Loss leader
By Sean O'Grady | Nov 29 2011
With the Prime Ministers of Italy and Greece recently replaced, Sean O’Grady looks at what this change means for the economy and the people.
As early as 2002, economists have been predicting the eventual failure of the euro. At a time when most European countries were free of recession and financial worry, to the majority of people, these predictions would have seemed pessimistic. Presently, however, those forecasts are becoming more realistic by the day. Several countries, including Ireland, must deal with the looming threat of completely ousted from the currency, the case being particularly grave in Italy and Greece. With both countries on the brink of economic disaster, two new leaders have been elected in both Rome and Athens to try and alleviate the problems their countries face. It must be said that when considering the actions of the previous leaders, this change in leadership is without a doubt a positive one. However, it begs the question, is it all too little, too late?Italy and Greece have been facing economic hardships for quite some time. While it is unfair to lay the blame entirely onto the leaders, it is evident that bad decisions were made on their behalf. The twelfth of November marked the end of the seventeen-year run of Italian Prime Minister Silvio Berlusconi. Berlusconi was once renowned for his undeniable charisma and political skills. This all came to a crashing halt when he was forced out of government, labelled a ‘clown’ by his own people.Berlusconi’s continuous political dominance in Italy, combined with his control of the media and wealth, almost echo the characteristics of another notorious Italian leader. Berlusconi, a man plagued by sex scandals and accusations of objectifying women throughout his political career, once claimed in 2008 that, despite the countless predictions of economic disaster, he was ‘optimistic about the future’. Now just three years later, Italy has been left in a crisis totalling 1.9 trillion euro in debt.With all of this in mind, the immediate election of Mario Monti as the new Prime Minister will hopefully be a positive one. While Berlusconi has moved from wife to wife, Monti has been happily married for years. While Berlusconi’s image has been plagued with corruption, tax evasions and bribery, Monti’s past is as clean as a whistle. As was expected, Monti, an expert economist, faces a long uphill battle in trying to bring his country back on its feet. His main priority is social equity and he has been welcomed with open arms by the population, who are eager to see the opening of a new chapter for the country. Certainly Monti represents a positive change for Italy, but whether or not he will be able to bring them out of their financial rut remains to be seen.Just as Italy faces an uncertain future, its neighbour Greece lies in a similar situation; with its debt expected to increase 186 per cent by 2013, the now former Prime Minister George Papandreou has stepped down from his post. Papandreou received substantial criticism from both members of the government and the public after his decision to have a referendum on the question of the euro. The choice was seen as foolish by many, including French President Nicholas Sarkozy, who labelled Papandreou as ‘crazy’ and a ‘depressive’ after his referendum decision. While he later withdrew the referendum, Papandreou firmly placed himself in a negative light in the eyes of the Greek people.The former Vice President of the European Central Bank and expert economist, Lucas Papademos fills the void left by Papandreou. While Papademos himself is ready to admit that he is not a politician, he has been well received, winning a confidence vote in which 229 MPs voted in favour for him. Unlike Papandreou, Papadamos is determined to ensure Greece remains within the euro, saying “Dealing with Greece’s problems will be more difficult if Greece is not a member of the eurozone.” This statement echoes the views of most Greeks and represents a positive indication for the country.It goes without saying that both of the new leaders of Italy and Greece face a long struggle ahead of them to help regain some of the financial stability that their countries are currently deprived of. The change in leadership is largely symbolic in both cases. From the positive reactions both Monti and Papadamos were given upon being elected, it seems that people’s mindsets have changed from frustration and disillusionment to hope and optimism. While this is undoubtedly a positive change for both countries, whether or not this change in direction has come about in time to make a positive impact before the euro completely falls apart remains to be seen. Monto and Papadamos have a lot of pressure to succeed on their shoulders, but they also have the support of their people behind them. Whether or not they will succeed in their goals, only time will tell.