Opinion

Pasta la Vista for the ‘Euro-Titanic’

The long-running farce known as Silvio Berlusconi’s Italian government came to an end over the weekend. But the fall of the prime minister better known for his “bunga-bunga” parties than for his statesmanship wasn’t just the latest act in the long series of revolving-door Italian governments. For what brought him down wasn’t his conduct in office but the economic and financial disaster known as the euro — a disaster that now threatens the entire Brussels-based European Union.

The euro fantasy is colliding with the cold reality of the sovereign-debt crisis. Insolvent banks are collapsing, national indebtedness is soaring and the piper has just appeared at the door.

The euro was supposed to forward the European Project, which traces its roots back to the French economist Jean Monnet and the European Coal and Steel Community, the early-1950s forerunner of the Common Market and thus the European Union.

The project’s original goal was to economically integrate Germany into the civilized world and remove the proximate cause of both World Wars. But that shifted to a grander effort to yoke together economically and culturally disparate countries, aiming at a truly unified Europe.

Yet now the euro is coming to symbolize the union’s impossibility, by sharply illustrating the irreconcilable economic divisions between Europe’s two halves — not the formerly communist east and the democratic west but the productive north and the manana south.

Take Italy — please. It’s the EU’s third-largest economy but, with a $2.6 trillion national debt, also the world’s fourth-highest debtor, a place where the vita has been plenty dolce the last few decades but also a place that has suddenly come face to face with the consequences of its financial and lifestyle choices.

As with Portugal, Greece and Spain, Italy’s work ethic (except in the Germanic north) has long since atrophied. Tax avoidance is a national sport. The fertility rate has fallen too far below replacement for it to survive as a recognizably “Italian” country — by 2050, fully three-fifths of indigenous Italians will be elderly pensioners, dependent not on their children (they forgot to have any) but upon the state.

And the state is broke.

In the past, distressed countries like Italy have always devalued their currencies in an attempt to get their balance of payments in line. Sure, the amounts owed to creditors would be effectively discounted, but it would be better than bankruptcy, in which everybody loses.

But that option doesn’t exist for nations that no longer have their own currencies. Which means that Italy — like Ireland and Greece before it — needs a bailout, which can come only from the EU’s economic engine, Germany (via the European Central Bank in Frankfurt) or from America. But the inflation-wary Germans are tired of rescuing countries that would rather sip wine than build automobiles. And we in the United States have our own problems. (Oh, and the Chinese have already said no.)

Too big to fail and too broke to bail out, Italy’s the iceberg that just impaled the Euro-Titanic below the water line. It’s no longer a question of whether the euro will sink but of when.

Financial analysts at Barclays’ Bank recently advised clients that Italy was “beyond the point of no return” economically, and quiet talks are under way between Paris and Berlin to break up the Eurozone roughly along north-south lines in an attempt to contain the damage.

For while a small country like Greece could restore the drachma with relatively minimal dislocation, a euro-less Italy would show the entire project for the delusional notion that it was.

“We’ve entered a make-or-break scenario,” said Thomas Klau, of the European Council on Foreign Relations.

Even as the Eurozone cracks, however, such leaders as Germany’s Angela Merkel are calling for greater political integration.

“It is time for a breakthrough to a new Europe,” she said. “That will mean more Europe, not less Europe.”

She’s dead wrong, and the failure of the euro proves it. What Europe needs is less faux unity and more honest division — free nation-states united by a common Western culture, not a centrally planned, bureaucrat-run pipe dream.