Analysis. War, sanctions, gas and oil — all of this has a bearing on the worst election campaign in Italian history. But not everyone wants to highlight it.

In a war economy, Europe is sleepwalking toward the abyss

The Russian countermove to the EU’s intentions to cap the price of Russian gas was not long in coming: it will suspend supplies until sanctions are lifted. As was entirely predictable.

The first statements by von Leyen and Borrel, however, rallied behind a belief, as rock-solid as it is without any clear foundation: Europe will prevail! It’s not clear how, since the outrageous cost of gas is not just the effect of Putin’s perfidy, but of the way its price is set.

The business lobby sees the matter much more clearly than politics. Federchimica president Lamberti acknowledges that “it was clearly a mistake to have given the TTF platform in Amsterdam the role of bellwether for the functioning of the entire European gas market,” because this built a convenient platform for speculation. But the solution lies not in a return to a direct relationship between gas producers and consumers, but in building a single European energy purchasing body, which, because of its size, could throw its weight around when it comes to price.

And not only regarding Russian gas: it would also curb the price demands of the U.S. for its shale gas. Of course, this would be another snub to free-market enthusiasts. But, as former minister Giovanni Tria noted, “we are at war, and market rules are being violated thoroughly, (as) happens in wars.” And the fact that sanctions end up turning against the peoples of the countries that put them in place is something one can already find out from the history books. It is a known truth, although always playing out within a particular set of circumstances.

Meanwhile, Russia is selling its energy to China and India, which are certainly not above reselling it to the West at a premium, especially the former – while, at least in the medium term, Russia’s economy appears resilient. If anything, it should seize this opportunity to transform itself, as central bank President Nabiullina proposed, but went unheeded.

At this point, Europe is the hardest hit by the Russian threat, but the immediate consequences are now on a global level.

Due to a number of factors, the world economy seems to be sucked more and more into an uncontrollable vortex, like the Maelstrom of Edgar Allan Poe’s famous tale. For 2023, the IMF is painting a picture of recession, or “stall speed” conditions, given the simultaneous stall of the U.S., Europe and China.

None of the three, which amount to 49% of world GDP, is now in a position to be the driving force. Germany is in danger of once again becoming Europe’s “sick man.”

The US has decided to prioritize fighting inflation. China, which between 2012 and 2016 had saved the world from a global recession by growing at an average of 7.4%, does not appear able to do so again.

Meanwhile, Italy is thinking on the one hand about small individual and family-level energy savings, and on the other hand about fully reactivating six coal-fired power plants that emit about twice as much CO2 as natural gas plants. “It’s not pretty,” acknowledged Economy Minister Daniele Franco, but it is what it is.

In the meantime, the euro is positioned just below parity with the dollar. The theoretical advantage this would give for exports is, in this situation, more than offset by the cost of imports, since the price of energy commodities, such as gas and oil, is overwhelmingly fixed in dollars.

The expectation of an unprecedented interest rate hike of 75 basis points, which is likely to be decided at the ECB meeting on Thursday, September 8, added to the 0.50% hike in July, will keep the hawks and doves happy (closer cousins than they seem), but certainly won’t fix the woes of the real economy and employment. There is only one way to stop this global recessionary process. It is not enough, but it is imperative: to build a process for ending the war, for a cease-fire, for convening an international peace conference. But that’s precisely what nobody’s doing.

Can any trace of this be seen in Italy’s worst election campaign ever? If there is, it’s very faint and well hidden behind the traditional smokescreen of accusations and counter-accusations, where everyone ends up picking on those who would otherwise be their closest allies. And this increases the number of undecideds, probably that of non-voters, and certainly that of those who have given up on politics.

Polls show us that people are now only looking at personalities, not ideas or programs. But in this case there is another reason as well.

Draghi said it clearly in his speech at the Communion and Liberation meeting: “Whoever comes after me will already find a path laid out.” The NRRP will take us at least until 2026, and the procedures to change it are very tough, as Gentiloni was quick to point out.

It is no coincidence that Meloni is consulting with Draghi to get her people in the decisive posts in the next government.

The “Draghi space” actually encompasses her as well, even if her friendships in and outside the EU and beyond the Atlantic are the source of some embarrassment. That is why Letta’s approach – “either me or her,” basically – was doomed from the beginning, instead of a pointed stand against her party on the terrain of political programs. It was all reduced to a clash of slogans, deprived of an overall proposal for society, because there hasn’t been such a thing in a long time and because loyalty to the Draghi agenda has made it easy to paper over everything else. But this is the fight from which the alternative must start.

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