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August 24, 2018

Towards a standoff between Italy and the EU

The biggest immediate risk to the relationship between the EU and Italy is likely to be the EU budget, an impending conflict that will play out in full after the European elections. The warning signs are already flashing. As a migrant ship, the Diciotti, docked at the port of Catania, an enraged Luigi Di Maio yesterday threatened that Italy would cease to become a net contributor to the EU budget unless there is a fair distribution of refugees. That position was also naturally supported by Matteo Salvini, leader of the Lega and interior minister. The Italian government has placed an order that the 177 refugees on board of the Diciotti must not enter Italy. 

Corriere della Sera notes that there is no urgency on the part of both the European Commission or Germany to help Italy with the refugee problem. Sherpas of 12 EU governments are meeting today to discuss the refugee crisis, but their meeting is overshadowed by the Diciotti refugees. The paper quotes one of the sherpas as saying that the Diciotti was not a European problem, but an Italo-Italian problem. Comments such as these are not only unhelpful in easing the tensions. They are also wrong factually. If we treat refugees as a national problem, the Schengen system of open travel cannot be maintained. The sherpas' meeting has its origins in the recent German refugee crisis, after which the EU agreed to set up a process of bilateral negotiations to get countries to take back refugees without official status that have left their country of arrival. 

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August 24, 2018

A short note on the diminishing role of economists in political life

For some time now we have been observing a secular trend - a reversal of the creeping influence and power of macroeconomists in political life. The trend is most obvious in the US - because of Donald Trump - but we are observing it in the EU as well. It will be interesting to see whether the successor to Mario Draghi will be an economist like him, or somebody with a more technocratic background. In this context we noted a tweet by Isabel Schnabel (@Isabel_Schnabel), a member of the Council of Economic Experts in Germany, who complained that the new digital council set up by the German government was made entirely of IT people and lawyers but no economists. The Merkel administration has belatedly discovered that digital technologies are becoming increasingly important and has set up a commission to find out what this is all about. 

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