Since the end of World War II, and throughout the Cold War, the ties between Italy and the United States have been close, although also rocky at times. On one hand, Rome played a fundamental role in tipping the balance of power in favor of NATO in its face-off with the Warsaw Pact. On the other hand, some Italian historians have described Italy's side in the relationship as one of limited sovereignty, with American interference in Italian affairs.
Today, however, the situation is different. Washington, under the administration of President Donald Trump, is no longer part of the traditional "deep state"; and Rome, under the government of Prime Minister Giuseppe Conte, is no longer prone to foreign interference. With his "America first" doctrine, Trump is calling into question the very existence of the "liberal international order." One realm in which this doctrine is being implemented is international trade. The US is the only country in the world that possesses what former French President Valéry Giscard D'Estaing, when he served as finance minister, called "exorbitant privilege" -- due to the US dollar being the international reserve currency, used in practically every international transaction.
For the US to maintain this privilege, it had to supply the rest of the world with American dollars. This was part of what led of mass imports from other countries into the US, the result of which often was a rise in unemployment in the US, according to some economists. It is this state of affairs that Trump is aiming to rectify, through a tariff policy directed mainly at China and Germany -- two countries that run huge trade surpluses. In January 2017, Trump told the Wall Street Journal that the Chinese yuan is "dropping like a rock," and therefore "[o]ur companies can't compete with them now because our currency is too strong. And it's killing us."
Two weeks later, Peter Navarro, the head of Trump's then-newly established National Trade Council, accused Germany of exploiting the "grossly undervalued" euro -- which, in an interview with the Financial Times, he called an "implicit Deutsche Mark" -- to gain an advantage over the US, as well as other European Union (eurozone) countries.
This is where Italy comes in. As Joseph E. Stiglitz, author of The Euro: How a Common Currency Threatens the Future of Europe, recently explained:
"Italy, the eurozone's third largest economy, has chosen what can at best be described as a Euroskeptic government. This should surprise no one. The backlash in Italy is another predictable (and predicted) episode in the long saga of a poorly designed currency arrangement, in which the dominant power, Germany, impedes the necessary reforms and insists on policies that exacerbate the inherent problems, using rhetoric seemingly intended to inflame passions."
Italy seems to be looking for powerful allies outside the EU to challenge German economic expansionism -- something that creates a unique convergence of interests between Rome and Washington. Unlike in the past, today's convergence of interests does not rely on or involve Italian subordination to America. In fact, Trump, it seems, would like to see a resurgence of individual nation states and the reduction of American meddling in the affairs of foreign countries. In other words, the new Washington-Rome relationship appears to be based on mutual respect for national sovereignty.
 Italy's Prime Minister Giuseppe Conte (left) shakes hands with the US President Donald Trump on the at the G7 Summit, on June 8, 2018 in La Malbaie, Canada. (Photo by Leon Neal/Getty Images) |
In the autumn, the Italian government will debate the new budget package. If it questions the austerity policies that have been completely ineffective where economic growth is concerned -- and if Brussels refuses to give Rome any deficit-spending concessions -- it is not farfetched to think that Italy's "government of change" will try to break the euro and leave the monetary union. Such a move would likely cause a domino effect on the whole structure of the euro, which could collapse without the presence of its third-largest economy.
Trump would probably view an "Italexit" scenario favorably, given his remarks to CBS Evening News in July about the EU being a trade "foe" in trade. If so, Rome's policies are crucial. To end the "liberal international order," Trump must inevitably target one of its main structures, the EU. In this effort, he would do well to rely on Italy, which seems to be his only EU ally with the political weight to achieve such an ambitious objective.
Contrary to what the leadership of countries such as Germany seem to believe, there is life outside the EU and the euro, and Italy would be happy to reestablish profitable trade agreements directly with the US. One would hope that Trump realizes this and will take advantage of the opportunity.
Cesare Sacchetti is an Italian journalist who has worked for two major Italian national newspapers, Il Fatto Quotidiano and Libero Quotidiano. He writes mainly on the economics, EU affairs, Italian politics and foreign affairs. Follow him on Twitter: @CesareSacchetti
