As this edition of Global Insight went to press, Europe was in turmoil once again. The Italian election on 24–25 February failed to deliver a prime minister, and instead a farcical four-way struggle threatened to further undermine the eurozone. The message from Italy was received loud and clear.
The remarkable number of votes cast for comedian Beppe Grillo’s Five Star Movement (25 per cent) constitutes a resounding rejection of what’s gone before. It’s certainly a rejection of the technocratic rule of Mario Monti, appointed by President Giorgio Napolitano in November 2011 to steer Italy through the austerity measures required by the Troika – the ECB, IMF, and EC – and Germany in order to appease the markets and (so the received wisdom goes) pull the eurozone back from the brink. Upon news of the inconclusive election result Asian stock markets fell and the US stock market had its worst drop in three months.
The support for Grillo was also a rejection of corrupt elites. For some these are epitomised by Silvio Berlusconi. As one authority quoted in our cover feature suggests: ‘The people who vote for Berlusconi are the people who don’t want to buy a ticket for the bus.’ Over the years, he’s faced trials for fraud, perjury, bribery, corruption, and having unlawful sex with a minor. He’s so far either been acquitted or let off under statutes of limitations. In October, Berlusconi received a jail sentence for tax fraud. He continues to appeal, says he’s the victim of politically biased prosecutors, and denies all accusations against him. He also garnered enough votes to stall nominal winner Pier Luigi Bersani’s efforts to form a government.
Meanwhile, the Troika set about appropriating funds from Cypriot banks as the condition for a bailout, suggesting they would be accessing the products of tax evasion and money being laundered by rich Russians. Russian assets in Cypriot banks are believed to total more than £20bn. This threw depositors into disarray and knocked confidence in Europe’s banking system. But, importantly, it also highlighted a key issue contributing to the financial crisis, as well as distorting democracy and the markets: the abuse of tax havens. When it comes to the pressing need to properly address this issue, it is surely, as our feature suggests, Time to wake up.