Spain is not Italy

Spain is not Italy. Photo: Gloria García (CC BY-NC-ND 2.0). Blog Elcano
Spain is not Italy. Photo: Gloria García (CC BY-NC-ND 2.0). Blog Elcano
Spain is not Italy. Photo: Gloria García (CC BY-NC-ND 2.0).

The two countries are often yoked together, particularly in more northerly latitudes and in the British and US press. But Italy –which boasts a fine Ambassador in Madrid, Stefano Sannino– and Spain are not only highly different, if anything they have become more so. This has become even more pronounced with the recent political changes in the two countries. Europe is concerned about Italy because it could imperil the European project, with the advent of a coalition government formed by two populist parties, which despite having different perspectives share similar agendas. This has not happened in Spain, where there is a broad consensus on Europe and where the new government led by Pedro Sánchez sees itself as even more pro-EU –and it is to be hoped that it will be more active and participatory in this arena– than its predecessor under Mariano Rajoy. The combination of the Italian pivot and Brexit may present Spain with an opportunity to restore its former presence and influence in the EU; and an opportunity for the EU to regain a proactive Spain.

Despite the fact that they are both Mediterranean countries, the differences between Italy and Spain are profound, and are rooted in their societies, which have negotiated the crisis and recovery differently (albeit with Spain being the harder hit). There are three million ‘NEETs’ (16-to-29 year-olds not in education, employment or training) in Italy. In Spain the number has fallen to around 400,000. Public opinion in Italy, a founding member of what is now the EU, has ceased to be predominantly pro-European. Pro-European attitudes in Spain on the other hand are growing. According to the latest Eurobarometer (published one year ahead of the European elections), when asked whether they think their country’s membership of the EU is a good thing, 68% of Spaniards (and 65% of the Portuguese) answered affirmatively, compared with only 39% of Italians, something that accounts for a great deal.

Another difference: in Spain there has been a political and professional rise of women, as exemplified by a predominantly female cabinet in which many of the key posts are held by women, and the appointment of a female editor at the helm of the country’s foremost newspaper. In the Italian government of Giuseppe Conte, of 18 Ministers only five are women. The Minister for families, Lorenzo Fontana (Northern League) has already said he is going to amend the law on abortion and civil marriages to thwart the LGTB community.

Italy has a populist party on the hard left (albeit with right-wing leanings on issues such as immigration), the anti-EU Five Star Movement (M5S), and another on the extreme right, the eurosceptic Northern League (or simply League). There is no significant party on the extreme right in Spain, for reasons that were described in an Elcano Royal Institute analysis. And the one on the left, Podemos, no longer describes itself as anti-European. Moreover, there is a clear difference between Italy and Spain on the issue of immigration and the issue of refugees, as reflected in the Aquarius case.

How about political stability? Spain faces at least a year and a half before there are fresh elections. In Italy, nothing is guaranteed. Admittedly there is the issue of Catalan independence, on which the previous Spanish administration received the diplomatic support of the other EU members, tempered by tactful requests that the problem be steered towards political dialogue. Spain’s image suffered from its failure to set out its case in Europe, not only for the benefit of other governments but also for public opinion. Perhaps this will change under the leadership of the new Foreign Minister, Josep Borrell.

Italy lags badly behind when it comes to companies and the public sector adopting new technology. One only has to think, to cite two obvious examples, of how difficult it is to find a cashpoint in Rome, or how long it takes to install a fibre-optic Internet connection. The most recent Technological Readiness Ranking from the Economist Intelligence Unit ranks Spain at 23rd out of the 82 countries listed, which is lower than it should be but better than Italy’s 27th. Both countries lag behind in terms of investment in R&D.

There are differences in terms of population (59.9 million in Italy compared with 45.9 million in Spain). The two countries are almost tied on the UN’s Human Development Index. The Spanish economy is two thirds of the size of the Italian. However, it is not simply the size of Italy that concerns Europe, but also its banking sector, still in need of in-depth reform, unlike its Spanish counterpart, and the volume and structure of its debt, which may be highly destabilising if the country runs into headwinds. Italian public debt, at 131% of GDP, is in absolute terms –€2.3 trillion– the fourth largest in the world. Spanish debt is 98% of its GDP. In the Italian case, 36% of its bonds –€686 billion– are held by foreigners and in March 2018, as Martin Wolf points out, the Italian central bank owed its counterparts, predominantly the Bundesbank –hence certain German fears– €443 billion under the ‘Target 2’ system. The fiscal reforms being proposed by the new Italian government –with a single rate of income tax– could have a destabilising impact on the public purse. Spain adheres to the Eurozone’s path of macroeconomic orthodoxy, although within this it is putting forward new proposals. As far as economic growth is concerned, Bloomberg is predicting that Italy will not exceed 1% in 2019, which would be half of what Germany and a third of what Spain are set to achieve.

Italy’s President, Sergio Mattarella, taking an institutional risk, laid down a red line by vetoing the eurosceptic economist Paolo Savona as Finance Minister in the joint government of M5S and the League (although he has been appointed European Affairs Minister). The EU, at least for those in the Eurozone, is a backstop to experiments and excesses. Within this framework there is some elbow room, as shown by António Costa in a reinvigorated Portugal. There are, however, many areas in which the Eurozone has to make headway. The new Italy makes the task more difficult.