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Italy begins to open a gap with Spain

ITALIA

It is well known that, during 2020, Spain and Italy went practically hand in hand in everything related to the coronavirus epidemic. This explains why both countries were the main beneficiaries of the Reconstruction Fund approved by EU leaders in July last year: 209 billion for Italy, while Spain received a total amount (between loans and non-refundable money) of 140 billion. The coronavirus, as is well known, had begun to take its toll some three weeks earlier in Italy than in Spain, but the reality is that both countries suffered the most: in addition to the fact that both have already clearly surpassed the figure of 100,000 deaths, Spain's Gross Domestic Product fell by 10.8 points to Italy's 8.9. As a result, national debt as a percentage of GDP has risen to around 130% in Spain, while in Italy it is already around 156%.

But the way out of the so-called "economic emergency" is beginning to be ostensibly different between the two countries. The first relevant figure is already known: the same Gross Domestic Product has grown by 0.1% in the first quarter in the case of the Italian economy, while the Spanish economy, on the other hand, has experienced a clear decrease (specifically, -0.5%). And it seems that this has only just begun. Because it should be borne in mind that the Italian productive apparatus is based on more solid foundations: its industry, although not as booming as it was, especially in the sixties and seventies of the last century, continues to have a very significant weight in the national economy, while in Spain, after undertaking the so-called "industrial reconversion" in the eighties, we have not experienced any significant industrial activity other than construction and, as we have already seen, this was not sustainable over time.

Add to this the fact that the real fiasco of the vaccination campaign (in both countries the rate of vaccination is not good enough) is leaving Spain without the very important influx of visitors who should have arrived this year and who, for the moment, will not (at times this is reminiscent of the famous film 'Welcome, Mr. Marshall', where, as our readers will remember, an entire town prepared to receive Mr. Marshall, author of the European reconstruction plan after the Second World War, until they realised that he would never come). And the British Government, representative of a country that is extremely important for Spain, has been one of the first to recommend that its population not come to Spain: the very low 20% of the population that has been completely immunised at the beginning of June has led the British "premier" (Boris Johnson) to think that the best thing he can do is to suggest to his fellow citizens that they look for another place to spend their holidays.

On the other hand, Americans do seem to be visiting Italy on a massive scale, and the substantial difference between the two countries has a key name: that of Mario Draghi, President of the Council of Ministers since 13 February. He is a figure of the highest international prestige: a man of Italian institutions since he began working in 1990 in the Directorate General of the Ministry of the Treasury, he has been, among many other things, Governor of the Bank of Italy and, subsequently, President of the European Central Bank. An extraordinary "curriculum vitae" that began to take shape when he earned his doctorate in economics at the Massachusetts Institute of Technology (USA) and from which he has been able to forge an image as a top-level manager. This contrasts with a Spanish Prime Minister (Pedro Sánchez) with huge gaps at all levels and who on many occasions gives the impression of living in an unreal world.

Let us add to this that Draghi, who received from the President of the Republic (Sergio Mattarella) the task of forming a government after the fall of the centre-left coalition that had governed the country since September 2019, has surrounded himself with the best in his new Executive, such as Daniele Franco, Director General of the Bank of Italy and now Minister of Economy and Finance, or Marta Cartabia, the first woman to preside over the country's highest judiciary and who currently holds the portfolio of Justice. It is not surprising, given this reality, that the immediate reaction of the European stock markets was a rise in Italian investments and that, likewise, the risk premium immediately fell: the around 100 points at which it is currently situated is a figure not seen since the times of the Renzi government (2014-16). Faced with this reality, Sánchez has barely touched his government, which comes from the spring of 2018, and this despite the fact that it is more than evident that there is a lack of muscle and that many of the ministers are merely passing through their respective portfolios without much success. Draghi also had ministers of little importance in his Executive, but he ensured that none of them could be at the head of a ministry of real relevance. The really important portfolios (Economy and Finance, Ecological Transition and Justice) are occupied by top-level personalities, which is not the case in Spain.

The figure given above for Gross Domestic Product (GDP) is particularly worrying if we pay attention to the evolution of this parameter in the last decade (2011-20): in the Italian case, it was never able to overcome the +2% barrier (the +1.7% of the Gentiloni government is the maximum achieved in the last decade), while Spain grew in 2015 at 1.9%; in 2016, at 3.3%; in 2017, at 4.1%; in 2018, at 3.2%; and, finally, in 2019, at 2.6%. And it is well known that the Italian economy has had a very serious problem for the last two decades in terms of growth, compared to the high rates achieved by Spain. So the fact that GDP is now growing at a clearly higher rate than in Spain (and it seems that the second quarter will confirm this trend), should have Spaniards very worried. All this without forgetting that the level of transalpine unemployment is below 10%, while in Spain it is already around 16% without counting the more than 600,000 workers in a situation of ERTE, which, if they lose their jobs, would take the national unemployment rate clearly above 20%.

Moreover, it should not be forgotten that, at the moment, Draghi is assured of an impressive parliamentary majority (all parties support him except Meloni's Brothers of Italy and a group of splinter groups from the Cinque Stelle Movement) that will most likely last until at least the middle of 2022, if not until the first months of 2023. In the face of this, Sánchez has a coalition government that has no more than a simple majority and, in order to get votes through, depends on the unreliable votes of the Catalan independence movement.

This whole affair has revealed a major weakness in our political system that the Italians, on the other hand, were able to predict: the key role played by the Head of State. Because the President of the Italian Republic enjoys two fundamental prerogatives: on the one hand, he orders the formation of a government (in addition to the fact that, in practice, he must give his "approval" to all the ministers who make up a new Executive), and, on the other, he can call early elections or resort to a government of independents (as was done with Ciampi in 1993, with Dini in 1995, with Monti in 2011 and now with Draghi). Against this, the Spanish Head of State (King Felipe VI) assumes the so-called 'ceremonial role', which greatly limits his capacity for manoeuvre: basically, after each general election, he entrusts the party with the most votes to form a government.

It is this reality that has allowed President Mattarella to call on the best man the country has at his disposal at a key moment, with the aim of making the most of the very generous funds that the European Union has granted Italy. While in Spain these funds will have to be administered by a low-level government, weak in parliament and without a clear vision of what needs to be done (what is most worrying is that the alternative, located in the centre-right, is practically the same, which means that calling for elections and changing the government would no serve).

What we must now ask ourselves is what the European Union will do when it sees that Spain is clearly lagging behind in the process of recovery from the debacle that the coronavirus is generating. Because the prediction, as of today, is that Italy, led by its Prime Minister Draghi, will continue to make headway and position its country much closer to the Franco-German axis than to neighbouring Spain. It is simply a matter of time: Italy is accelerating, while Spain continues at a pace that is causing increasing concern. And the worst part of it all is knowing that our country also has a Draghi or something quite similar to the Roman banker and economist, but our political system does not make it possible.

Pablo Martín de Santa Olalla Saludes is a professor at the Centro Universitario ESERP and author of the book 'Historia de la Italia republicana' (1946-2021) (Madrid, Sílex Ediciones, 2021).