We continue the analysis of the Plan B of Savona: even the states in their small ... are broken

(To David Rossi)
09/07/18

Urged by the many readers (thank you!) Of our precedent article, we continue our analysis of Plan B of the then prof. Paolo Savona: we do this by focusing on some examples of "breakup of federated or unitary states", as proposed by the same author of "a practical guide to exit the euro", with the aim of understanding that examples of separations we face as models for the exit of Italy from the Eurozone (and probably from European architecture).

In the text of 2015, the neoministro for relations with Europe refers, in order, to the Austro-Hungarian Empire, to the Union of Soviet Socialist Republics and to Czechoslovakia. The writer said that, forgive us the prof. Savona for the correction, none of these three cases is, in fact, an example of a unitary state: on closer inspection we are facing a confederation (the Hapsburg empire) and two federal states (the USSR and Czechoslovakia from the 1969 at the 19921). It should also be noted that the comparison between the European Union and the present and past federal states is to say the least: with the entry into force of the Treaty of Maastricht on November 1, 1993 ends, yes, a phase of the European process, that in one could only speak of a strengthened international organization or a particularly advanced customs union. From that moment on a reality arises that in fact and by law comes to constitute a confederation of states2, that is, a union of subjects that substantially maintain their sovereignty while putting certain areas and powers in common. All treaties following the one on the European Union constitute an evolution and an amendment, but they do not exceed it. In short, the comparison with the USSR and Czechoslovakia does not stand: to be precise, it does not make much sense to compare a confederation of two sovereign states (the Austro-Hungarian empire) multiethnic and multinational, Austro-Hungarian traction ... with a reality of twenty-eight, where everyone still exercises sovereignty, even with the limits deriving from their relative political, demographic and economic weight. But evidently in Savona it is especially important to evaluate the issue from the point of view of the breakdown of the monetary union: in these three cases, as also in that of Italy by the Eurozone, there is no reference to a political-institutional framework. In short, a good economist is interested in money. Point.

From the 13 slide begins the analysis of the common lines of said breakup political-monetary, with a cascade of consequences:

  • The capitals move towards the (ex) federated or even third country that offers greater protection

  • This is why authorities tend to impose controls on capital movements and try to minimize the transitional period

  • Despite all this, there is no lack of fraud and forgery, in addition to the inevitable falsifications

  • All this also because of the spin-off difficulties of two (or more) independent central banks from each other

  • With the inevitable consequence that the new currencies, especially in the short term, are subject to strong fluctuations.

On closer inspection, at the time of the separation of the Austro-Hungarian Empire3 in November 1918, there is a tacit determination to preserve the crown as the currency of the successor states: to make the overprinting on the banknotes and to limit the scope of validity to its territory is at the beginning of January 1919 the Kingdom of the Serbs, the Croatian and Slovenian (later, Yugoslavia), followed a month later by Czech-Slovakia and in turn, in March 1919, by Austria itself. Professor Savona tells the reader that the various currencies have important changes "in the short term", almost to imply a happy outcome in the medium and long term, but is silent about the real consequences of the "breakup", which the writer summarizes as follows:

  • Prices for consumer goods in Austria grow by 14.000 times (the reader does not have the raison d'être: fourteen thousand times higher!) Between the 1914 and the 1922, so much so that there is a change between the Crown and the 10.000 Shilling to one , in the 1924;

  • In Hungary, where at the beginning of the 1919 the Hungarian Crown circulates only in banknotes from 1, 2, 25 and 200, in less than five years they are printing pieces from 500.000 and one million, due to the hyperinflation and economy not competitive;

  • The Austrian crown that changes the 1919 11: 1 with the Swiss franc in two years slips up to 10: 000 crowns for just one franc.

Above all, the writer urges to highlight how the birth of national currencies should be considered, in the case of breakup the two-headed empire, as a pathological consequence of the chaotic way in which the individual successor states gain independence in the 1918 and how they struggle (apart from Czechoslovakia up to 1938) to carry on a stable political-economic development. In short, Austria Felix no longer has reason to rejoice for well over a generation. In all this, on closer inspection, money has nothing to do with it, except as a paradigm of a political disaster.

We carry forward the clock of history and we run the short century (1914-1991) to the end credits, when even on the spiers of the Moscow Kremlin the red flag finally falls. It's the 25 December 1991. According to Professor Savona, the end of the Soviet Union is not an example of a "crisis of success", because it is announced "months before" unlike the breakup of Czechoslovakia a year later, which becomes public "six days before". All this serves the well-known teacher to show that secrecy is a value so useful to prevent "speculation and countermeasures from other countries" to overcome even "the democratic merits of a disclosure and an internal political debate"4. Too bad the opposite is true: Slovakia proclaims, in fact, its independence the 17 July 1992, with Vaclav Havel who resigns as president of the federal state three days later and with the formal division of the properties and obligations between two new states that it is approved in mid-November, in view of the dissolution of the Czechoslovak state on December 31. In short, public debate and clear agreements are the characteristics of the "Dissolution of velvet" that in Savona are completely missing. On the other hand, the Belaveža Agreement with which Russia, Ukraine and Belarus declare dissolved the Soviet Union comes as a bolt from the blue 8 December 19915, leaving the successors of the former socialist empire with an infinite number of unresolved issues, which only by chance in the following two years did not lead to a conflict, possibly even atomic. In both cases, Czechoslovakia and the Soviet Union, the monetary aspect is again secondary: just remember the case of Ukraine, where between 1990 and 1996 is in circulation - initially parallel to the Soviet ruble - a coupon ( or a coupon) called Karbovanec, which then becomes the national currency and depreciates to the point that in the space of four years the biggest cut goes from 100 to a million karbovanec. In the case of the dissolution of velvet, at the beginning even the old Czechoslovak crown remains as currency of both states: only after the summer, due to the Czech economic concerns due to the difficulties of the "poor" sister, two distinct coins are born. Of the two, the Slovak crown is the one that suffers the most, depreciating by 30% compared to the Czech currency of the same name: however, the progress of Bratislava is such that the country is admitted into the Eurozone since January 1 2009.

The Czechoslovak case, in reality, presents further food for thought, on what could be a model of ITALEXIT, well beyond the notorious Plan B of Savona. We are facing a more complex reality than the name of the "Czech-Slovak" federal state explains: in fact, the "Czech" itself is nothing more than the union of two historically distinct nations, namely Bohemia and Moravia. For seventy years, the most important political decisions in Prague were taken on the basis of a balance of three, not two, as might have been evident. In a certain sense, Boemi and Moravi can be compared, in their strong relationship, to the famous Franco-German axis which is the real engine of Europe. Italy, compared to this axis, is very similar to Slovakia in the years of real socialism, which undergoes decisions taken elsewhere. The Czech reader forgives me: the "velvety" way in which politics is done in sophisticated Prague, so different from Budapest or Warsaw, is very similar to moral suasion exerted by the fat and satisfied Berlin of the ten years of this century ... Well, if you want to arrive at a separation devoid of the consequences suffered by former Hapsburg and Soviet subjects, perhaps the Czechoslovakian road is the best: not as quick and painless, but just for the exact opposite, because reasoned, sought and produced with seriousness and attention, aiming at creating future relationships of good neighborliness and collaboration. The road is that of a very courageous parliamentary vote, of declaration of independence, but without really seeking it through a public act of breaking the Union, but limiting it to a warning to the government, so that it can deal with special conditions of permanence or leakage as painless as possible and win-win, for the same Union and for Italy. The Danish and British cases show that special positions can also be dealt with in Brussels: it is enough to have a firm head and clear ideas ... This is to avoid the consequences, already indicated in our previous article, produced by a sudden and hasty rupture.

Yes, because the three illustrated cases show that money is never really a cause of division, but it is often the object of a post-collaboration effort.breakup: an attempt almost always nullified for contingent political reasons. Thus, the "separations" under examination - such as those of Greenland and the United Kingdom - send an exquisitely political message to the world: we will change our strategic position, trying not to change the economic one. Now, the reader will forgive the writer some frankness: in the case of Italy, what message would we give to the world? That we can not follow the German rules on indebtedness and inflation, even though we have them (and voluntarily6) constitutionalized? It should be noted that Germany itself has adopted them for less than ten years, not since the time of the Ruhr crisis, and has made it the secret of the spectacular growth of the German economy of the last two decades, daughter of less indebtedness and rationalization of public spending, not of spending money. The impression is that the political message (and financial, as a consequence) would be implicitly this: the Italians do not make it to submit to accepted criteria of seriousness and if they vanish to not suffer. In short, a new September 8 ...

Some readers writes that at this point, with the Italy spill, the European Union would be close to imploding and therefore not dangerous, virtually dissolved as the USSR7. We doubt that anyone rational would have the courage to call a tiger not offensive, even if mortally wounded8: the damage of a bad division is witnessed by millions of Austrians, Hungarians, Russians and Ukrainians, who still today carry their wounds. In the case of the European Union, too often it is written that it would be "in crisis" or "over"9, confusing its inefficiency with subsistence: inefficient giants like the Eastern Roman Empire, the Ottoman Empire or the USSR itself have lasted for decades or centuries, doing damage everywhere.

In conclusion, the writer believes that the "democratic merits" of a public debate and an open negotiation are essential, especially if we address the question of the meaning to be given to the breakupsovereignty per se is only a means, not an end, and can not be justified by anything. Not by chance, Greenland and United Kingdom, the only cases of sovereign countries out of the EU / EEC have passed from there, from a referendum and a negotiation, and have retained - or intend to preserve - relations with Europe also in strategic-military context. Without the tears and secrecy that fascinate our leaders, but that sends the world a gray message: the Italians escape again ...

1 To be precise, in the 1990 the country even took the name of Czechoslovak Federal Republic.

2 There is no reader but it should also be noted that the "Confederation" par excellence, that is Switzerland, since the end of the Sonderbund war and the entry into force of the current constitution in 1848 actually represents a federal state, not a confederation .

3 The official name of the Double Monarchy was: "The kingdoms and lands represented in the imperial council and the lands of the crown of St. Stephen".

4 It should be emphasized that the former Minister of Government Ciampi, in listing the subjects to be involved in this "secrecy", leaves a little limestone on his hand: President of the Council, Ministry of Economy, Ministry of Labor, Minister of Foreign Affairs, Ministry of Industry, CONSOB, Bank of Italy, COPASIR, CNEL, Confindustria, Trade Unions, Confartigianato ... and so on and so forth!

5 Mikhail Gorbachev laments: "The destiny of a multinational state can not be determined by the will of the leaders of three republics. The question should be solved only through constitutional ways with the participation of all sovereign states and considering the will of all their citizens. The sentence according to which the laws would cease to be valid is illegal and dangerous; it can only worsen the state of chaos and anarchy. The haste with which the document appeared is also a further concern. This has not been discussed by the population nor by the Supreme Soviet of the Republics in whose name it was stipulated. Even worse, the document was presented while the draft of a treaty for the Union of Sovereign States, prepared by the USSR State Council, was being discussed by the parliaments of the republics ".

6 In the 2012, the Senate approved at second reading the constitutional reform bill of art. 81, which introduces a balanced budget in the Constitution, exceeding the quorum necessary to avoid the popular confirmatory referendum.

7 The USSR is dissolved, by the way, by common agreement of its stakeholders, not for the sole initiative of one: Ukraine does not follow up on its declaration of independence for four months.

8 Indeed, someone claims that the Eurozone would be even better without the PIGS: Portugal, Italy, Greece and Spain, becoming the currency of Europe's strong economies.

9 The writer is amazed to read articles like: http://www.occhidellaguerra.it/unione-europea-fallimento/ where it is stated that the EU "has never really been a Union, but a group of States that were united to better manage a continent, but in which everyone had an interest in making their own agenda prevail". This is the meaning of confederation, not a scandal. Some beautiful souls, however, have a romantic idea of ​​Europe and have to spread it to the wind ...

(photo: web)