Posted on 06/03/2005 1:02:16 PM PDT by MadIvan
As Europe reels from two 'No' votes against the EU constitution, an Italian minister caused a further stir today by calling for Italians to be polled on ditching the euro and bringing back the lira.
The suggestion for a lira referendum was made by Roberto Maroni, the Welfare Minister in Silvio Berlusconi's coalition, in an interview with La Repubblica published today, but were soon dismissed in Brussels and by financial markets.
"I say not to discard this hypothesis because it isn’t at all far-fetched," Signor Maroni said. "Wouldn’t it be better perhaps to return, temporarily, at least to a system of double circulation (of both the euro and lira)?"
Signor Maroni's call reflects widespread anger among Italians about euro-related inflation. Retailers are blamed for having used the changeover to raise their prices sharply. With the adoption of the euro, Italian consumers found themselves paying much more for everything from fruit and vegetables to plumbing repairs.
With elections due next spring and the nation in recession, Italy’s politicians are becoming increasingly sensitive to public anger over economic difficulties, and likely to be worried about any anti-European backlash in the wake of the rejection of the EU constitution by French and Dutch voters.
Signor Maroni is a leader of the Northern League, a party whose base is largely built on owners of small and medium-sized businesses in northern Italy. The eurosceptic party is one of Signor Berlusconi’s main coalition partners.
The currency had "proved inadequate in the face of the economic slowdown, the loss of competitiveness and the job crisis," Signor Maroni said. He argued for giving Rome greater power to defend national industry from foreign competition and to take control the exchange rate again.
Signor Maroni cited the example of Britain as a country whose economy "grows and develops, maintaining control over its currency".
"I have no nostalgia for the lira. But from the citizens a cry for help is reaching our ears," Signor Maroni said. The minister added that with the euro Italy could no longer adopt certain measures, such as devaluation of currency, to make exports more attractive.
Signor Maroni's comments were dismissed by the European Commission - a spokeswoman said the euro was "forever" - and were rapidly discounted by market analysts.
Steve Barrow, chief currency strategist at Bear Stearns, said the euro initially dropped by half a cent against the dollar after the remarks were reported, but soon recovered. "It’s only later when we find out that it’s the welfare minister from the Northern League that you realise that it doesn’t make a great deal of difference," he said.
"The market has now thought twice about these comments and isn't taking them very seriously,'' Carsten Fritsch, a currency strategist at Commerzbank in Frankfurt told Bloomberg. "It's only comments from a low-profile minister from a euro-sceptical party."
The Northern League is the smallest party in the Italian government. Headed by Umberto Bossi, it fought in the 1990s for norhtern Italy to become a separate state, which it would have called Padania. Southern Italy is considered a poorer region.
Analysts have said that without the single currency, Italy would have far greater interest rates and debt costs, swelling its budget deficit.
Italy has suffered particularly from the euro - saddled with a currency that is far too strong in relation to their battered economy, their economy has officially entered recession after a period of stagnation.
Enough, already. It failed. Let it go.
Regards, Ivan
Ping!
Wrong. Cut taxes
If you see the Duetsche Bundesbank say anything remotely to what the Italians are saying then know the EU is gone. Thye cannot survive with Germany (the EU's strongest economy).
The water is too clean in that toilet to be a standard issue EU one.
Regards, Ivan
Time to buy European bank stocks.
Bring back the lira!
This is just too much. The euro was a huge scam. They could have done it right but didn't . Had to scam every last euro out of them instead of making it a somewhat good deal. Italy first then the Dutch then ??? Big trouble .....
Doesn't this somewhat indicate how the EU never really was a free-market economy if supposedly *all* merchants and producers took advantage of the currency changeover to jack up prices? That shouldn't have been possible.
It takes significant time to get a market to the point where it is actually, for most practical purposes, free, and even then there is always some glich where somebody is pulling something. A couple years won't do it. Maybe a century.
Bravo!
Pass the pasta without the Euro topping, please.
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