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Italy and the Fiscal Compact: Why does a country commit to permanent austerity?

Published online by Cambridge University Press:  05 July 2017

Manuela Moschella Open the ORCID record for Manuela Moschella [Opens in a new window]
Manuela Moschella*
Affiliation:
Institute of Social Sciences and Humanities, Scuola Normale Superiore, Firenze, Italy
*
*E-mail: [email protected]
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Abstract

The paper investigates the factors that led the Italian government to accede to the Fiscal Compact in spite of its demanding requirements for the country’s budgetary policy. Specifically, the paper assesses the extent to which Italian government’s support for the Fiscal Compact was driven by the logic of the ‘vincolo esterno’ in a replication of the pattern that led Italy to sign the Maastricht Treaty. The paper finds only limited support to the ‘vincolo esterno’ argument. Rather than being motivated by domestic dysfunctions or socialization to the fiscal discipline doctrine, the Italian government acted mainly out of market punishment fears. Interestingly, however, three factors filtered such external pressures and contributed shaping government’s support for the new Treaty. First, the Economic and Monetary Union unfinished architecture, and in particular the lack of a European financial firewall, weakened opposition to the new Treaty. That is to say, the institutional context constrained the choices that Italian policymakers could pursue. Second, the pro-European orientations of government members contributed to elevating the new Treaty to a symbol of European integration. Finally, the Italian government confronted a quite large domestic win-set during the negotiations, as the parties supporting the Monti government also supported Italy’s participation to the new Treaty.

Keywords

ItalyFiscal Compactinternational economic negotiationsEurozone crisis
Type
Research Article
Information
Italian Political Science Review / Rivista Italiana di Scienza Politica , Volume 47 , Special Issue 2: Special issue: Italian Foreign Policy: To Take Arms against a Sea of Troubles? , July 2017 , pp. 205 - 225
Copyright
© Società Italiana di Scienza Politica 2017 

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