April 8, 2008
Tremonti and the serpent’s egg
The first time I interviewed Giulio Tremonti, he was in shirtsleeves and a pair of bright braces, puffing confidently on a cigar in Milan. At that time he was finance minister in Silvio Berlusconi’s centre-right Italian government, and there’s no denying it, he looked every inch the part.
Now, as Italians prepare to vote in their April 13-14 election, Tremonti is playing a more populist tune. He’s just published a book, Fear and Hope, which lashes out at globalisation and condemns “the dictatorship of the market”. He also calls for a “new Bretton Woods”. Today’s Tremonti, some may think, has more in common with his protectionist political opponents on the Italian far left than with the Tremonti of 2003.
In truth, Tremonti was always fairly suspicious of globalisation, once remarking that Europe would end up in the pot of a Chinese cook if it wasn’t careful.
All this matters because opinion polls suggest Berlusconi will win the election and, being a creature of habit, he will probably appoint Tremonti as finance minister, just as he did in 1994 and 2001. Then what will happen?
Tremonti can’t single-handedly rip Italy out of all the free trade commitments by which it must abide under European Union rules. However, it is not difficult to imagine Berlusconi and Tremonti lining up in support of French President Nicolas Sarkozy’s calls for “community preference”, an anodyne phrase behind which lurks the threat of higher import tariffs on non-EU goods.
Perhaps this is one reason why European Commission president José Manuel Barroso warned in his recent Financial Times interview that protectionist forces were on the rise in the EU, including on the centre-right. A victory for Berlusconi and Tremonti, far from signalling a triumph for the spirit of dynamic Italian entrepreneuralism, would strengthen the defensive, inward-looking forces of Europe.
The UK and other free trade advocates such as Finland, the Netherlands and Sweden need at this point to consult their copies of Shakespeare’s Julius Caesar. In Act II Scene I they will find that Brutus, when looking for a reason to justify Caesar’s assassination, said that the point wasn’t Caesar’s actions so far, but the future danger Caesar represented. “And therefore think him as a serpent’s egg/ Which, hatch’d, would as his kind grow mischievous,/ And kill him in the shell.”
So the message to Tremonti must be: Giulio, wear those braces if you must, but we can’t let the serpent’s egg of protectionism grow to full size.
Dear Mr Barber,
Posted by: Jetmir Dinoshi, Trieste | April 9th, 2008 at 8:48 am | Report this commentI think that we have to make a distinction for Tremonti as political, and as an economist. I think that he is an intelligent man with his ideas, and the book just published(Fear and Hope)is the mirror of Tremonti as political. I want to focus him as political. He has been the most powerful Minister of Economy(tow ministries in one Finance&Economy) during 02-06. What was his policy, what did he made? I understand that the period was difficult in all Eu(not in Spain)but in Italy was terrible. Twenty “tax amnesty”(i hope it is wright), the creator of creative finance, the only serious political that has affirmed that the problem of Italy is the exchange rate between € and Lira, that was fixed 1 € for 2000, and not 1 for 1550. So sir Tremonti as political is a populist, he has to give lessons of populism. And when i say populist i mean a threat for Italy.
One problem in Italy (and actually in most of continental Europe) is that it is the politics ultimately that determines the economics.
Posted by: Torquil Dick-Erikson, Rome, Italy | April 9th, 2008 at 3:57 pm | Report this commentBusiness is controlled by politicians, since you cannot even open a corner-shop (let alone drive a taxi!) without 101 permits, authorisations, licences, without which you are an illegal operator. And to get all this paperwork political support is invaluable, indeed necessary. Of course the politicians exact their slice of the financial action from the business community in return for “facilitating” the bureaucratic process and allowing “friendly” businesses to operate, as well as favouring them with contracts, lenient applications of the hyper-regulations etc. At times it is a form of extortion, rather than corruption (as was shown in the “clean hands” campaign in Italy in the early 1990s).
In exchange the business operator gets a form of monopoly or oligopoly, e.g. if you have a licence to run a chemist’s shop you can be pretty sure they will not allow a competitor to open another one next door.
Vast sections of Italian business tend to lean on the State for protection from competition (competition is all too often called “disloyal competition”), so it is not surprising that Tremonti’s policies receive support. The Chinese are frankly depicted as a “yellow peril”.
Since historically these attitudes go back a long way, as far as Colbert and his “dirigiste” policies in 17th century France, they are part of the the EU’s general ethos, and are being imposed on Britain too via the hyper-regulations continually flooding out of Brussels, and clogging up if not strangling British business (not to mention our agriculture and fisheries). The trick is to lobby the regulators so that they make regulations that match your widget, and make the other fellow’s widget simply illegal. That is how competition is conceived. Very clever isn’t it.
The captains of industry in Britain who control the commanding heights of British business, (and I am afraid this includes the editors of the Financial Times), who are the ones pushing for Britain to be fully integrated into the EU, have not grasped that continuing along this road the businessmen and women will end up as the playthings of the politicians.
Mr. Barber, are we to understand that you would like to see someone “take Mr. Tremonti out”, rather than let him implement the selfsame policies that brought prosperity to Europe a mere forty years ago under General de Gaulle and, dare one say it, Enrico Mattei?
Are you perhaps, inviting someone to do so, and if so, dear Mr. Barber, WHY?
Posted by: katharine kanter | April 12th, 2008 at 9:46 pm | Report this commentTony Barber is right in voicing his concerns,especially now that Silvio Berlusconi has won the elections and Giulio Tremonti will be the Finance or Economics Minister.
In fact most of Giulio’s public comments over the last twelve months or so have been anti globalisation and in favour of restrictions and protectionism. Moreover, like most of his powerful friends in the Lega Nord Party he is a Euro sceptic.
However, in his letter today to the Editor of the FT Giulio Tremonti pleads not guilty to statism and protectionism. In fact he summarises his view in two points :”First,market if possible,state if necessary;and second, rule- based trade vs unregulated free trade”
We shall soon find out what he really means by his two points.In fact,the solution for Alitalia will be a good case in point.
Over the next five years we will see if Italy really prospers in line with its main EU partners and like Germany will be able to increase its exports,in the face of a strong Euro.We will also witness if there is more free enterprise and whether most of the necessary liberalisations are carried out by Giulio Tremonti under the leadership of Silvio Berlusconi.
Jagdish Kothari, Azzate (VA), Italy
Posted by: Jagdish Kothari | April 16th, 2008 at 2:22 pm | Report this comment