Table of contents
2. From the Maastricht criteria to the EMU
2.1 The Maastricht Convergence Criteria
2.2 Reforming the welfare state
In March 2018, the Italian general election spawned vast support for Eurosceptic parties.1 Although Euroscepticism is a widely spread phenomena in European countries, its presence in Italy is special as Italy is a founding member of the European Union and, historically, has always been one of the most supportive members for European integration. Since the end of World War II, Italy aimed at mediating between antagonistic views and corroborated European integration. Today, however, Italy seems to be reluctant towards the EU and experiences a strong opposition towards the EU, which is manifested as Eurosceptic political parties.
The emergence of Euroscepticism is a general threat to the functioning and credibility of the EU. There are numerous reasons why countries develop Euroscepticism. As for the Italian case, some scholars explain Euroscepticism by the accumulation of external historical factors, such as Marc Lazar, who traces Euroscepticism back to the Maastricht Treaty of 1992.2 The ‘Convergence Criteria’ set the standards for potential member countries to join the European Monetary Union (EMU) and consequently required Italy to implement reforms. Italy had to cut back on public expenditure and welfare-state costs. In Eichenberg and Dalton's (2007) study on public opinion of European integration, they found that citizens were increasingly more concerned about the distributive effects of integration than by the aggregate economic performance of the EU.3 The study demonstrates that before the Maastricht treaty, the growth of intra-European trade and joint efforts to achieve price stability were rewarded by citizen support. Thereafter, the phenomenon reversed and people became more concerned than supportive. This demonstrates the change of basis by which citizens evaluate the policy performance of the European Union during the transition into the EMU4.
Euroscepticism is generally assumed to have evolved further under the financial crisis in 2008, which led to a drop of stock markets, housing market, rise in unemployment and great financial difficulties for the already weakened Italy. A third factor for Euroscepticism is seen in the refugee crisis that started in 2013 for Italy, which led to difficulties that the government is trying to deal with until today.
This paper seeks to analyze the influence of the Maastricht Treaty on Italy’s foundation of Euroscepticism. Euroscepticism will be understood as “the opposition and doubt to the process of European integration”.5
The pressure to join the EMU forced the Italian government to cut state expenditures and resulted in drastic reforms of the welfare state in the 1990s. Fiscal adjustment were also achieved by revenue increases and reduction in interest payments on public debt, yet the cuts in public expenditures were significant for the evolution of Euroscepticism.6 Important for this paper are the reforms on social insurance and the labor market, since they directly influence people’s life and lead to the concern of distributive effects. Consequently, political parties included Eurosceptic aspects in their program and reflected the doubt of the people whether European integration is in fact advantageous.
It is important to keep in mind that even though Euroscepticism did evolve, the reforms were necessary to allow for economic development in Italy. Despite the inevitable short-term costs and creation of Euroscepticism, the convergence criteria prompted Italy to impose long-needed reforms that might have never been imposed without the effort of joining the EMU.
2. From the Maastricht criteria to the EMU
2.1 The Maastricht Convergence Criteria
With the Maastricht Treaty (Treaty on European Union), that came into force in November 1993, the institutions of the European community were enhanced, and a framework was set out to achieve the EMU by January 1999.7
Continuing a process that had begun with the Single European Act (SEA) in 1987, the treaty increased the power of the European Parliament and laid ground for improved policy coordination for parts such as social affairs, high technology, border controls, immigration, and anti-crime efforts.8 At the same time, the starting point was set for a common foreign and security policy. Most importantly, for the aim of this paper, the Maastricht Treaty opened the path towards the creation of a single European currency, the Euro. A European Central bank (ECB) was established, free movement of capital between member states was introduced and a single monetary policy by the ECB was established.9
To be able to join the Euro, the Maastricht Treaty set the criteria countries must meet before acceding the EMU in 1999. These criteria, sometimes referred to as Maastricht criteria, were designed to guarantee countries are prepared to join the EMU by converging towards the same standards. The criteria obliged the candidate countries to meet economic policy targets, which demonstrated the countries will and ability to pursue a sustainable stability policy.10
The first criteria defined the need for candidates to have inflation rates of no more than 1.5 percent above the average of the three EU countries with the lowest inflation rates. Secondly, long-term interest rates should be no more than 2 per cent above the average of the three countries with the lowest rate. The third criteria obliged the candidates to ensure that the national currency had not devalued and must have remained within the normal (15 percent) bands of the EMS for the previous two years. Fourth, the National budget deficit must be less than 3 percent of GDP and, lastly, the national dept must be less than 60 percent of GDP.11
The fiscal criteria, specifically, was of outmost importance for the entrance of Italy in the European currency market. Even though supportive of the EMU, the Italian government had to tackle domestic difficulties and take drastic actions to fulfill the criteria. At that time, Italy did not meet the criteria. At the beginning of the 1990s, the government deficit in Italy exceeded 10 percent of GDP. The debt ratio has always been above 100 percent of GDP in the 1990s and, at times, was more than twice as high as the Maastricht reference value.12
The difficulties that Italy would have to face was the high unemployment rate and the inefficient public sector. Moreover, a single currency would abolish the possibility of devaluating the Lira, which has been used by Italy to create competitive advantages.
The successive governments all agreed on fulfilling the criteria and to tackle Italy’s budgetary problems.13 Major cuts were made on social insurance and the labor market through innovation and flexibilization.14 Since social expenditure amounted to 25.8 percent of GDP, it was necessary to reduce those costs.
1 The Movimento Cinque Stelle (M5S) surpassed the polls with 32% of votes, the Lega Nord increased its votes fourfold compared with the 2013 elections. See The Guardian (2018). Italian elections 2018 – full results.
2 MarcLazar has given many interviews, explaining his theory of Euroscepticism in Italy. See for example Institut Montagne (2018), Euractiv 2018, Fondation Robert-Schumann (2018); Eichenberg, Dalton (2007) also state that in the post-Maastricht period support for EU decreased. See R.C. Eichenberg, R.J. Dalton (2007). Post-Maastricht blues: The transformation of citizen support for European integration, 1973–2004. Acta politica, 42(2-3)
3 R.C. Eichenberg, R.J. Dalton (2007). Post-Maastricht blues: The transformation of citizen support for European integration, 1973–2004. Acta politica, 42(2-3), p.129
4 R.C. Eichenberg, R.J. Dalton (2007). Post-Maastricht blues: The transformation of citizen support for European integration, 1973–2004, cit., p.144
5 P. Taggart (1998). “A Touchstone of Dissent: Euroscepticism in Contemporary Western European Party Systems”, European Journal of Political Research, p.365
6 M. Ferrera, E. Gualmini. Reforms guided by consensus: The welfare state in the Italian transition. West European Politics, 23(2), p.205
7 J.M. Grieco (1995). The Maastricht Treaty, Economic and Monetary Union and the neo-realist research programme. Review of International studies, 21(1), p.21
8 J.M. Grieco (1995). The Maastricht Treaty, Economic and Monetary Union and the neo-realist research programme. Review of International studies, 21(1), p.21
9 F. McDonald, S. Dearden (1999). European economic integration. Pearson Education
11 All criteria quoted from F. McDonald, S. Dearden (1999). European economic integration. Pearson Education, p.110
12 M. Ferrera, E. Gualmini. Reforms guided by consensus: The welfare state in the Italian transition. West European Politics, 23(2), p.194
13 One exception was the right-wing government of Berlusconi who gave little priority to budgetary measures during 1994
14 M. Ferrera, E. Gualmini. Reforms guided by consensus: The welfare state in the Italian transition. West European Politic s, 23(2), p.188