict must be resolved in the first instance by the Ministers of the Interior of each country, with the necessary intervention of both the European Council and the Commission. Because the reality is that Austria cannot have its border with Italy closed indefinitely, since the Austrian economy, however healthy it may be, accounts for 20% of GDP in comparison with Italy, the third largest economy in the European Union as a whole. And there is no point in the Italians putting their still important industrial sector to full use if it cannot provide an outlet for all its production, and, as we have said, the border with Austria is key to this process. It should not be forgotten that two cities as important to the Italian economy as Rome and Venice are already having great difficulty trying to recover their normality because they are living off a foreign influx that is coming in slowly for the time being, so all that remains is for the Italian-Austrian border to remain closed.

And yet, from a political point of view, the country seems to have entered, at least for the moment, a phase of relative tranquillity. Because the key party in sustaining the current government coalition, the Italia Viva of former Prime Minister Matteo Renzi, which until recently was very critical of the second Conte government, is sending out more and more signals of its willingness to support the current Executive. In this sense, three key elements concur in Renzi's decision and his own: the first, the inappropriateness of calling early elections, at a time when a government is needed to negotiate hard with the rest of the EU member countries; the second, that Prime Minister Conte has decided, now, to really take into account Renzi's demands, particularly in the economic field, leaving aside the indifference he had maintained until the beginning of the confinement; and the third, that the political strength of the young Tuscan politician, should the government fall and early elections be held, risks becoming a party without parliamentary representation, since some of the latest polls give Italy Viva less than 3% of the vote, which is the threshold currently established by the electoral law to have representation in the two legislative chambers that the Italian political system has, so Renzi better keep the government, at least for the time being, alive, because his political future and that of his most direct collaborators depends on it.

So, with an apparently united government (although the unpredictable nature of Matteo Renzi and his lack of harmony with the "premier" Conte as well as with the Five Stars Movement are well known), the third European economy needs more than ever the solidarity of the member states of the European Union. And, for the moment, the Austrian economy does not seem to be in sight. Once again, there is a conflict between the existence of the European construction and the maintenance of the so-called nation-state. 

Pablo Martín de Santa Olalla Saludes is Senior Researcher at the Fundación Civismo and author of the book Italia, 2013-2018. Del chaos a la esperanza (Liber Factory, 2018).