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The Covid-19 epidemics and the issue of Italy’s public debt

Giancarlo Elia Valori

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How will the E.U. resources be defined in the near future for the coronavirus issue? The issue is, in fact, much more complex than we may think.

 The actual European Funds that are theoretically available are manifold: the European Regional Development Fund, the European Social Fund, the Cohesion Fund and, finally, the European Maritime and Fisheries Fund.  All of them have been activated by President Von der Leyen in the initial phase of the COVID-19 spreading to Europe.

 The resources identified by President Von der Leyen for providing support against the epidemics and its economic effects are all drawn from these budget items, which are also those transferred to the States, usually as pre-financing, i.e. as advances on operating expenditure.

 The unspent part of these advances will soon be renamed without any particular bureaucratic problems and these funds will cover at least some past expenses, precisely as from February 1, 2020.

 President Von der Leyen’s proposals affect also the General Regulation of European Funds, which will also enable us to use the Regional Development Fund to finance capital and investment, particularly to improve the efficacy of regional health services.

 In principle, contributions from these Funds will only be used to cover the losses caused by health crises, climate events, environmental accidents or accidents at sea which, however, account for at least 30% of the turnover of the affected company, calculated on the average of the last three previous years.

 For severe diseases and epidemics, this new E.U. system envisages that these Funds can be activated if damage greater than three billion euros or 0.36% of the usual GDP can be proved (well, what next? No end to bad news).

 Hence a total of only 8 billion euros are expected to be made available to all the European economies affected, plus further 29 billion euros as cascading effects of investment already being made.

 Too little, as is evident to us all.

 The 2021-2027 EU budget, however, has not been approved yet. The resources are therefore already scarce and, to tell the truth, completely insufficient for all EU countries. Nevertheless, approximately 850 million euros will be transferred to the Italian regions alone to face the epidemics, in exchange for a not so formal guarantee of “enhancing the managerial approach” to health management – which is already high in Italy – and also to the relationship between spending centres and political authorities.

 However, we are back again to the usual routine of a too little too late approach in the E.U., both for the Italian health spending and for the equally high one of the other countries affected by the epidemics, such as Spain, France and Germany, in the very near future.

 In the German case, however, the public budget cosmetics – which I am surprised is not well known to the international financial markets – will make it possible to turn a plater, i.e. the German public finance, burdened with colossal debt, into a very fast Varenne.

 It will not be with this little money and these post factum bureaucratic criteria that the European Union will rebuild its image in the European productive forces and industrial systems destroyed by the epidemics.

 In the meantime, Prime Minister Conte’s government has already funded – – with 25 billion Euros, mostly as debt instruments- the whole package of measures to face the Covid-19 pandemic.

 The government bonds that can be issued are valid only as from 2020 – as a starting date – but there will be specific “aid” for Air Italy, the Sardinian airline being closed, and the Solidarity Fund for Air Transport and the airport system will anyway have additional 200 million euros available.

 All these measures can be found altogether in the Prime Minister’s Decree, so that we have the feeling that, in the end, with a view to setting again the economy into motion in the productive Northern regions after the epidemics, there will be less money than it is needed just to rebuild the industrial system of Small and Medium-sized Enterprises, which – as is well-known to all scholars and experts – have a much shorter time of permanence on the markets than large companies.

 These 25 billion euros – which are clearly too little – also include funds for the publishing sector, given the unavoidable decline in advertising revenue, as well as an anti-spread shield for insurance companies to face the tension recorded on Italy’s public debt bonds. This is a very technical issue on which I will not elaborate in this article.

 As always happens, however, if investors know it, they discount the insurance value on the amount of bonds acquired or on their price.

 It is a painful mystery how, today, we can take a measure like the spread seriously, considering it measures a difference between the ten-year Bund of an ailing country, namely Germany, with the ten-year BTP of an equally ailing country, namely Italy.

 Indeed, I have always had little faith in the average intelligence of private financiers.

 Prime Minister’s Conte government, however, is ready to implement the E.U. changes to the volatility adjustment, which has always had a very discontinuous trend and a very limited effectiveness.

 Thus, by purchasing the tools for estimating the spread parameters, the companies that hold public debt bonds should be in a position to evaluate the functioning of the mass of bonds and calibrate the mix of investment in “paper” instruments, as well as the duration of all the bonds they own. But there is no guarantee in this respect.

 With specific reference to business support, the 25 billion additional public spending will allow to apply for the ordinary wage subsidies or for access to the ordinary allowances, but only for a period of nine weeks.  

 Once again there is not a single word about the companies’ operations to recover market shares, as well as to recover the profit already forecast. All these measures would apply for just nine months, which, even if the pandemic ended immediately, would probably not be enough for the many Italian SMEs affected by the epidemics to recover their place and positioning in the E.U. and international markets which, meanwhile, the others will have already taken.

 The fact that economic intelligence exists has not yet been understood by Italian politicians.

 With specific reference to the healthcare sector, the 25 billion euros – which, as can be seen, are becoming ever less available – also include only 150 million euros for the increase in overtime for the medical and paramedical staff.

 Based on the Decree enacted, the potential of specialized military medical staff will be increased by 320 doctors and nurses, but more money will be invested in local control offices for checks on goods and people.

 Moreover, a total amount of 340 million euros will be available to use the beds in the private healthcare facilities’ intensive care units. What about the already available direct funding for private healthcare facilities?

 It should also be recalled that the Supreme Defence Council has not yet been convened, which would be the minimum in the current situation.

 Once again, too little too late. There is no reliable data on the permanence of the virus and its distribution throughout the country.

 For SMEs, however, the Central Guarantee Fund will have only one billion euros available, which is still too little.

 If we overlap the maps of the infection areas, from the province of Lodi to the Veneto region, we can also have the map of the development area of Italy’s Small and Medium-sized Enterprises in the North.

 They face the international markets “barehanded”, just as Karate or Judo men fight. Whatever happens, the COVID-19 epidemics has put an end to Italy’s particular system of development and industrial organization, precisely in the most productive regions.

 Now for Northern Italy there is a possible future either as a “guaranteed” area or as an area completely dependent on the other countries’ economic cycles. This is the real game at stake. Especially for Germany, which thinks strategically about its economy within the EU.

 The guarantee, however, will in any case be increased up to 5 million euros per company. For those who are still in difficulty, there will also be easy access to the “Gasparini Fund” for the suspension of mortgage payments. Said Fund has been increased with as many as 500 million euros for the whole 2020.

 For the usual nine months after the entry into force of the Decree, access to this Fund will be provided also to the self-employed and freelancers who self-certify – and it will be very easy – a drop in turnover higher than one third which, however, shall be connected with the COVID-19 emergency (although no clear details are provided on how this correlation shall be proved).

 For banks, as well as for the other companies’ creditors, the turning of debt into tax credits is envisaged for a maximum amount of 2 billion euros.

 Hence we are well over the 25 billion euros initially envisaged, as debt instruments, by the Prime Minister’s package of measures, well knowing the debt conditions of many and often excellent SMEs in Northern and Central Italy.

 For restaurants, cafés, gyms, entertainment and culture, as well as transport services, there is an exemption at source of withholding tax payments on income. However, real income support would be needed rather than the usual tax exemptions on income that is no longer there.

 Finally, there is income support for freelancers only to the tune of 500 euros per month. Income support is envisaged also for those who have an active VAT number, as well as for the Made in Italy sector, which has always been the key for the SMEs’ economic penetration abroad. As to the latter, this income support – the amount of which is not specified – will be managed by the Institute for Foreign Trade (ICE). What about SACE for the companies which are already active overseas? In this case, everything is too vague.

 However, there are already all the signs of the E.U. trip.

 In one day the alleged gaffe of current ECB Governor Lagarde has already destroyed the Italian Stock Exchange, which, indeed, is owned by the London Stock Exchange, but the Franco-German banking axis has been speculating for years on the difference between the interest rates paid by Germany and France and the Italian ones.

 This is a real industry. Hence Lagarde’s alleged gaffe can be easily understood.

 Obviously all this is also a prelude to a sale of Italian companies and real estate sector, while it is increasingly likely that the rating agencies will downgrade Italy to junk from the current valuation of its public debt bonds, as a result of the 25 billion euros – albeit insufficient – spent as debt instruments to face the COVID-19 emergency.

 As already mentioned above, while describing President Von der Leyen’s plan, nobody within the E.U. is still outside the old “austerity paradigm”, which works badly even when things go well. Let us not delude ourselves, in the future, about what the Popperian epistemologists called “paradigm shift”.

 Hence de facto industrial stoppage due to the epidemics and E.U. Member States’ subsequent joint speculative action on the Made in Italy companies, as well as downward operations against all listed SMEs. In this regard, we should also recall the 2019 ruling of the Strasbourg Court on insolvent Municipalities, in which it was decided that the whole amount of local debt plus interest shall be taken over directly by the central State.

 This is already a huge blow. Currently there are, in fact, 66 large insolvent Municipalities, with 54 small administrations in the Calabria region and 409 medium and small Municipalities in crisis, for various reasons, as well as 111 insolvent Municipalities in Sicily, all for amounts which are currently difficult to assess but, however, very close to the famous 25 billion euros invested as debt instruments to face the COVID-19 epidemics.

 This is an evident manoeuvre to circumvent our fiscal and economic crisis, which will be used at the right time by our E.U. and non-E.U. competitors.

 Furthermore, if – as many current leaders of the ruling parties maintain – there will be Italy’s access to the European Stability Mechanism, a European Court will judge whether private assets should play their role in the default procedure, in addition to the public ones.

 It should also be recalled that 91% of Italian Municipalities are at risk of landslides and soil crumbling.

 Hence, for all public assets and companies, there would be the classic bankruptcy procedure, which may also involve private assets. Just as happened with Greece.

 And as was the case with Germany in Versailles, at the end of the First World War, thus paving the way for Nazism and the Second World War and, above all, for the European one.

 What about temporary solutions? A double circulation of the old lira, which should be made interchangeable with the euro – something that, in fact, former Prime Minister Monti prohibited in 2012 and that Germany never dreamed of abolishing – or the circulation of forward and futures contracts, as done by Hjalmar Schacht, the Jewish and Freemason brilliant President of the German Central Bank under Hitler’s rule, who invented the MEFO bills to ward off the last blows of Weimar Republic’s hyperinflation.

 With specific reference to public debt, the Bank of Italy speaks about an increase in debt – precisely with additional 9.8 billion new liquid assets of the Treasury, which brings it to 55 billion euros – with a further central government’s debt that has increased by 7.2 billion euros and that of local governments – whose bad financial situation has already been mentioned above – by 0.5 billion euros in 2020.

 For the long-standing theory of Eurobonds, called for by many more or less experienced economists, there is still a key question.

 What if, in fact – as a result of a possible persistence of the COVID-19 epidemics – the investors, skilfully manipulated – and we can well imagine by whom – turned to other bonds, such as BTPs?

 Currently Italy’s public debt is held by 80% of private markets/operators, by 33% of European institutions and central banks and by 20% of “other entities”, namely small and medium savers or other organizations.

 According to the European Commission, with a zero economic growth, at the end of this year the Italian public debt could reach, ceteris paribus, 2,435.7 billion euros out of a total EU-27 debt of 12,814 billion euros.

 If the Italian economy is set again into motion at the end of May, as forecast by Cerved, our companies could recover a level of turnover even 1.5% higher than the one recorded at the beginning of the epidemics.

 In essence, between 2020 and 2021 the COVID-19 epidemics is expected to cost companies 275 billion euros.

Certainly too much, but nothing that cannot be spread by a public debt carefully managed in its main components, if this data is disseminated among international investors. Hence we can definitely expand the range of buyers of our public debt bonds, carefully calibrated and even renewed, to open up to the financial markets in which we have ventured little in recent years: Great Britain, which certainly has a political, strategic and financial interest in opposing the E.U. policies, now that it is no longer a E.U. Member State; the United States, a market in which we have been present with our large companies, but much less with listed SMEs and other excellent companies; obviously China, but even India, not to mention Australia and New Zealand which, thanks to the London Stock Exchange – which knows the Milan Stock Exchange very well – could buy our bonds confidently.

 Hence, we should no longer ask for charity from the E.U. financial markets, which have not shown any interest in our internal and economic situation. We should begin to make high-level propaganda and skilful promotion of Italy’s “image”, not with a tourist-oriented approach but with excellent financial expertise.

 Moreover, there are those who – not heeding danger and experience – propose to turn the European ESM into the E.U. “Economy Ministry”, which could issue the famous Eurobonds or other instruments that, hopefully, would “sell like hot cakes” on the markets.

 Does anyone know that nowadays countries compete, by all means, on their public debt bonds?

 This operation – as debt instruments of the whole EU-27 – could raise the whole E.U.  budget, so as to help the less “fortunate” countries.

 The idea is good, in principle, but it does not take for granted what now seems obvious: the E.U. project to make Italy end up just like Greece – as in slow motion, like in sport events such as football and athletics.

 Moreover, the famous one trillion euro budget for the Green Compact, equal to seven years of the E.U. whole budget, was in fact an advertising idea, but we cannot even imagine where we can get this huge amount of money.

 According to other reliable banking sources, the situation of Italian SMEs in the COVID-19 epidemics phase will have an impact on the working capital of our Small and Medium-sized Enterprises equal to over 18 billion euros, out of an already calculated total of 342 trade receivables and payables.

 Nevertheless, only for the whole 2020, the requirements for SMEs could reach 46 billion euros, including repayments of debt coming due and investment.

 50% of this amount regards companies in Lombardy, Veneto and Emilia Romagna.

 Creating debt to set again the economy into motion is of no use in the long run – if not as a stopgap measure. A direct interest-free financing from the Bank of Italy is needed but – and this is going to be tough – also from the ECB, an institution in which experts study the old microeconomics and believe that it is the whole economic theory.

 With a view to solving the COVID-19 crisis, the State Rescue Fund – the well-known ESM – could resort to its “toolbox”, albeit this is very dangerous.

 Within the ESM, there is the possibility to activate the Precautionary Conditioned Credit Line (PCCL), i.e. loans granted quickly to avoid the default, but which are NOT conditional upon a Memorandum of Understanding (MoU) of mandatory cuts in public spending and “structural reforms”.

 This would mean a significant increase in unemployment, further compression of the internal market, as well as subsequent and obvious impact, as well as knock-on effects, for Italy’s companies. For an indebted government it is enough to sign a Letter of Intent, which is similar to a MoU, but is less imperative. Hopefully so, although no one has experienced it yet.

 Furthermore, in the case of an Enhanced Conditions Credit Line of the ESM, with MoU-style reinforced guarantees which, I imagine, would be required from Italy, the effects would be directly proportional to the amount of credit granted and the average return time.

 The ESM is therefore a trap and, in the long run, it would create the same disasters it would like to solve.

 Microeconomics is not the whole economic theory. Today there is no soup, like the Marginalists’ one, having the maximum marginal value at the first spoon and the minimum value at the last one. Usually, you finish earlier.

 Another nonsense, albeit very widespread, is the wealth tax called for by the IMF and other scarcely experienced economists.

 The first house owned does not produce income, but an increase in taxation is created immediately during an economic recession and you do not need to be John Maynard Keynes to understand what would happen next.

 Meanwhile, the big financial information agencies say far and wide that “there are 40 billion U.S. dollars of reasons to avoid the Italian public debt”.

 Hence the real and future struggle will also be fought with the careful and authoritative explanation of how the Italian public debt is made, and above all by avoiding the counter-propaganda of some of our scarcely affectionate E.U. friends.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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Republic Of Cyprus: Ruling a Country Against Its Constitution

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The Green Line at Nicosia, Cyprus. Image credit: Julian Nyča / CC BY-SA, creativecommons.org

When you hear about Cyprus, one of the things that comes to mind is the word “conflict.” Then, its beautiful beaches, paradise-like nature, and warm island culture.

But you could not guess that this island nation, which is also part of the European Union, has been ruled against its constitution for more than half century. What if we also tell you that this fact is even forgotten by its own citizens? This is exactly what is going on.

Cypriots gained their independence in 1960, after living under the control of the United Kingdom for 82 years. However, this was not an end, but the beginning of the pains they will suffer, the nation that did not experience governing their own island for a very long time.

But during the period of British rule, something needed to change, for the sake of their “divide and rule” policy. Cypriots were a community that was living in great harmony in their remote and isolated island far from the mainland that can influence them easily.

But there was a community without a name. In Ottoman censuses, they were called just Muslims. In the books written by European travellers they were called Linobambaki, Cypriots who spuriously converted to Islam to save themselves from the Ottoman oppression. After World War I, with the death of Ottoman Empire and the birth of the Turkish state, Brits had already found an identity for this community of the descendants of Crypro-Christian Cypriots: Turkish Cypriots. But there was a problem and it was the fact that a big portion of this community spoke Greek. Then, the young Republic of Turkey lent a hand by sending Turkish teachers to the British-controlled Cyprus and the Turkification process began.

Until 1960, there were small gang fights between these two communities with the provocations of Turkey and Greece, but nothing serious happened. When the independence day came for Cyprus, the representatives of these two Cypriot communities were at the table. The Orthodox Archbishop Makarios representing Greek Cypriots and the extreme secular DoctorFazıl Küçük representing Turkish Cypriots. And they agreed on the constitution that is “still in force” today in the Republic of Cyprus. Let’s point out the main articles of the official Constitution of the Republic of Cyprus.

    • “Greek Cypriot President and Turkish Cypriot Vice President with veto right”

    • “Greek and Turkish as official languages”

    • “70 percent of the parliament, cabinet, government and law enforcement officers made from Greek Cypriots, and 30 percent from Turkish Cypriots”

    • “60 percent of its army made from Greek Cypriots and 40 percent of it Turkish Cypriots”

    • “Adoption of new national flag and anthem”

    • “The authorities and any public corporation or utility body of the republic are not allowed to fly any other flag than Republic of Cyprus flag, except holidays”

Now, have a wild guess about how many of these articles of the constitution are being violated by the Greek Cypriot community who seized the republic since 1963. The answer is all of them except for the “national flag” that they use, which was drawn by a Turkish Cypriot.

I know what you are thinking. How can a country that is part of the European Union, a symbol of democracy, get away with such activity? We must get into more history to see how.

Three years after the independence, the Greek Cypriot President of the republic, Archbishop Makarios unconstitutionally proposed his infamous thirteen points, which took away many rights from the Turkish Cypriots. This attempt made Turkish Cypriots leave the government.

Then, the rest of the unconstitutional activities of the Greek Cypriot administration followed, which includes establishment of Greek Cypriot-only army and adopting the national anthem of Greece as the anthem of the Republic of Cyprus.

The main aim for all these activities was achieving “enosis,” which is the idea of a union with Greece. But the Republic of Cyprus and its constitution were the biggest obstacle, since it was clearly based on the idea of an independent republic with equal ownership by Greek and Turkish Cypriots.

While all these events were happening, we cannot say that the Turkish Cypriot administration was innocent either. Like the Greek Cypriot administration, the Turkish Cypriot administration silenced people and groups who believed in the existence of Republic of Cyprus and who demanded more struggle to save the republic, instead of leaving it to the hands of the Greek Cypriots. The reason behind the decision of the Turkish Cypriot administration to not struggle for their rights effectively was their beliefs that the greed of Greek Cypriots would be a shortcut to achieve “taksim,” which is the idea of partition.

When we come to 1974, after painful events and internal struggles within each Cypriot community, a group of enosis-dreamer Greek Cypriots tried to overthrow the Greek Cypriot administration, which was not sharing the same enosis dream anymore, with a coup d’état backed by the Greek junta. With this event, Greek Cypriots gave Turkey a chance to intervene in the situation in Cyprus according to international agreements. And, as we all know, this intervention turned into an occupation, which has continued since then.

Today, what is on the table is a United Nations backed “federal solution” for the Cyprus problem. Despite the current status quo, the unconstitutionally Greek Cypriot-governed Republic of Cyprus continues its life with the constitution which was written in 1960. The main reason behind keeping the constitution is the Greek Cypriots’ desperate tactic of showing the world they are not the ones who broke the deal. But even the Greek Cypriot population is not aware or educated about their own constitution, since legislation continues like the country does not have one. Greek Cypriot people do not even have an idea of simple facts, such as that Turkish is an official language of the country or that their flag was designed by a Turkish Cypriot artist, İsmet Güney.

But all these seem to be changing. While crypto-Enosis desire and impossible federal solution talks continue, there are organisations like the Union of Cypriots (Ένωσις Κυπρίων / Kıbrıslılar Birliği) that advocate and promote that the only way to end this madness and occupation is restoring the constitutional order—the deal that was already made and a lot of pain and suffering that hit all Cypriots after it was broken. Failing to ease the pain with different dreams, maybe it is indeed the right choice for Cypriots to hold on what they have to delegitimize Turkey’s existence on the island. Because the speed of Turkish colonization of Cyprus tells us that Cypriots do not have much time left to save their homeland for good.

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A New Twist in the Spanish Approach to Politics in Venezuela: Podemos in the Spanish Government

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During the last pseudo-legislature in Spain, the position that had been maintained by the Spanish government towards Venezuela and its government was not too far from the quasi-common position that was established at the European level. After the entry of Podemos, a far-left party, into the Spanish government, the Spanish narrative towards the Latin American country and its leaders has taken a turn that calls into question the position of the Spanish government towards Venezuela.

The Special Relationship of Spain with Venezuela

Since 1845, the year the Treaty of Peace and Friendship was signed after the independence of the South American country, Spain and Venezuela have maintained bilateral ties and diplomatic relations. In fact, history has only one instance of no diplomatic relations existing between the two countries, specifically from 1945 to 1949. Despite suffering many serious crises during the Chavista period in face of a number of political disagreements that seriously endangered mutual understanding, the special relationship between the two countries has been maintained constantly.

After the Spanish Civil War and between 1969 and 1990, Venezuela, along with Argentina and Mexico, was the main destination for Spanish exiles and emigrants. Beyond migration, the Hispano-Venezuelan ties are transcendental in nature, both historically and socio-economically. Venezuela is home to more than 150,000 Spaniards; the Venezuelan community, in turn, is the fourth largest ethnic group in Spain. In 2017, exports from Spain to Venezuela amounted to 111 million euros and imports from Venezuela to Spain were worth 318 million euros; however, these figures are quite low compared to those of previous years, for example, in 2014, Spanish exports equaled 550 million euros and Venezuelan imports – 1,325 million euros.

Podemos in the Spanish Government

As a well-known Spanish journalist said, “Venezuela has been a thrown weapon since Podemos appeared on the Spanish political scene in 2014”. The relationship with the Latin American country for the political party led by Pablo Iglesias is not only a political issue, but also an ideological link. The core of the party has maintained close ties with the government of Hugo Chavez, including becoming advisers to the then Venezuelan president, and later to Nicolas Maduro; the party also has links with the rest of Bolivarian leaders, such as Evo Morales or Rafael Correa.

After the November 10 general elections in Spain, a coalition government consisting of the historic socialist party PSOE and the far-left party Podemos was created. This coalition marks a period of the greatest political instability in the history of Spanish democracy. The two parties and their leaders devised this joint government to break away from the ungovernability that the country has been facing for almost three years due to the lack of a stable and consolidated government. This is how Pablo Iglesias became the second Vice President of the Spanish government and his current partner Irene Montero – the Minister of Equality.

From “Delcygate” to Guaido

Two recent controversial diplomatic episodes have once again made Venezuela an urgent subject of the Spanish politics. On the one hand, the stopover of the Venezuelan Vice President Delcy Rodriguez at the Madrid Airport of Barajas, where she held a meeting with the Spanish Head of the Ministry of Transport. The Spanish authorities first denied the meeting and then clarified it with different versions, giving rise to a speculation about the case, cosnidering that the EU imposed individual sanctions that restricted Rodriguez from entering the Schengen Zone.

The second mistake of the Spanish Government, according to its critics, was not to receive Juan Guaido, who is recognized as an interim president by more than fifty countries, including Spain and Germany, at the highest official level on his European tour. Throughout his European tour, Guaido met with several heads of state, including Merkel, Macron, and Johnson. Many people deemed Sanchez’s gesture upon the Venezuelan leader’s arrival in the Spanish capital as a legitimt cause of outrage. In addition, when explaining, the Spanish president called Guaido an “opposition leader.” More and more voices have since accused the current Executive of having changed his position with respect to Venezuela by the influence of Podemos.

Spain Flies Alone

A turn at the helm in Madrid would be more than a national decision. The consequences for Venezuela of such a turn cannot be understated, because historically Europe has seen Latin America through the eyes of Spain, and Madrid has been in charge of relations with Latin America. Undoubtedly, Spain will lose a lot if its relationship with Venezuela continues to deteriorate. The human and socio-cultural ties between the two countries are obviously close, but just as relevant are the Spanish economic interests in this South American state, particularly in its oil companies.

Some European countries, such as Italy, did not recognize Guaido as the president-in-charge at the time – Rome still does not. A more neutral, less pro-Guaido Spain would mean aligning with the Italian position, which does not imply neglect, as the Italian diplomacy continues to work on finding solutions to the Venezuelan question through the Contact Group of European and Latin American countries.

What does this mean for the European approach to the crisis in Venezuela? From the point of view of capabilities, it can be said that Spain does not have as much weight as to change the Community’s foreign policy; however, because Spain is a traditional filter of relations between the European and the Latin American blocks and the Head of European Diplomacy Josep Borrell is Spanish, a possibility that the positions will be killed exists -“cooling,” therefore, cannot be ruled out.

Conclusions

As a victim of its own contradictions, the Spanish government has projected an image of chaos and confusion. It is evident that PSOE and Podemos have disparate positions regarding Venezuela, but it is necessary that the executive government adopt a coherent line of thinking, the continued absence of which deteriorates cohesion within the EU and complicates relationships with its international partners like the USA.

Sanchez defying Guaido is not so much a concession to the former’s Podemos partners in the government, but rather a symbol of the latter’s waning influence. Guaido has become an awkward figure, who failed to achieve his main objective of free elections. This is why Maduro is stronger today than a year ago.

Nonetheless, too much importance is being attached to the role Podemos really plays in the new Spanish government. Though its power is magnified, it has a minimum effect on foreign matters. When Sanchez came to power in alliance with another party that had more votes, that is PSOE, he assumed that he has no choice but to respect their decisions, whether he likes them or not. He has yet to distance himself from such conformism.

Meanwhile, the shadow of the Venezuelan crisis keeps flying over internal politics in Spain, especially over its progressive government, without facing any of the harshest opposition forces in the country’s democratic history. The truth is that a year after half the world placed its hopes in Guaido to find a way out of the humanitarian crisis and the political impasse in Venezuela, the opposition leader is making substantual efforts to prevent the passage of time from opening cracks in his political legitimacy. At this juncture, the whole international community needs to act as a mediator of negotiations between the Venezuelan Government and its opposition to get out of the ongoing stagnation.

From our partner RIAC

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Italy’s Last Unexpected Eurosceptic Friend: Edi Rama and his “Lesson to Europe”

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On March 29, Italian and Albanian media reported the news of the arrival in Italy of a team of 10 physicians and 20 nurses from Tirana to fight the Coronavirus epidemic that has hit the country since the end of February. The medical professionals will work in Italy for one month with their expenses being covered by the Albanian government. Albanian Prime Minister Edi Rama accompanied the team of experts at the Airport “Nënë Tereza” where he read a speech in Italian that was warmly received by the media and public opinion in the neighbouring country. To many Italians, the words of the Albanian premier sounded as a sincere act of friendship given in return of the assistance provided by Italy to Albania in the last decades and especially in the aftermath of the recent earthquake of last November. Italian Prime Minister Giuseppe Conte, leader of the opposition Matteo Salvini and chief of the Protezione Civile (Civil defence Corps)Angelo Borrelli expressed their gratitude to Albania through their Social Media and public declarations. The parts of the speech that gained more media attention are those in which he underscores the selfish attitude of the other countries in the Covid-19 crisis:

“(…) It is true that all are closed within their borders and also very rich countries have turned their backs from the others. And maybe it is because we are not rich and [we are not] without memory that we cannot afford not to show Italy that Albanians and Albania will never abandon their friend in a moment of difficulty.”

In the course of last week, the Italian public opinion was strained by Germany’s and Holland’s refusal to share the economic weight of the Coronavirus crisis among EU countries through the emission of the Eurobonds. Some Italian newspapers have defined Edi Rama’s speech as a “lesson” of solidarity that a small country like Albania is giving to rich and big EU countries that cannot put aside individual interests for their collective good. The leading opposition organ Il Giornale which usually promotes anti-immigrant (including anti-Albanian) content, published on March 30th an article by the title “The great lesson of the Albanian premier to the bureaucrats of the UE” in which the author criticizes the attitude of the president of the European Commission Ursula von der Leyen for refusing to back Italy’s demands. The author declared that “the words of Edi Rama are above all a lesson of style to a class of eurocrats that (…) have shown their cynicism and their inadequacy. Italy will certainly not forget the solidarity of Tirana and the egoism of the European Union.” On March 29, the Left-oriented newspaper Open commented the news witha similar heading: “The lesson to the rich Europe from small Albania (…)”. The journalist remarked that the “Albanian premier Edi Rama, with his little big gesture has taught European leaders what it means to be part of Europe”. The same day Il Tempo presented Edi Rama’s speech as a “Lesson from Albania to Europe” stressing that while the EU is trying to find an agreement, Italy applauds Albania. The Italian edition of the Huffington Post in the article “The Albanian Lesson” emphasised the symbolic character of the Albanian assistance to Italy.

Beside the undisputable value that the Albanian medical staff will bring to Italy’s ability to curb the epidemic, the speech pronounced by Edi Rama has above all contributed to bring his and Albania’s popularity to a level that has never been so high in Italy. Edi Rama’s speech momentarily recalibrated the set of ideas through which the majority of Italians are accustomed to look at Albanians. It is hard to imagine that Edi Rama did not foresee the possibility that his words were going to be used in the Italian “internal” debate concerning the attitude of the EU toward their country. Edi Rama’s relation with Brussels has not been so keen after EU’s refusal to open membership negotiations with Albania last October. Put in front of the fact that Albania was not going to access the EU anytime soon, in the last months of 2019 Rama pushed for the constitution of a so-called mini-Schengen with Serbia and Northern Macedonia. On March 24, EU retrieved its decision to keep Albania (and Northern Macedonia) out of membership talks. However, Edi Rama probably did not want to miss the occasion for a little reprisal against the attitude of some EU member states that had damaged his internal and external credibility after turning down Albania from accession talks in October. His words certainly improved his own and Albania’s image in the neighbouring country, but at the same time he endorsed and alimented the endemic anti-EU Italian trends.

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