Italy Goes to War With Germany
Not literally, obviously. But Italy’s almost-formed government wants to fight Berlin’s rules for the eurozone. No one’s going to die—but it could lead the European Union to a make-or-break moment, one from which it will emerge stronger, more dominant and more dangerous than ever.
Two months ago, I warned that Germany could “be facing a nightmare scenario” in the aftermath of Italy’s elections. That scenario is almost here.
Two fringe Italian parties are ready to form a coalition together. The fringe left and right will unite—and all they can really agree on is their opposition to Germany.
The largest party in the coalition is the Five Star Movement. It was founded in 2009 by comedian Beppe Grillo. This party wants to kick out the elites and bring in a new political system. It has championed using online polls to make major decisions based on the will of its membership.
Its partner is Lega (the League). Originally called Lega Nord (the Northern League), it was a fringe right-wing party campaigning for autonomy and even independence for northern Italy. But it has dropped the “Northern” and campaigned for anti-EU, anti-migrant policies—calling for mass deportations, etc. Lega is now Italy’s largest right-wing party. It is often, and not entirely inaccurately, characterized as “far right.”
The two have agreed on a platform and a candidate for prime minister: Giuseppe Conte, an obscure law professor. Their program just needs to be approved by Italian President Sergio Mattarella and they’re off—ready to slash taxes and increase spending.
The financial markets are already having a fit. Fitch Rating has issued a red alert. The interest rate on Italy’s debt has shot up.
Sharing a currency means sharing some risks. If Italy crashes, Germany will have to choose between bailing it out or taking a hit as poorer Italians stop buying German goods and the Italian domino knocks down other European economies.
The 2008 euro crisis made this shared risk clear. Since then, Germany has pushed more rules onto the eurozone to try to force other countries to keep their economies in good shape. Now, as Bloomberg put it, the Italian coalition “doesn’t just break those rules; it laughs at them.” The Telegraph’s Ambrose Evans-Pritchard calls it “a total revolt.”
Italy’s debt burden is larger than any other developed country’s, except Japan. The coalition wants to borrow more. It is projected to blast through the eurozone’s spending limit and spend twice as much as the maximum, according to Citigroup estimates. It also wants to ignore the EU’s rules on how much governments can help out businesses. And it wants to break the eurozone’s bank bailout rules.
A leaked early draft coalition agreement also included a refusal to pay €250 billion (us$294.6 billion) of its debt to the European Central Bank. That was removed from the final version, but the cat is out of the bag—the world knows that the coalition has thought about simply not paying back its debts.
To cap it off, the coalition is even talking about introducing its own parallel currency—the mini-BoT. This is essentially money printed by the Italian government to pay off its debts. The government would accept it from businesses as payment of taxes. Government-owned businesses, including train and petrol companies, would also accept it as payment.
Introducing a new currency like this within the eurozone is completely against the rules. But again, Italy doesn’t care. “If the EU says we can’t do it, we will do it anyway,” said Alberto Bagnai, a Lega senator and one of Italy’s senior economists.
Meanwhile in the rest of Europe, “Central bankers and eurozone finance ministers have been balanced in their reaction to the mini-BoT proposal,” wrote the Financial Times. “Balanced, that is, between outrage and apoplexy.”
This is more dangerous for Germany than an Italian Brexit—a QuItaly. The coalition’s real plan seems to be to ignore all the eurozone’s rules and borrow as much as it can get away with, knowing that when the bill comes due, Germany will have to help pay it or suffer far worse consequences itself. The mini-BoTs could be even more destructive. “If mini-BoTs are introduced on a large scale, political strains would eventually force either Italy or Germany out of the euro,” continued the Financial Times. “Having done its damage, the mini-BoT scheme would ultimately be wound up.”
Thus far, whenever a eurozone nation has threatened to defy Germany, it has been forced into submission. Italy is a very different kettle of fish. It is a G-7 economy. In an economic fight, it can threaten Germany with something like mutually assured destruction.
Will Germany resort to other means to force compliance? It may have come close when Greece defied it in 2015. Then Greek Finance Minister Yanis Varoufakis wrote in his book Adults in the Room that Greek Prime Minister Alexis Tsipras “told me that he feared a ‘Goudi’ fate awaited us if we persevered—a reference to the execution of six politicians and military leaders in 1922.”
Tsipras “began to insinuate that something like a coup might take place, telling me that the president of the republic, Stournaras, the intelligence service and members of our government were in a ‘readied state.’” Greece voted to defy Germany in a referendum by 61.3 percent of the vote. Yet fears like these caused the prime minister to give in to Germany.
Geopolitical Futures founder George Friedman describes the looming confrontation in his book Flashpoints: “As anti-German, anti-austerity sentiment rises, Germany, with vital interests, investments, markets and so on, will become a target, and attacks on its interests will escalate. Germany will have a choice of accepting the punishment or using its vast resources to transform wealth into power. … Germany will face stark choices, and increasing its strength in all dimensions will become more bearable than the alternatives. Germany will therefore become a full-fledged power, first flexing its political muscles and, in time, its military ones as pressures develop.”
That pressure is about to develop further. Moving beyond economic power may be Germany’s only option.
It may not happen all at once. Italy has already pre-borrowed much of the debt it needs to keep the country going for the rest of the year—so the point of crisis may be some time away. But it’s hard to see how a coalition like Italy’s, with a plan for both low taxes and a guaranteed minimum income, can happily coexist in a currency union with a Germany allergic to money printing or massive debt.
This isn’t all Italy’s fault. As I’ve written before, the euro was set up to benefit Germany. European officials have already overthrown one Italian government in the name of protecting the euro. Italy’s political system and economy are dysfunctional for many reasons—and the euro is just one of them. But I can understand why many Italians are so angry with it.
How this showdown will play out will be interesting to watch. It is a much more even match than Germany vs. Greece. But as I wrote in our last Trumpet issue, we have been waiting for a transformational crisis in Europe for a long time. The article was on the subject of Italy, and we never got around to posting it on the front page of the website, so I’ll finish with the same words.
A eurozone on the brink of civil war. A Germany that has barely managed to patch together a government after its longest period of coalition negotiations in history. Spain struggling to stay together as a country, its government possibly on the point of collapse. This is Europe today—a continent on the brink of a massive transformation. Business as usual simply cannot remain an option much longer.
The Bible forecasts this transformation. In Revelation 17, it describes a tightly knit union of 10 kings, united under one strong leader. Currently, Europe is a loose collection of 28 democracies under 28 heads of government and three European presidents. Although they have tried to tighten that collection into a stronger union and have taken significant steps, a solid federal Europe has remained elusive.
Why? Because uniting into a superstate is an enormous task. And Europeans will only give up large chunks of sovereignty in a dire crisis.
In the November 1965 Plain Truth, Herbert W. Armstrong wrote about one “hard, stern fact” that the nations of Europe must face. “That crucial fact is this: The nations of Europe are utterly unable to unite themselves by their own political maneuvering,” he wrote. “For more than 31 years, the Plain Truth has said Europe will unite! And also for more than 31 years we have said these countries cannot agree among themselves.”
How can they unite? Here’s how Mr. Armstrong answered this question:
For years the Plain Truth has said these nations are going to have to realize their inability to unite themselves politically—to choose a common political-military leader that all can trust. They are going to finally face the fact they must look to a supreme authority they can all trust! That supreme authority cannot be a politician, or a general (De Gaulle is both). The only possible answer is a religious leader! …
Watch for developments suddenly to speed toward European political and military union, through religious union! This new trend may not start this year—or next. But in very few years at most, it must start. And when it does, events will flash by with a lightning speed that will astound the world.
Mr. Armstrong wrote that more than 50 years ago, and the Europeans have still not turned to religion to unite themselves. Until they do, they simply cannot unite. And if Europe cannot unite, its crises will keep getting worse.
Jean Monnet, one of the EU’s founding fathers, famously said, “Europe will be forged in crises, and will be the sum of the solutions adopted for those crises.” The designers of the euro currency knew that it would never work—that a common currency without a common government would provoke continual crises. For more on this, read our article “Why the Euro Is Heading for an Earthshaking Crisis.”
Yet even these crises have been unable to force Europe to fully unite. The crises will continue until Europe is desperate enough for a solution that it will turn to a religious power. Revelation 17 makes clear that the 10-nation European superstate will be led by a church.
Trumpet editor in chief Gerald Flurry explained in April 2006 how this would happen:
Throughout Europe’s history, what has helped it to overcome its division has been a unity of purpose between church and state. Charlemagne showed how strong Europe could be when he formed a partnership between Germany and the Roman Catholic Church to create the Holy Roman Empire. That empire has risen up repeatedly since that time.
But this church-state union hasn’t always been a happy marriage. Usually the two have been drawn together because of a crisis—an emergency. …
Herbert W. Armstrong believed the same pattern would occur again in our time—that European nations would unite suddenly because of a crisis, and that the Roman Catholic Church would play a huge role in solving that emergency. In times of crisis, religion has a way of pulling people together! …
Crises are developing that could lead to this ‘emergency’ that will cause Europe to look to a newly strengthened Germany and end up bringing church and state together—from the weakening of the U.S. economy to danger brewing in the Middle East.
The journey ahead for Italy and Europe is chaotic and uncertain. But the Bible makes it clear that this is the final destination for Europeans: a union of church and state that forms one of the strongest powers in history.
For more on what the sum of Europe’s solutions to its crises will look like, read our free book The Holy Roman Empire in Prophecy.