Italy and EMU as a 'Vincolo Esterno': Empowering the Technocrats, Transforming the State

Abstract

Abstract This case study analyses how the Italian 'core executive' operated in the negotiation of the Maastricht Treaty provisions on Economic and Monetary Union. The record of the Italian negotiators on EMU is examined in the framework of a 'two-level' bargaining game. It argues that policy was largely driven by a small technocratic elite, with limited ministerial involvement. The overarching foreign policy imperatives were to maintain Italian participation at the heart of the European integration process and to reduce the asymmetry of monetary power with Germany. Domestically, however, the technocratic elite shared a belief in the need for externally-imposed economic discipline (a vincolo esterno - external constraint), to overcome the problems posed by the partitocrazia - the domination of government by parties. EMU was used to effect domestic reform by redistributing power. In the process they unleashed powerful transformative effects on the Italian state. The domestic effects of EMU were thus much more far-reaching than the Italian impact at the European level on the final EMU agreement.