In Italy, Bid to Revive the Lira Gains Currency

By Tracy Wilkinson

June 9, 2005 12 AM PT

Times Staff Writer

ROME — Bring back the lira!

The lira? That currency of the many zeros that had Italians calculating the price of their pizzas in the thousands and rents in the millions?

As improbable as it may seem, a kind of lira nostalgia has surfaced here more than three years after the euro was introduced in Italy and throughout most of the European Union as the common currency and a key symbol of continental unity.

French and Dutch voters’ decision last week to reject the proposed EU constitution has not only hurled Europe into crisis, but is taking a toll on the value of the euro, until now a strong and stable -- if not always popular -- currency.

No expert believes that Italy or other EU powers with similar economic woes, such as Germany, will scrap the euro and return to their old national currencies. But that hasn’t stopped a junior partner in Prime Minister Silvio Berlusconi’s ruling coalition from announcing a campaign to put reviving the lira to a national vote.

The movement underscores the risks facing the EU. It reflects widespread unhappiness with local economies, including high unemployment and sluggish growth, a sentiment that helped fuel the backlash in France and the Netherlands. Amid fears that European integration is contributing to such problems, the euro becomes an easy scapegoat.

“In this current climate of resentment and disappointment, demagoguery [about the euro and the lira] is a very dangerous thing,” said Federico Rampini, an Italian commentator who specializes in economic affairs.

The idea of reviving the lira started with Welfare Minister Roberto Maroni, who told an Italian newspaper late last week that he wanted to hold a referendum to let Italian voters decide the matter. Bringing the lira back, or at least circulating it alongside the euro, was not a “far-fetched” proposal, he said.

“I have no nostalgia for the lira,” Maroni said. “But from the citizens a cry for help is reaching our ears. The euro is the legitimate child of the European model, which, with worry, we’re watching fail.”

Maroni presented no specific rationale for reviving the lira. But other political leaders in Italy, and across the continent, recoiled at the idea, calling it unrealistic, costly and counterproductive, and quickly sought to shoot it down.

“Bizarre,” said Italian Foreign Minister Gianfranco Fini.

“A horror movie!” said House Speaker Pier Ferdinando Casini.

“It is total folly,” Giancarlo Padoan, an Italian official with the International Monetary Fund, was quoted as saying. “The fact that such a hypothesis is being debated does not help Italy’s image in the world. It is a sign of desperation, of the inability to find solutions.”

But Maroni persisted, saying a petition drive to gather signatures for a referendum would be launched soon. He was joined by other members of his small, euro-skeptic political party, the Northern League, one of four parties in the ruling coalition.

It is not difficult to find Italians who rail against the euro. Since it replaced the lira, just about everything has become more expensive. Italians are fond of saying that prices are now in euros and their salaries are still in liras.

Economists say rampant gouging at the time of the euro’s introduction nearly doubled prices on many items. A 1,000-lira espresso immediately cost 1 euro in many bars and restaurants. But in fact, 1,000 lira was equal to about 50 euro cents.

“The euro has been useless,” said Sabrina Falcioni, dusting the counter at her boutique in central Rome, where she sells colorful fishnet stockings. Her partner, Alessio Ansuinelli, agreed, noting that the euro’s extraordinary strength against the dollar and other currencies has meant fewer tourists and less business. “It’s been negative for me like for everyone,” he said.

Although the euro’s strength should mean cheaper imports from the U.S. and some other nations, Italians say they aren’t seeing much benefit.

“My problem isn’t with the euro. It’s that the cost of living goes up, and I haven’t had a raise in years,” said Gerardo Favaroni, a waiter serving cappuccino at a sidewalk cafe. “Cigarettes, gasoline, insurance. Everything goes up. Our prices [on the menu] do, too. But so do tips, so at least I have that possibility.”

None of these shopkeepers and employees thought that bringing back the lira would necessarily solve the problem, however. “It’s not as though we’d go back to the lira and back to old prices,” Falcioni said. “It wouldn’t help.”

Despite their claims to the contrary, Maroni and his supporters, more than sponsoring an exhumation of the lira, seem to be appealing to their conservative base and to the widespread discontent in Italy with an eye to next year’s elections.

“It is populist jargon aimed at attracting the support of the discontented,” said Franco Pavoncello, a political scientist at Rome’s John Cabot University. “The Northern League is trying to find an electorate. But the idea is insane, unthinkable.”

Still, Pavoncello said, the rhetoric gets a hearing because many Italians, like other Europeans, have been angered by how their leaders have handled continental integration. They resent EU regulatory bodies, such as one that this week ruled that Italy violated budget deficit limits and could face monetary sanctions.

Some analysts believe the euro is overvalued against the dollar, making European exports to U.S. markets very expensive. For the euro to fall could help exporters. But it’s unlikely to drop enough to give a substantial boost to weak economies such as Italy’s, which has slumped into recession for the second time in two years and has been branded the weakest in the 12-nation bloc that uses the euro.

Berlusconi has not joined the call for a return to the lira, but in the past he has been quick to blame the EU for many of Italy’s economic troubles.

Such rhetoric “is exactly the kind of scapegoating that led to the results” in the French and Dutch votes, said Rampini, the economics commentator.

“Italy for a long time has been very pro-European, but I think even Italians would vote against the constitution now,” he said. “I’m worried, not because I think the EU will dissolve but because I think we’re headed into a period of prolonged paralysis.”

Italian comic actor Roberto Benigni, an Oscar winner, may have had the best idea: Instead of bringing back the lira, why not return to sesterces, the silver and bronze coins of ancient Rome?

“That would be even better,” he said, according to the Ansa news agency, “so we could return to conquer Gaul and resolve the economic crisis.”