That deafening silence you’re hearing in Berlin is the sound of German V.I.P.s not (yet) talking openly about Italy. Sure, everybody from Chancellor Angela Merkel on down is worried that we may be on the verge of Euro Crisis 2.0, and that the Italians, via Brussels, will before long come running to Germany for a bailout. But German pols also know that the worst thing right now is for Germans to be doing the criticizing. That would just dare Rome’s governing populists on left and right, Luigi di Maio and Matteo Salvini (also left and right, respectively, in the picture). Under the banner of defying German tyranny, they would leap even further over the cliff of budget insanity.
So the talking-to must come from Brussels, not Berlin. The Commission already sent an official letter to Rome, complaining that Italy’s planned budget would break euro-zone rules about deficits and debt. Today, Rome is sending its reply to Brussels, in effect telling the Eurocrats to go to hell. For di Maio and Salvini, that kind of posturing is the whole point. They want to dole out the largesse they promised their supporters and also paint Brussels and Berlin as the oppressors. So tomorrow, the Commission may have to take steps toward its first-ever sanctions against a member country.
This clash is scaring investors. They have been selling off the shares of Italian banks and of Italian bonds, causing their yields to rise. On Friday, Moody’s downgraded Italian debt to Baa3, just one notch above junk. Standard & Poor’s will probably follow suit this week.
Looming over these events is the realization that there would be a big difference between Euro Crisis 1.0 and 2.0. Greece, for all its problems, was small enough to be bailed out, as were Portugal and the others. But Italy is the third-largest economy in the euro zone. It cannot be bailed out. If it came to a crisis, the only way for Italy would be out of the euro. And even though Matteo Salvini currently denies it, that may be exactly what he wants.
As usual in world diplomacy, Germany has been trying to sit out the brouhaha between others. But the murder of Jamal Khashoggi by Saudi assassins was, by all appearances, too gruesome; the attempts at cover-up by the Saudi regime are too deceitful; and the international backlash is too huge. Once again, Germany is discovering that it can’t just stay silent and do nothing.
So now Angela Merkel and her foreign minister, Heiko Maas, have announced a moratorium on new arms exports to Saudi Arabia. And everybody is calling on Joe Kaeser, the boss of German blue-chip Siemens, to pull out of the upcoming Future Investment Initiative, a powwow in Riyadh dubbed “Davos in the desert”. Lots of other honchos, both corporate bosses and government ministers, have already canceled. For Kaeser, this should be a no-brainer.
During the Cold War, the Germans used to say that “the shorter the range, the deader the Germans.” That was a macabre acknowledgment that the Americans and Russians, had they ever clashed in Europe, would have met in Germany and had their missiles pointed at each other across the inner-German Iron Curtain. That’s why Germans have been perhaps the world’s biggest fans of the Intermediate-Range Nuclear Forces Treaty signed by Ronald Reagan and Mikhail Gorbachev in 1987. It banned all land-based nuclear missiles with ranges between 500 and 5,500 kilometers.
This also explains why many Germans are even more horrified by Donald Trump today than they were last week. Speaking in Nevada, Trump casually announced that he intends to pull out of the treaty. Niels Annen, a top diplomat in the foreign ministry, tweeted that the decision was “disastrous”.
But Trump has a good reason. Russia, he charged, has been cheating, building the banned missiles on the sly. (Russia, for its part, also accuses the US and NATO of cheating.) If so, how exactly was the INF going to keep us all safer? Here’s hoping that Trump is pulling out of this treaty the same way he yanked America out of NAFTA: not intending to exit permanently, but trying to dial up the pressure to renegotiate a tighter deal. But boy, playing chicken with Mexico and Canada over trade is one thing; playing chicken with Russia over nukes is quite another.
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