The first is whether the government’s estimate proves correct. The eventual allocation
will depend partly on the size of the hit each country’s economy took from covid- 19
restrictions. Halfway through 2020, Italy’s GDP was 17.3% below its level of a year
earlier. That was worse than the EU average. But Italy still fared better than either Spain
or France.
The second question is whether the authorities can devise the kinds of projects the
European Commission can approve: the greener and more digital the better. And a third
is whether the money that is allocated will all reach its intended destination. One of the
aims will be to channel funding to the mezzogiorno, as the country’s south is known, in
an effort to close the wealth gap with the richer north. Past efforts to achieve that have
failed, in part because too much of the cash has ended up in the hands of Italy’s
organised criminals, who are ominously well embedded in the legal economy.
But perhaps the most important question of all, when it comes to Italy’s future
productivity, competitiveness and overall prosperity, is whether those in charge are
ready to accompany the aid with the kind of painful structural reforms that the country
has successfully fended off for more than two decades. That, in turn, will depend on
politics.
The coalition of the prime minister, Giuseppe Conte, which includes the centre-left
Democratic Party (PD) and the anti-establishment Five Star Movement (M5S), looks
relatively durable, despite a fragile majority in the Senate, parliament’s upper house.
But the M5S in particular has a weakness for nationalisation and the PD has historical
and emotional ties to a labour movement that has successfully blocked attempts in the
past to make Italy a more modern and efficient country. Do not hold your breath.
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