By Paolo von Schirach
February 5, 2014
WASHINGTON – The Financial Times reports that Italian authorities have filed some kind of suit against Standard & Poor’s and other credit rating agencies because, apparently, when they downgraded Italian debt they failed to take into account the vast patrimony of Italian art and history that –as everybody knows– is at the foundation of Italy’s wealth. Sounds ridiculous? Yes, it is ridiculous. And in fact S&P called the legal action “frivolous and without merit”.
Center of culture and corruption
But here is an additional argument for S&P. They could legitimately claim that Italy’s impressive record as a center of art and culture is outclassed by the more recent and equally striking record as the unchallenged center of European corruption.
The worst EU country
Indeed, as the EU recently indicated, Italy –all by itself– is responsible for 50% of all corruption occurring within the EU, a Union of 28 countries. Congratulations. You want more details? 201 city councils dissolved because of corrupt activities, 28 of them under suspicion of Mafia infiltration. The Mafia has penetrated northern regions such as Lombardia and Emilia. And how about law-makers? Well, 30 members of the Italian parliament are under investigation for corruption.
And what do the Italians think about all this? 97% of people polled recently indicated that corruption is everywhere in Italy. 88% declared that it is impossible to get ahead (find a job, get permits, etc.) without the help of a push delivered by someone well-connected. 42% are convinced that open illegality is an everyday occurrence in Italy. There you have it: a supposedly modern, industrial society in which illegal activities are the norm, where corruption is rampant and where you cannot get ahead without the help of illegal pressures. Not bad.
Corruption affects credit ratings more than past glories
Now, let’s put all this together. How does a stratospheric level of corruption blend with Italy’s glorious past as a cradle of culture and the arts? Sadly, corruption wins. Simply because it is happening now. Italy’s glorious past is, indeed, past; even though there is still a large patrimony of what was produced centuries ago.
However, the bribes, the corrupt office holders, all the embezzlement, the dominance of organized crime, and what not are happening today. S&P could argue that such a country, whatever its glorious past, does not inspire much confidence within credit markets.
Hence the lowered credit ratings.