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Erik Jones

The bond markets turned on Italy during the first weekend of July 2011

as part of a wider loss of confidence in European efforts to manage the

sovereign debt crisis. On Friday, 1 July, the difference—or “spread”—

between Italian and German 10-year government bond yields was 178

basis points or 1.78 percent. The following Monday, 4 July, it was up

to 183 basis points and rising. By Friday, 8 July, the spread was 237

basis points. It remained above that level to the end of the year.1 The

center-right government led by Silvio Berlusconi attempted to head

off this change in sentiment by pushing through successive reform

packages to promote fiscal consolidation and stimulate growth. Bond

traders consistently shrugged off these actions as too little, too late.

Ultimately, the pressure became so great that the center-right coalition

fractured and President Giorgio Napolitano replaced Berlusconi’s

Cabinet with a technocratic government headed by Mario Monti. Even

this, however, was not enough to appease the markets, and the year

ended with Italian bond yields again rising..

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Relations with Europe

Beyond the Vincolo Esterno

Erik Jones

The relationship between Italy and Europe has changed since the 1980s. Where Europe used to provide a constructive external constraint (or vincolo esterno) on domestic Italian politics, now European constraints are less constructive and more problematic. At the same time, Italy has a more important role to play in contributing to European debates. The government headed by Matteo Renzi demonstrated both sides of this change in 2016. Renzi argued that European policies regarding macro-economic policy coordination, financial stability, and international migration did not help Italy. He also insisted that Italian proposals in these policy areas warranted closer European attention. Renzi was not successful in redefining Italy’s role in Europe, but he did win recognition for his efforts. The question is whether the government headed by Paolo Gentiloni will keep pushing in the same direction.

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Marco Giuliani and Erik Jones

The year 2009 was a period of uncertainty, during which the Italian

political world appeared to be floundering and in need of a compass.

As evidenced by the chronological overview, many events continued

to beleaguer the political and social life in Italy. Some, such as the

result of the European elections and the escalation of the economic

crisis and its repercussions, were foreseen or, in any case, predictable.

Others, including the numerous scandals and irregularities that

tarnished the political year, continuously feeding the mass media with

distractions and nurturing the public debate with less then edifying

themes, were less expected.