Farmers in Northern Italy are coming together, in a massive uprising against government policies that led to high costs.
Like most other EU countries, Italy is also facing its highest inflation in decades, owing to disruption in supplies from sanctioned-Russia.
Recently, Italy became the second European country, where the government fell, after the sanctions on Russia took effect. First was UK.
On 21st July 2022, Italian Prime Minister Mario Draghi resigned following the collapse of his National Unity government, sending tremors through Italian financial markets.
Italy is one of the major economies of the EU. Italy is also a member of the G7 (group of most industrialized nations).
It is also a key Eurozone member (where the € is used as currency + European Central Bank fixes the monetary policy).
– In the initial round of Western sanctions against Russia, Mario Draghi’s Italy had successfully managed to exempt from sanctions, its biggest exports to Russia – diamonds + luxury goods of Gucci, Prada, Versace, etc.
Exports of Italian luxury goods to Russia totaled 1.3 billion euros in the first 11 months of 2021 alone.
Luxury is one the few industries where Europe is unrivalled. The East Asian tigers like China, Japan, South Korea, cannot compete with Europe in the luxury goods industry Europe’s richest man — and third richest in the world after Elon Musk and Jeff Bezos (according to Bloomberg Billionaires index) — is Bernard Arnault, chief executive officer of LVMH Moët Hennessy – Louis Vuitton SE (French company).
Louis Vuitton SE is one of Europe’s largest employers.
Italy and France manufacture most of the world’s high end leather and apparel goods.
Europe is also a top global destination for big spending tourists, in terms of
• luxury hotels,
• restaurants,
• spas, and
• shopping boutiques.
March 2022 – Under pressure from the US and UK, Italy began seizing Russian assets.
Soon, Italian luxury brands were asked to shut their stores in Russia, being assured by American experts that these luxury brands can very well survive without access to the Russian market – because US is consumers will buy those products instead.
Italy increased the intensity of sanctions on Russia, in line with the rest of EU.
• If rich Russians wanted to give the Italian luxury industry money to buy products that are neither strategic nor useful for the war, that would not have helped Russia’s war efforts in Ukraine.
• However, Italian luxury firms pulling out of Russia, resulted in the loss of a huge market for them.
Unemployment grew in Italy.
But, what about other sectors?
Primary sector= Climate change caused crop failure
With intense sanctions, Russia was now unable to procure the turbines required for operating the gas pipelines.
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