The structural economic downturn of Italy is a positive for CE4 convergence, but will rebalance the geopolitical equilibrium within the EU in a way that we have never seen before; and, under the current leadership, things are, objectively, very difficult. The recent veto by Hungary and Poland to the rule of law conditions, which were proposed to be put in place from 2021, is a clear example of this.
How will it be resolved?
EU politics has a tendency to find an agreement during times of crisis, and it is going to be the same this time. There will be some watering down of the new conditions, affecting the Recovery Fund and the MFF. However, how the economic and political cooperation of the EU27 will evolve will only become clearer once the Brexit agreement and the fine details of the rule of law procedures are signed off.
Make no mistake, this is a critical juncture for Europe, the departure of the UK from the Union and the enormous structural difficulties of Italy have changed the political equilibrium of the EU severely, and it is not necessarily true that we will find a workable stable equilibrium easily, especially because the two powerful civil servants of the Union, the ECB and the Commission, are not (yet) fostering a more constructive and realistic analysis of the economic reality of the Union.