Monday, May 21, 2018

Italy's new government threatens alot of chaos for the EU, including voting no during next renewal for Russian sanctions

While the UK's vote to leave the EU was a historic milestone for the continental coalition, in the end it has done little to change the landscape of unelected rule by bureaucrats residing in Brussels.  But following Italy's recent elections and their ability to install a completely different government that is both anti-euro and anti-EU, the Southern European country has the power to create great chaos for the entire Union.

This is because under the EU charter, most major policies must be achieved through a unanimous vote.  And while there was great hope a few years ago that Greece would become this change agent following their installation of the Syriza government, this was quickly negated by the Troika's ability to hold much needed loans over their heads and force them to vote in lockstep with France and Germany.

That method of control however may not work in Italy as the new government is already planning on reintroducing the Lira or another form of domestic currency.  And because of this, there is one major policy that Brussels has in the past been able to get all member states to stand in agreement with over which may soon be in jeopardy.  And that policy is the imposing of sanctions against Russia over the Ukraine coup.

Donald Tusk may say “Europe must be united economically, politically and also militarily like never before … either we are together or we are not at all” but Europe is indeed not “together” at all. The Brussels commission is hounding Poland and Hungary on what are clearly internal political matters beyond the Commission’s remit; the EU is about to lose one of its most important member states; and a new government is going to take power in Rome whose economic policies (a flat tax at 15%) will blow the eurozone’s borrowing rules out of the water and perhaps cause Italy to leave the euro. 
The Italian 5-Star/League government also wants an end to the EU sanctions against Russia; these are voted by a unanimity which, although fragile, has held until now but which, if the new power in Rome keeps its word, will shortly collapse. In other words, what Trump has done is to make the Europeans look like the fools they are. In circumstances in which the EU has placed all its eggs in one basket, a basket which Trump has now overturned, it will be impossible for it to come together. On the contrary, it is falling apart. 
[..] the EU draws its entire legitimacy from the belief that by pooling sovereignty and by merging its states into one entity, it has advanced beyond the age when international relations were decided by force. It believes that it embodies instead a new international system based on rules and agreements, and that any other system leads to war. It is impossible to exaggerate the importance of this belief for European leaders; yet Donald Trump has just driven a coach and horses through it. 
The angry statements by European leaders might lead one to think that we are on the cusp of a major reappraisal of trans-Atlantic relations. However, the reality is that the EU and its leaders have painted themselves into a corner from which it will be very difficult, perhaps impossible, to extricate themselves. 
Like I said, completely different conclusions based on the exact same events. The EU risks what might turn into an existential crisis with Beppe Grillo effectively holding the reins of power in Rome. The new government may have dropped the demand for a €260 billion debt relief, but the basic income plan is still there, and so is dropping Russian sanctions. -  Zerohedge


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