President of the Corporate and Investment Banking for Europe, Middle East and Africa of JP Morgan, the largest American bank, Vittorio Grilli has been Treasury manager since Mario Draghi was general manager, general accountant and general manager himself with different ministers such as Giulio Tremonti and Tommaso Padoa-Schioppa, finally Minister of Economy in Mario Monti’s government. On matters of Italian finance, he does not comment. But in his role, he continues to follow the entire economic and financial framework in Europe and Italy.
What is your impression of the European response to the recession since Covid-19?
“I am more optimistic about Europe than I have experienced in past years. Without recognizing it explicitly, it has been shown that the lesson of the past has been understood ”. What do you mean by that? “During the euro crisis, things had gone slowly, sometimes making irrelevant or wrong decisions. All this had left a trail of rancor. Now the lesson has been understood; we moved well. There has been a return to the Franco-German understanding: the leaders of the two countries have taken a stance, even taking risks, and this has made everything easier. There are useful tools in the Commission proposal. Above all, there is a paradigm shift. “
But they stress that this initiative is temporary and one-off, isn’t it?
“But it already allows us to think about new forms of fiscal policies at the level of the European Union and not only of national states. Europe can change gears in terms of the political depth of its institutions. After all, this pandemic represents a paradigm shift, in this context it makes no sense to give this or that country the responsibility for what happened ».
Much is due to a change in Germany’s approach. How do you explain it, in your opinion?
«In 2008-2009 Germany had focused on exports to support economic growth; he saw in the demand coming from the Asian markets, rather than from the European ones, the dynamo to make his industrial machine run. The certainty of this push no longer exists. ” Do you mean that Germany feels more than before the need to strengthen Europe because it is not sure that it can grow on its own? “I mean that all countries, not just Germany, by protecting the integrity of the European Union also intend to safeguard the common market”.
So Italy can breathe a sigh of relief, because now there are those who guarantee for us?
“I would not say. The fact that there is now a European response does not mean that the matter is closed. In order for the European plan to work, it is necessary that all countries support it with conviction; therefore, a regime of incentives and accountability is needed, of responsibility for one’s own work, capable of reassuring the most skeptical. Having a Recovery Fund does not mean that a country “takes the money and runs away” ».
There is no jackpot here, but a system that must be correct in the distribution of resources in sectors and geographic areas. In discussing these issues, Italy will have to be good and careful. Andrea Guerra, of LVMH, said that this recession can be like the “safety car” in Formula 1: it aligns the countries and all starts again with the same chances. Is this so?
«It is true, but to take advantage of it we need to correct the problems that have always slowed our run. We have to improve on the past. There is no way to do it. Let’s think, for example, of the virtuous path taken by Spain: in 1986, upon its entry into the European Community, it presented a significant economic gap compared to other EU countries, including Italy. Over the years, Spain has been able to reprogram the economy and plan investments, efficiently using European structural funds. Italy, despite being in the Union for much longer, has failed to do the same to help the development of the South. A change in our approach is necessary “.
What approach do you suggest?
“If there has been a paradigm shift in Europe, there must also be in Italy. There is a need for vision and, above all, for capacity for economic realization. It is time to translate the many good ideas into concrete projects, to be carried out quickly and effectively. Let’s not forget that the full impact of the economic crisis has yet to materialize: this must be a source of awareness of the choices to be made “.
She also does not ignore the difficulty of implementing reforms in Italy …
«Of course, I am well aware of the difficulties encountered when trying to make an impact and really change things. In Italy, the central government often does not make use of administrative acts based on current legislation, which would have the merit of being already available and tested, therefore timely and certain. Instead, extensive use is made of new laws, which must inevitably be followed by new decrees, regulations and implementing circulars which complicate and slow down the bureaucratic machine, instead of simplifying it ».
Some compare this crisis to a war and what awaits Italy in an era of reconstruction. It shares?
“All true, but there is a fundamental difference: in a post-war scenario, physical capital is destroyed and huge investments and time are needed even just to allow the recovery of production. Today, however, the physical capital has remained, but is, in some way, frozen. We must put the lifeblood of the economy back into circulation. The economy today is strongly interconnected globally: it is difficult for a company to restart if it does not restart the supply chain of which it is part. This is a problem of economic coordination, because everything has to start again together. If a sector or territory remains stationary, imbalances or bottlenecks are created that hinder the entire system “.
The government’s response seems to be a wave of interventionism and nationalizations …
“It is a time when there is a need for public intervention; my hope is that it will be temporary. The public sector enters the productive world in certain circumstances, but as soon as possible it must return to its job as a regulator. It cannot replace companies in the medium and long term. ”
Do you perceive in the political class the awareness of the necessary reforms and the limits of statism?
“Italy is facing a great test. The change of pace must concern the whole country, not just the political class. This terrible tragedy has given us time to reflect; I trust will give us the strength to change and make a system. Economy, politics and society march together. It is one of the precious lessons that Alberto Alesina leaves us, a dear friend that I would like to remember ».
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