Reform, yes; change, no." As this "excellent Reuters report by Gavin Jones makes clear, this has been the slogan of Italy’s bureaucrats and big industrialists for many years now. Laws are passed, prime ministers take bows for the camera, and then...nothing.
Why? For one thing, even after parliament passes a bill and the president signs it into law, it isn’t quite law yet. The bureaucrats still have to issue an implementation decree that defines how, exactly, the law will be carried out. This can take months, years, even forever—and by the time the implementation protocols emerge from the bowels of the bureaucracy, they have often been amended and weakened to the point that they change little or nothing.
And the bureaucrats have an easy time of it; Italian reform laws tend to be thought through poorly and drafted poorly, and they are then amended in a complicated legislative process that usually both weakens the intent of the law and complicates its execution. All of that provides plenty of grounds for the bureaucrats to “interpret” what’s left into something bland and ineffective.
The second big reason is that the Italian state is weak—it is not very good at making people do what they don’t want to do, especially in the South. After all, the Mafia and other organized crime associations have been defying governments since the Middle Ages. They are still at it today, and Italy is a prime case. The politicians and even the bureaucrats in far away Rome may have decreed reforms, say, in the trash hauling business, but what matters much, much more to the officials on the ground in South Italy is what Tony Soprano thinks about the reforms.
Beyond that, Italy has far too many local governments. It has twice as many municipalities and towns, for example, as the much larger and more populous United States. The central government doesn’t have enough inspectors and overseers to keep them all in line, and even if it did, the inspectors and the overseers would often sympathize more with their fellow bureaucrats than with the grandstanding politicians in parliament. Beyond that, firing a tenured civil servant in Italy is virtually impossible, meaning that bureaucrats can pretty much run their offices to suit themselves.
Italy is far more sophisticated and clever, that is, than the hot-headed Greeks. Syriza is a party of naifs who made the mistake of attacking Germany and Brussels head-on. Italy is savvier than that: it knows how to say yes" and look busy while doing little or nothing. Italy has a long history of using that strategy. The Goths conquered Rome and did a lot of damage—but they didn’t change Italy much. German emperors strutted through the halls of Italy’s palaces and issued decrees to both princes and popes—and Italy kept on being Italian all the same. The idealists of the Risorgimento who fought for Italian unification in the 19th century dreamed that a united Italy would become a modern great power, but what they got instead was more of the same. Mussolini tried to make Italy organized, disciplined, and modern, but his efforts made little difference in the end. The Italian Communist Party became steadily more Italian and less Communist over time; the mani pulite "scandal was supposed to provoke a wholesale shake-up of the Italian political class. The scandal ended, and with a few minor changes the political system rolls on.
It is very hard to see how Germany or Brussels could pressure Italy actually to make the kind of deep and meaningful change they want the country to make. It is much easier to see how Italy can go on indefinitely holding them at bay with cosmetic reforms. Getting Italy to turn itself into the kind of economic partner Germany wants in the eurozone really is like trying to nail Jello to the wall. It’s the nature of Jello to slither down walls and nails have nothing to do with that fact.
In other words, if Germany’s problem in the eurozone was as simple as its problem with Syriza—beating back an open challenge from incompetent blowhards—Berlin could rest easy. But the real problem is that the social transformation that Germany demands in the name of the euro is one that many eurozone members do not want to make—and perhaps could not make if they tried. Even Greece seems to be learning this lesson: A smarter strategy for Greece, and one it appears to be reverting to, is the Italian approach of saying "yes" and then failing, of looking endlessly busy with reforms but ensuring that whatever you do always falls short. Germany can’t replace the Greek bureaucracy with German bureaucrats, and it can’t micromanage a society that it doesn’t understand. Germany is stronger than France, stronger than Italy, almost infinitely stronger than Greece. But it isn’t stronger than culture and it isn’t stronger than inertia.
This cultural argument, of course, shouldn’t be taken to mean that nothing ever changes, or that nothing could ever be different, in Italy. Like all countries with living cultures, Italy changes over time. Feudalism ended. The industrial revolution reshaped North Italy dramatically, while it brought notably less industrial development in the South. The Church has lost much of its power. Immigration will shake up Italy even more. But the shifts can’t be guided, and they certainly can't be timed to suit the plans of technocrats. They come in their own time, and in their own way—and, so far at least, it isn’t easy to argue that cultural change is making Italy more German.
If Europe is going to have a single currency, it must be one that is permissive enough for Italians to go about their business as they see fit without violating German expectations of order and honesty. There probably is no magic meeting place that makes both sides happy; the German proposal is that the Italians reform to fit the euro and the Italian counter-proposal is that they pretend to reform and the Germans pretend to believe.
The problem with the euro isn’t, and never has been, one of interest rates and austerity. It has always been at its core cultural and not administrative: it is a political problem and not a technocratic one. Unfortunately, the only effective institution for managing the eurozone’s affairs is the ECB, a technocratic institution that can only deal in the decisions that central banks make. It can raise and lower interest rates; it can take a more or less accommodating stance to the deficits of its member states. It cannot reconcile the conflict between cultures and values that is the heart of the matter.
All this, then, adds up to a simple forecast: There's more trouble ahead for the eurozone, with greater disenchantment with the European project very likely in both the north and the south.