Mini-BOTS: is Italy on its way to installing a parallel currency?

After the recent European Parliament elections, commentators concluded two things: the political centre, though much more scattered, remains relatively intact; and “populist” parties have become stronger. As the populist Northern League (Lega Nord) won more than one third of the votes in Italy, its leader, Matteo Salvini, uses the momentum to advance a new proposal which we could say is part of the European movement towards monetary reform on which we reported earlier.

As explained by Silvia Merler, the international headlines saying that Italy decided for a parallel currency are not entirely correct. Instead, the Lower House of the Italian Parliament voted unanimously for a motion in which the government is asked “to explore the feasibility of issuing small denomination public security [mini-BOTS = mini Bonds of Treasury/Buoni Ordinari del Tesoro] for the purpose of speeding up the payment of PA arrears”. By allowing people to use it in private exchanges and pay future taxes, “you are basically monetizing your deficit by issuing tradable small-denominated securities that act exactly like currency. It’s illegal [under EU law], and you are out of the single currency”. The question is what the government will do with this non-binding yet unanimous motion. Merler speculates that the reason the Bank of Italy and prime minister Conte do not speak out against the motion, despite their formal commitment to the euro, is that a large part of the current government’s supporters are staunchly Eurosceptic.

Commentators are wondering whether the mini-BOTS are the first step towards a parallel currency and possibly Italy’s exit from the monetary union. Authors such as Wolfgang Streeck have indeed claimed for a long time that the euro leads to economic divergence instead of convergence and that the historical, cultural and institutional differences between the member states are such that, as long as the euro exists, countries like Austria, Germany and the Netherlands will have export surpluses and countries like France and Italy will be gradually impoverished.

Matteo Pucciarelli has written an insightful essay on the rise of Matteo Salvini, Italy’s Minister of the Interior and leader of the Northern League. In Salvini’s hands, Pucciarelli argues, the party has become “the pivot of Italian – and perhaps European – politics”. Salvini is known first and foremost for his anti-immigrant and “Fortress Europe” agenda, which is perhaps not openly but at least secretly supported by the EU, but he also has an anti-EU agenda.

Against a similar backdrop as in Greece, where we have seen that austerity measures and welfare cuts raised the question whether these violated the right to adequate food, Pucciarelli makes the following analysis for Italy:

Giving wings to Salvini’s rise was the historical conjuncture. All too visibly, the dreams of Altiero Spinelli, the Italian progenitor of the United Europe ideal, had not materialized. As many respected scholars pointed out […] the apex of the EU had increasingly become dominated by a consortium of bankers and bureaucrats, dictating policies to elected governments regardless of democratic mandates, imposing neoliberal austerity and welfare cuts, and threatening the collapse of the single currency should any alternative be pursued.

When the Lega Nord was founded in 1991, it was characterized by a particularist rather than universal agenda, expressing itself in the call for independence of Northern Italy similar to secessionist proposals elsewhere in Europe. However, the party expanded its supporter base from Northern Italy, where voters “felt threatened by lack of jobs and the spectre of immigration”, to other parts of Italy. Salvini’s star quickly rose after adopting a very ingenious social media campaign in which he attacked Brussels instead of Rome and immigrants instead of (Italian) Southerners. Adopting a Trump-style personality cult and “Italians first” agenda, “public opinion was fed with an unceasing stream of images of Salvini consuming Nutella, cooking tortellini, biting into an orange, looking at the sea, listening to music, relaxing in front of the tv: every day a piece of his personal life was ‘shared’ with millions of Italians”.

Matteo Salvini

Although Salvini is part of the Eurosceptic and populist movement, Pucciarelli explains what sets the League and Salvini apart compared with the National Rally in France, Alternative für Deutschland in Germany, Vox in Spain and the movement around Nigel Farage in Britain. The strength of the League combined with the annihilation of the traditional left in Italy makes that anything Salvini says and does should be taken very seriously indeed.

The current Italian government is formed by the Five Star Movement and the Northern League. Despite their differences, Pucciarelli explains that “their most significant commonality was hostility to Brussels and questioning of the single currency, held responsible for the imposition of austerity and Italy’s economic stagnation, under the yoke of the Fiscal Compact”.

The future will tell whether the League’s economic agenda is more important than its immigration one. Pucciarelli seems to question Salvini’s willingness to push through his economic proposals if this would be at the expense of his immigration plans:

The social base of the League may be hostile to big banks, foreign regulations and footloose multinationals, but its sensibility is unremittingly capitalist. [Salvini’s predecessor], too, fulminated against Brussels in his day, yet the League voted for the Treaties of Maastricht and Lisbon. For Salvini, the single currency was a helpful scarecrow on the way up. Once on the heights, it can be put away. Porous borders cannot. They remain his true passport to power, where the [European] Union makes no difficulty.

Dr. Olivier Vonk