Italy

The headline business story of the holiday season was the latest bailout of Banca Monte dei Paschi di Siena. This is Italy’s third largest bank and, according to recent ECB ‘stress tests’, Europe’s weakest — regarded by pessimists both as a potential catalyst for systemic collapse and a symptom of deeper Italian problems that could kick off another euro crisis this year. Monte dei Paschi is also of special interest to me as the world’s oldest bank, having been founded by the magistrates of Siena in 1472 to provide loans at non--usurious rates to ‘poor or miserable or needy persons’, underpinned by wealth from local agriculture.

That the Tunisian terrorist who slaughtered 12 people in Berlin on Monday was even in Europe, let alone able to move about Europe with ease, is a scandal. It shows that the policy of the European Union and its member nations on the migrant crisis is a complete and dangerous failure. The collective refusal of the European liberal elite to face up to this fact promises further disaster. Anis Amri, 24, had no legal let alone moral right to be in Europe, and yet he had been here since 2011 when he arrived in a migrant boat on the tiny Italian island of Lampedusa. Shortly afterwards, he was jailed for four years after he set fire to a migrant welcome centre in Sicily. On his release in 2015, he was ordered by Italian authorities to return home.

Theresa May was not the only elephant in the room at Thursday’s European Union summit in Brussels, and EU leaders studiously ignored the other one as well. Paolo Gentiloni, Italy’s new Prime Minister – its fourth unelected one in a row since 2011 - must somehow save Monte Paschi di Siena, the world’s oldest bank, from collapse. If he fails to do so – and much will depend on EU help - then it will set off a chain reaction that could easily engulf the Eurozone. You might have thought, then, that EU leaders would have had something to say about the matter. But no. Italy’s third largest bank, founded in 1472 in the city that is nowadays de facto capital of the Tuscan province of Chiantishire - teeters on the edge of the abyss.

Something is happening across Europe, says the Sun - but EU leaders are still intent on burying their heads in the sand. Following Matteo Renzi’s defeat in the Italian referendum on Sunday and far-right Eurosceptic candidate Norbert Hofer’s good showing in the Austrian election, it’s clear that ‘voters across Europe are increasingly rejecting the EU’s self-interested ruling consensus,’ the paper says. But while the outcome for the continent does not look good, the signs of instability in Europe can arguably be only a good omen for Theresa May as she looks to negotiate Britain’s Brexit deal.

Matteo Renzi has resigned from being Prime Minister of Italy but he has not resigned from the Democratic Party.  He has not done a David Cameron or David Miliband and left public life. This means that he will be back next year, and it also means that he will act as kingmaker in the coming days.  Right now, he will be working away behind the scenes to help organise the next coalition government that will soon be ushered in to pass the Budget law and to ensure the smooth passage of the banking bail out.   There is zero appetite among Democratic Party members or their junior coalition partners to call a general election.  It is clearly in everyone’s self-interest to come to a consensus on a coalition cabinet so as to freeze out the insurgents.

Voters in Austria and Italy head to the polls tomorrow and could plunge the EU into a political and economic crisis, as I say in The Sun today. In Austria, the candidate of a genuinely far-right party—its first leader was a former SS officer—could become president. If the Freedom Party’s Norbert Hofer does win, and the race is too close to predict with any confidence, it’d show that the very extremist forces that the European project was meant to crush are now on the rise—and in part, because of the EU’s own failings. But it is the Italian referendum that could have the more immediate consequences. Italy bans polls just before votes, so we don’t have any up to date polling.

Though he is a big fan of the European Union, Barack Obama brings bad karma to it. So perhaps he should not have chosen Greece and Germany, the two countries which illustrate so poignantly why the euro is doomed, for his last foreign tour. His farewell visit is, if not a kiss of death, surely a bad omen for the EU and most immediately for one of those present in Berlin to bid him goodbye: Italy’s prime minister, Matteo Renzi, who has called an all--important referendum on constitutional reform for 4 December. If he loses, as looks ever more likely, it could cause a run on Italy’s sclerotic banks that could engulf the eurozone.