Thread by @heimbergecon

As the announcement of the New Draghi government is approaching, here is a thread with a couple of thoughts why I think that political leaders in Europe should push for a "New Southern Policy". Bottom line: the EU as a whole would be stronger with a strengthened Italy /1 #CAIN

Italy certainly has significant structural problems, e.g. the banking sector, the North-South divide, organized crime or dysfunctional political elements. Other members also have their own problems. The question is: Under what conditions is Italy able to tackle such problems? /2

In this country of 60 million people, my reading of the political economy situation is that economic decline relative to other members over the last 20 years has been a breeding ground for fatalism rather than optimism. /3

All the more reason for media and politicians in 🇩🇪, 🇦🇹 and beyond to refrain from distorted stories about Italy - "a southern European patient who is having problems because he refuses the reform medicine of the northern European doctor". Flawed and counterproductive. /4

European media and key European leaders, invoke international competition between the EU and China and the US. A logical geopolitical conclusion would have to be to actively support the Italian economy in recovering – e.g. by launching a modern industrial policy strategy. /5

This measure alone would significantly strengthen the EU's economic weight in the global economy. If Italy had grown as fast as Germany or France since 2000, the EU's economic strength would be much higher vis-a-vis the US and China. /7

A strong Italy in a strong EU would also be in the interest of all those who consider such international economic rivalries to be contrived, but who want Europe to preserve its social model of a liberal democracy of social balance in the 21st century. /8

Today, I think we need to realise that the breaking point of the euro area and the EU is Italy and Southern Europe. An Italian exit in the future could be a fatal blow. From a European perspective, Italy's recovery must be considered a central task of economic policy. /9

So as Mario Draghi's is set to start as prime minister soon, we should see this as an opportunity for a "New Southern Policy" in the coming years - both on the part of the EU Commission, the German and Northern European governments. /end #CAIN