The Munk Debates Podcast - Sack of Rome – Harper’s Endorsement

Episode Date: July 29, 2022

Munk Members Podcast provides listeners with a focused, half-hour masterclass on the big issues, events and trends driving the news and current events. The show features Janice Gross Stein, the founding director of the Munk School of Global Affairs and bestselling author, in conversation with Rudyard Griffiths, Chair and moderator of the Munk Debates. This week’s Munk Members podcast explores two stories in the news this week. First, Italy is gearing up for a national election in September. Not only populist but outright far-right parties seem on the cusp of forming a coalition government if opinion polls hold over the summer. What would this mean for the Eurozone? Italy is struggling under sclerotic economic growth, massive public debts and restive politics, thanks in no small part due to a backlash against the “technocratic” government of outgoing Prime Minister Mario Draghi. Is this a turning point for Italy? How are Europe’s technocrats in Brussels likely to respond to Italy moving hard right? Second, this week saw former Prime Minster Stephen Harper endorse the populist front-runner candidate in the Canadian conservative leadership race. Why is a former PM who was avowedly anti-populist during his tenure in government lending political support to a candidate and party flirting with bans on vaccine mandates, World Economic Forum conspiracies and attacks on the independence of central banks and bankers? This podcast is a project of the Munk Debates, a Canadian charitable organization dedicated to fostering civil and substantive public dialogue. More information at www.munkdebates.com.Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

Hi, Monk podcast listeners. The following is a sample of the Monk members-only podcast. To access the full-length edition of this episode and all of our regular Monk members-only podcasts, go to our website, www.W.Munk Debates.com and register for membership. Membership is free, and it's available for you right now at www.munkdebates.com. Hope you enjoy the program. Hello, Monk members. Rudyard Griffiths here, your host and moderator. Welcome to this.

our regular monk members only podcast. This is the program where we dig into the big issues and ideas in the news. We focus on the issues and topics moving the public conversation. And we do this each and every week with Janice Gross Stein. She's the founding director of the Monk School of Global Affairs and internationally renowned author and scholar. Janice, great to be in dialogue with you again. And great to be here with you. you were edgird before a long weekend with warm weather.

August long weekend. What are your plans, Janice? Are you, is there a Blue Jays game? I know you're a big fan of the Blue Jays. Do you get a game on the long weekend? I do. And it's a very good time in the history of the world

because the Blue Jays are back in contention. As long as that's going well, we can put up with almost everything else, Roger. But come on. New York Yankees out there somewhere? Yeah. Well, the Yankees are the Yankees. There's a whole lore about the Yankees. And we won't go into that.

I could probably bring Pierre Polly ever into that discussion about the monopolist Yankees, but we'll leave it out for a moment and just say that the Blue Jays are in contention for the first wild card spot. And as long as that is there, Trontonial. are happy. Awesome. Well, I am happy to be pondering a long weekend and what a great way to kick it off then with our weekly conversations.

So let's dig right in. Two stories we want to focus on for our listeners this week. First up is a return to Italy, but we're not going to talk about the energy crisis in Europe, which we did last week, which actually took another nasty turn with Vladimir Putin seeming to reduce the capacity yet again in the Nord Stream pipeline down to 20%. But we'll continue to follow that story on subsequent shows. What I want to dig into you with today, Janice, is Italy. Something really interesting is happening there.

It could either be, you know, populism's next and we always hope, Alaska, gas, or there's something more serious brewing in the boot. of Europe that could potentially threaten the union in a more substantial way than some of the other populace that we think of in the northern countries or even Marie-Lapin, who kind of flopped, frankly, in the last French presidential election. So do you share a concern here that we need to watch Italian politics to understand at least some of the parameters of the future trajectory of Europe in the months and a year to come. Certainly what's happening in Italy is important, Rudyard, on the surface.

Mario Draghi's government is gone. He's a caretaker prime minister. There will be an election. And if you believe the polls in Italy, there will be a populist government. and one that might be a right-wing populist government in which support for Ukraine will diminish, admiration from Vladimir Putin will go up. And you have Europeans wringing their hands now

in and foretelling catastrophe because of what's happening in Italy. But that's not the whole story. and there is a terrific article that I recommend to everybody by Christopher Caldwell, a historian in today's New York Times, where he says, hold on a minute. There's another story. Europeans are bemoaning the fall of an unelected government. Mario Draghi never was elected at the ballot, appointed by an unelected president. are we losing our way here when Mario Draghi and a technocratic government of sensible, rational people who will bring the debt under control and do all the right things and to whom you can lend money, are we losing the threat when we talk about that as democracy?

Great question. It is. And just to remind people, Mario Draghi was the former head of the European Central. bank. So the ultimate kind of technocrats, technocrat, he led the Eurozone through the post-great financial crisis crisis when Greece, we remember, was blowing up in terms of its debt. And he was, you know, much beloved in Brussels by Ursuline von der Leyen and Madame Lagar, now at the ECB. He was part of that coitory of kind of elite European bureaucrats. And it did serve Italy well through the pandemic.

He was very effective to the tunes of hundreds of billions of euros of aid and now additional COVID funds that are being promised to Italy and other Eurozone countries, all that to his credit. But Janice, at the end of the day, as you point out, unelected, supposedly, as some technocrats, are a little bit autocratic, not particularly interested in the views in this case of a rather fractious Italian parliament, the five-star movement, the brothers of Italy. We can talk about some of these players, the Northern League, Salvini's party. You have to wonder if this was a bit of an own goal by Europe's elite.

They obviously wanted an outcome, which was a compliant, stable, Italy because it is the large debtor nation in Europe with a debt to GDP ratio north of 150%. It is a star in the debt market. Right. It is the weak link in a sense in the Eurozone. And whenever we see these political convulsions and upheavals in Italy, what happens that bond yields begin to spread, increase between what it costs Italy to borrow versus Germany.

And this makes the Europeans political and economic. leaders very, very nervous. I think you've captured very, very well, Roger, exactly how the central bankers think about this. They are alarmed at the coming chaos. Here's Chris Caldwell's point in. I was really struck this morning when I was reading it. He talked about the fact that beaches in Italy are publicly owned. And there are thousands.

small hotels on the beaches that are owned by families for three or four generations. And one of the reforms that the European Central Bank wanted was more efficient hotels on the public beaches. And of course, a howl and rightly so, of protest from these long entrenched family-owned businesses. who maybe are charging more, I'm sure they are, but do not want to be replaced by some international hotel chain. Now, if that isn't a metaphor for populist politics everywhere, frankly, we want what we have. You know, I remember Ukrainian saying to me, yes, we have corruption, but boy, it's our corruption. And we want our own corruption. not some international standard of corruption.

You can say the same thing about beaches, about taxis, about restaurants, about the whole service sector, really, where small businesses, you know, deeply entrenched in local tradition operate. That's what the technocratic solutions that, yes, favor efficiency, but they miss that whole part of the story. And in fact, that's what the poll. are showing that the reforms that he rightly from a technocratic point of view was pushing, was alarming more and more Italians.

It's not a coincidence that this government felt. So, you know, take a look sometime at the GDP chart of Italy. It's basically flatline for generation. I mean, it is an amazing country to go to. I think we all know the vibrant culture, how lovely. and welcoming and warm, the people are, there's a kind of what I'd like, I was just there, in fact, a few weeks ago, there's a feeling of what I would call managed collapse. There's an remarkable ability in that country to eke out, I think, an incredible way of life, the Vietalce, you know, the sweetness

of life. And yet, in some ways, the technocrats are right, that this is a nation that is, has, to call it sclerotic is probably to be to be charitable. And now I guess, Janice, we're faced with this odd constellation of right-wing parties that have emerged here as the largest block in what will be not a first pass the post system, but a parliament of a coalition,

a grand coalition potentially here of the right. And when I say the right, we're talking about a party called the Brothers of Italy, this may be new to people, but led by a young charismatic woman in her 30s, Gloria Maloney, partnering with Guess Who, that old subtergenarian geriatric Silvio Borsconi is back with Forte Aetalia in a new incarnation. And then Selvini, the kind of dark, very dark rhetoric, anti-immigrant leader of the Northern League coming out of Milan and again, amplifying these cultural and geographic divisions in Italy.

So I don't know. I put this all together and I really feel for Italy. It's a country that has real problems. They do need to be addressed. But to think that these right wing parties have anything other than the usual populist cocktail of blaming the other, I think is to ignore, again, Italy's danger to the rest of Europe, the threat that it poses if it were to crash out because of, you know, it's borrowing costs exploding or because of the fact that its economy just is sowing this

political instability, this constant eruptions of anger on the part of a population that do feel that they haven't seen their standard of living rise in a generation or more. You know, it's interesting, Roger, because clearly Europeans see Italy as a threat to the financial stability of the European Union for all the reasons that you just mentioned. But when you look at the brothers that you just talked about, this is a far right-wing crypto-fascist party. That's really what it is. It is led by a young woman, as you said, who's charismatic Maloney.

But wow, when you read what the party stands for, it is not hard to sniff the smell. a fascism in that party. And then the League, which is really just an anti-immigrant party, that's how it came to power in the wealthy North and wants to seal off the Mediterranean to North African immigrants. Now, that does not bode well for the future of Italy. That is not a revolt of the small people in the country. against the technocratic elite.

There's something much darker here, as you said, that has arisen in the past in Italy 100 years ago. And that's what's far more than whether it's going to cause real trouble in the bond markets in an integrated Eurozone is the worry that there are dark currents here in Italian politics. They're not only in Italy. There are French parties like that in Germany, but they're more. more powerful in Italy because the system is so unstable there and so fractured that it's really conceivable that we can have a right. If we want to be charitable, we'll call them

right-wing populace. I don't want to be charitable. I will call them right-wing crypto-fascist party in power in Europe at a time when Europe is facing huge security challenges. That is not a good story. Yeah, and I would urge listeners to keep an eye, again, to go back to the beginning of this conversation with Mario Draghi coming out of the ECB. Well, Christian Lagar, as people may remember, in the last week, has announced this new, boy, they love their acronyms when it comes to central banking in Europe. It's called the transmission, what's it called? Got the transmission protection instrument. Basically, it's a tool whereby the ECB, it's a tool whereby the ECB can raise rates to the rest of Europe because they have very bad inflation right now.

We just saw another disconcerning inflation number out of Germany late this week. But it allowed them to buy Italian debt. Again, and there's all kinds of language here, JAS, provided, you know, Italy's conforming to EU guidelines as related to its percentage of fiscal expenditures vis-a-vis its budget and, you know, some some interesting language in effect saying, you know, that it's policy, if you read into it, its politics has to be kind of stable and functioning. And I wonder if we're not going to see a kind of battle royal between the technocrats using, as they have in the past in Europe, the ECB and these powerful financial instruments, the ability to

suppress the true boring costs of Italian debt, which they've done in a spectacular way over the last decade and a half to basically try to cow Italian voters into bulking at what could be really steep and pernicious financial and other opportunity costs of veering, as you say, not simply to the right, but the hard right. And again, I'm sympathetic with the ECB and probably why they're thinking about these mechanisms and using them in these ways. It's Machiavelli. Hey, Machiavelli was Italian.

But it sets up. I mean, to me, this also just sets up this very manichaean, you know, struggle between the populace who will blame the ECB and Lagar and the whole panoply of European bureaucrats as the new boot on the back of Italy and the back of Italians' freedom. Yeah. I think that what you're describing is a real possibility. And, of course, it's worrying. Let's just, you know, if I think back just over recent European history, when Greece was on the verge of, frankly, bankruptcy. And in many ways, Greece was a bigger problem, not because of its size. That was small and manageable.

But frankly, it fudged all its data and covered up its costs. And everybody in Europe knew it and didn't have a lot of sympathy. but Europe came down on Greece and its government very hard and frankly broke the back of that revolt. And when the costs of borrowing became clear, Greeks buckled. There's no other way to describe it. Now, let's look at one other example, which is slightly different story from one you just told. Roger, which is Hungary, the Europeans in one of those amazing feats of the conundiates of the conundi described so agile, did a carve out for Hungary on gas sharing agreements and gas reductions

just this week. So no real reason to make an exception for Hungary, except that Hungary's run by Orban, and they couldn't get it to knuckle under. What happens in Italy, I think, is a huge story, not only for the European Union, not only for fiscal responsibility, which, you know, Italians don't really understand what that concept is in modern history. But for the larger struggle we're having, what does democracy mean in an age when economies are interconnected? When there's contagion. What does it mean? I agree. What does democracy mean? What does democracy mean when you have these technocrats, frankly, I mean, here, I hope I don't sound too popular, but you have these technocrats walking around with, you know, in a sense of bazookas at the ECB targeting,

we might not like the politics, it may be abhorrent, but targeting what looked to be like the democratic choices of a fully entitled, constitutionally constructed member of the European community, a sovereign nation in its own right. I mean, it has a feeling to me of a down. I guess this is my concern about Europe. It's a constant doubling down over and over and over again. And at a certain point, I think something breaks. And when it does break, the tensions, the load in the system is so high because of all the doubling down, the weight that you've put on these institutions and structures and mores and assumptions. I don't know. I don't want to predict that this is going to be the moment Italy crashes out. But I do think this warrants a lot of attention. And I think that it is almost inevitable if the polls are right, that there will be a far-right government in Italy and the havoc that they can reap in the Eurozone joining the likes of Orban and, you know, other anti-Europe MEPs and parties like Le Penh in France, this starts to get kind of dicey.

Yeah. Yeah, I think you're right to worry. And let's just put one more possibility on the table here, Rudyard, as we watch this, that there's almost the reinforcing effect between technocratic solutions that come from the outside and sympathy for populist parties. Right. They feed off each other. They feed off each other.

It's a frog and the scorpion going across the river. And it makes it really hard then for centrist democratic parties to, find their voice because the centrist parties understand that you need to be responsible, but are much more aware of the local damage that gets done when the ECB or the IMF, you know, this is the story that's playing out as we speak in Sri Lanka, in Pakistan, and every time the IMF enforces strict conditionality on loans that, it is giving to a government that is hanging on by a shred. It does not end well.

You could argue in a sense that one of the biggest risks to democracy in these few years that are ahead of us is technocratic solutions imposed without popular support that puts local inefficient but cherished traditions at risk. and I think that's what we're seeing in Italy. It is a really important story, much bigger than Italy. Fascinating analysis, Jess. Well, look, when we come back for the break, we're going to continue on the theme of politics. We're going to come back to Canada. We're going to try to unparse a really interesting endorsement that happened this week.

Former Prime Minister Stephen Harper out of the blue, after seven years of not endorsing candidates to replace him as leader of the Conservative Party of Canada, came out and provided what, by all intents and purposes, a pretty emphatic endorsement of a seemingly confident, self, I wouldn't say self-described, but self-positioned populist candidate, Pierre Pollyette. So we're going to talk about what that endorsement means, what's happening in Canadian politics,

as the populist movement finally lapped up on our shores and is it ready to storm the halls of Ottawa? Back after this break. You've been listening to a sample of the month. Monk Members Only podcast. To access the rest of the episode, consider becoming a member. Membership is free and available at www.w monkdebates.com. Once you've joined as a member, go to your membership profile to access the rest of this episode and all of our Monk members podcast. Thanks for listening.