34. Interview #3 Italy, History, & the EU W/ Alberto M S Puglia - Part 1

[music]

[00:00:05] Hugh Sifu: All right, guys. Welcome back to Thoughts of a Random Citizen. I'm your host always Hugh Sifu. Today I have the extremely knowledgeable Alberto with us. I have met him from a family and a family as it is in Italy. Fantastic interview. We cover everything from the EU to the Italian Mafia, history, and whatnot. It's a really good interview. I think you should enjoy. I'll not take any more of your time. I'll start it off, guys. Alberto, thank you so much for coming on today, man. I am quite excited for this interview, especially considering I've been in Italy for over a month and a half now and I haven't found anybody with as much knowledge as you possess. Thank you so much for coming on, man.

[00:00:59] Alberto: Thanks to you. I know nothing. I will show all of my ignorance during this podcast, but I hope to be helpful to you, and to your audience.

[00:01:09] Hugh Sifu: Italian information compared to Americans. You're going to be all right.

[chuckles]

Before we get started, do you just want to give us a little bit of background on who you are, what you've done in life so far?

[00:01:19] Alberto: Sure. You said we are in Italy. I'm Italian clearly Italian, as you can probably understand from my accent. I was born and raised in Southern Italy. I consider myself a be more than Italian, a Southern Italian, which is something different no more. I don't want to offend anybody, but it's something different. A stronger identity then I moved to Milan to Northern Italy, to the Italian economic capital when I was 18, studied there, started to work there, then I had a few international experiences.

I'm basically a lawyer with professional experience in the European institutions and in the financial and bank system in Europe. Then I also had a couple of years in Singapore, in Asia as a law business consultant. I'm now back to Southern Italy to my roots. I'm restarting here my private practice. I'm a lawyer and a strategic counsel for mainly foreigners coming to Italy to invest both in real estate and other types of assets. Then I'm a counsel to small and medium enterprises here in Southern Italy to mainly for access to the European funding and for internationalization of the smaller minimum enterprises, so those who want to go elsewhere, that's the people I try to help.

[00:02:49] Hugh Sifu: You're doing that now independently in Southern Italy?

[00:02:53] Alberto: Yes, completely. In a completely independent way. I have a network of other professionals and of course, I rely on their specializations, on their skills for specific matters, but yes, I'm independent both politically and business-wise.

[00:03:11] Hugh Sifu: Nicely said. I do want to get a bit of background on two different things you said, if you could just briefly first give in an overview of what your role specifically was with the European organization, what you're talking about.

[00:03:25] Alberto: After eight years, I would say of career in the private sector, so I worked for large law firms and for an Italian Commercial Bank. Then as an expert of both finance and regulations, I started to work as an official of the European Union at the European Investment Fund, which is the specialized agency for funding and guaranteeing small and medium enterprises all over Europe. I focused on the Mediterranean area, so Southern Italy, Malta, and partly in a small part for Greece.

[00:04:03] Hugh Sifu: Then just the other thing that I wanted to bring attention to was your time in Singapore, as the listeners don't know that was actually during all of COVID. How the hell was that, man?

[00:04:16] Alberto: Perfect timing. I landed in January 2020. I did my full 18 months during the pandemics. It was a tough but very, very interesting experience.

[00:04:33] Hugh Sifu: I can't even imagine. People probably do know, but Singapore is a pretty nice nation. Or is it a bit still like?

[00:04:43] Alberto: Now that I'm not holding an immigration permit anymore in Singapore, I can say from my point of view and perception is a very unique country, very interesting in terms of culture and diversity but then to me, it's a dictatorship.

[00:05:03] Hugh Sifu: Really?

[00:05:04] Alberto: Yes.

[00:05:05] Hugh Sifu: I had no idea.

[00:05:07] Alberto: It's one of the most important financial centers in the world, but in terms of freedom of speech expression, and civil liberties, it's a dictatorship.

[00:05:18] Hugh Sifu: Really? Is the government labeled a democracy?

[00:05:22] Alberto: It's a parliamentary Republic but in fact, the prime minister currently in charge is the second prime minister since the independence. For the last 60 years, I think, I don't want to say wrong things, but roughly it's like that and the previous prime minister was his father.

[00:05:42] Hugh Sifu: Ah, perfect. One of those situations. Wow. I had no idea. Great to know about Singapore. I would ask a bunch more questions, but I'm quite excited to ask you about Italy specifically. I know that you wanted to caution something about something black and gray but before you do that, I'm just going to ask this question to lead it off. Southern Italy, especially as you've told me before, has a diverse history being on the Mediterranean and has, I guess you could say the privilege of always being taken over by a bunch of people throughout the Mediterranean, throughout the history. Can you just go into a bit of that and then also explain how that relates to the, I guess, the black and gray that you're going to refer to?

[00:06:26] Alberto: Yes, of course. I'm not an expert of history and my culture is very limited in that respect, but I'll try to give you a few information that I think they are useful to know. The Southern Italian area and in general, the Mediterranean area is being characterized for 10s of centuries by invasions from other cultures, empires people. Change is the only constant thing in our history. This has had a big, big impact on our general culture, meaning that our culture is a mix in Southern Italian culture, and especially in the Mediterranean area, it's a mix of different influences that you see and notice in language, in behavior, and in the way of thinking of people.

My disclaimer, the disclaimer that I wanted to add in the beginning, everything we're going to say during this podcast, I guess maybe not very easy to understand to somebody that has no experience at all in Italy and Southern Italy especially, because our way of thinking is so complex and made of different layers of history and influences that nothing is really black or white. There are a lot of gray shades and that's probably what makes this land particularly interesting, and this is what led us to be us. When I say us again I'm referring to Southern or Mediterranean people that led us to be extremely productive in terms of arts, literature, philosophy, and also sciences, because you can also think about the first mathematicians in the modern world where basically from Sicily.

[00:08:21] Hugh Sifu: I guess diversity probably plays a large part in that fact is you guys just come from everywhere, but then all around the Mediterranean that is. Do you think that has a bit to play with how close families are here? Because for the listeners back home in the US and anywhere else in the world, family is just not the same over there as it is here. I promise you probably know that but it is just so ingrained and important from what I've witnessed over here, especially just coming straight in and living with an Italian family, it is a 180. Do you think that plays a big part in it just the constant change and you guys have one consistent, I guess?

[00:08:59] Alberto: Yes. It's very, very possible. I agree with you. I don't have a definite answer on that, but what I can say is that family always played a very important role over a year, and it has had an impact on pretty much everything. A few days ago, a few weeks ago there was a public discussion around the subject, how families are linked to phenomenons like criminal organizations. One of the most important strengths of the criminal organizations are family links. The more families are interconnected and strong, the less a criminal organization is in danger because of course there's an affection among people, there's a family link, which is very difficult to break.

The role of family is also linked a lot to the Catholic religion of course. There's a whole culture around that, the importance of family is also a religious importance, but it's pretty much also it has a social role. What normally happens in Southern Italy is that families represent also a social security net, meaning that when anybody is in difficulty or in danger, there's a family helping them. On the other end, family can be a problem in terms of freedom of people and the decisions they make over their lives. I have to say that in the last decades the role of family has slightly changed. It's not as strong as it used to be. Families tend to be much more flexible in terms of what single persons choose to do, but we're very far from many other countries in terms of the role of family.

[00:11:01] Hugh Sifu: 100%. [laughs] Going from that Mediterranean discussion, what would you say the influence of ancient Greece and Latin has had on not only the Italian language but culture as well?

[00:11:16] Alberto: Well, both the Italian language and Italian culture are the result of several gratifications, and invasions, and influences. Of course, the Greek civilization and the Latin, let's call it civilization, are the most important ones in terms of overall impact in the current Italian culture and language. Think about Greek philosophy, the importance of Greek philosophy in the history of philosophy and you already have a lot of answers. The complexity of thinking the complexity of logics, the complexity of history also led to a complexity of an entire country and an entire system.

[00:12:00] Hugh Sifu: In regards specifically to the Latin because I noticed you said we'll call it a civilization even though it wasn't. My understanding until just recently when we had our conversation before was that Latin was this own, I don't know, poky call it civilization even though it was really just what? A family, a tribe before that spread out in Latin, although they call it a dead language is not really dead as it lives through Italian or?

[00:12:28] Alberto: Yes, we call it Latin the official and common language of the Roman Empire. When we say Latin and Roman, we're not saying the same things, we're talking about a small civilization as you correctly said, the Latins which then turned somehow and mixed with the Roman history, and the Roman Empire chose Latin as the common language more or less as the Greeks chose what we call now the ancient Greek as the common language for the whole Greek Empire.

[00:13:03] Hugh Sifu: Okay. How or when was Italy today formed from how we know it around the world, the little island with the boot compared to-- Well, I guess you don't have to go into the ancient Greece and Roman aspect of it, but I for some reason, thought Italy was around a lot longer, but you guys are a recent nation for what? Parliamentary republic that you guys are, correct? Or a democratic republic?

[00:13:31] Alberto: We are a democratic republic since after the World War Two but the unification of Italy as a single country dates back to 1861.

[00:13:43] Hugh Sifu: 1861.

[00:13:44] Alberto: Yes. It's 160 years. 160 years ago. Italy as we know it today, the boot was divided into many different states.

[00:14:00] Hugh Sifu: Before 1861, Yes?

[00:14:01] Alberto: Yes. We had a royal family, let's say in northern Italy, these are the main states. A royal family in Northern Italy, Savoia, which then became royal family for the whole Italy. Then we used to have the Vatican State, which is not what we know today, a small square in Rome with the church, and a few palazzos for the administration of the Vatican State. Before 1861 The Vatican State used to be huge, it covered part of Tuscany, and Umbria, and Marche few regions in central Italy.

Then in southern Italy, we used to have the so-called Regno delle Due Sicilie, the Kingdom of the Two Sicilies. There was basically Naples and Sicily covering the whole south of Italy. The process of unification is a heroic process when you read history books. As a Southern Italian, I cannot avoid to say, I'm not interested in the subject anymore.

[laughter]

I grew up in Milan and I love Northern Italians so there's no fight totally in my heart and in my soul, but the way I see the history and the way I studied the history apart from what they taught me school is that the process of unification was a conquering process from north to south with the defeat, the basic defeat of the Vatican State as an entity, as a country. They started to scale down the size of the Vatican State and its influence over Italy.

[00:15:48] Hugh Sifu: The Vatican State was in power until the 1860s give or take, is that correct?

[00:15:54] Alberto: Yes, it's still in power.

[00:15:56] Hugh Sifu: I knew that because is its own little square, it's completely different from Italy. You have to have a passport right, or?

[00:16:02] Alberto: No, technically any European citizen can pass the border. There's no border, there's no physical border, but there's very funny Swiss Guards.

[00:16:15] Hugh Sifu: Swiss Guards?

[00:16:16] Alberto: Yes, they're called the Swiss Guards. If you look at some pictures of San Pietro Cathedral and the Vatican State these days, you have these guys, these soldiers, these army, and they're dressed up in a ridiculous way. [laughs]

[00:16:33] Hugh Sifu: Like the guards in front of the Britain whatever that you mentioned.

[00:16:36] Alberto: No, they're dressed in very colorful dresses and they looked like middle-aged puppets somehow.

[00:16:43] Hugh Sifu: Ah, like the Joker guys a little gesture, that it.

[laughter]

[00:16:48] Alberto: They're not, no I think they have a hat. Everybody should look at these. Google it, it's Swiss Guards in Vatican, and have a look at it it's fun.

[00:17:00] Hugh Sifu: I got to pull it up now. Wow, that's funny though I had no idea.

[00:17:05] Alberto: The guys are of course superstrong. Don't mess around with them. [laughs] Don't offend them because they're strong guys but no, you don't need a passport and they--

[00:17:17] Hugh Sifu: They're not Swiss are they? Are they Swiss? They're not Swiss?

[00:17:20] Alberto: I think they're all Swiss. I think, I'm not 100% sure, but I think it's a foreign army paid by the Vatican State.

[00:17:33] Hugh Sifu: That's odd. [laughs] I was talking to Gretta and she was saying that you can't actually go and live there is an Italian citizen, right?

[00:17:43] Alberto: No, you cannot move.

[00:17:45] Hugh Sifu: Can anyone or how do you go?

[00:17:47] Alberto: I think that the only people with a Vatican passport. Of course, the Pope has a Vatican passport. I never saw it, but I guess he does have a passport. Then you have basically priests, so religious people living in the Vatican as citizens and a few state officials which are not religious people, but they work for the Vatican State and they technically have a Vatican passport.

[00:18:16] Hugh Sifu: Well, that's exciting. [laughs] Okay, moving on to more the Italian side of government as opposed to the Vatican. Who is in charge? Do you guys have Parliament? What are the powers? I don't know if you are familiar with the way that the US government is structured with the three branches? Do you guys have a balance of powers in that sense? Is it effective? I'm not saying that Americans is effective, but could you just brief us on how democracy over here works?

[00:18:51] Alberto: As a lawyer, if I don't want my masters to be revoked today, I should be able to answer in quite a correct way, especially compared to what I was saying about more historic and less technical things. I will try to give you a complete answer.

[laughs]

Separation of powers is one of the basic principles of our Constitution. We have the parliament which is a legislative role, legislative power. The government has the so-called executive power and, of course, the judicial system has the judicial power. Separation of powers is, as we said, basic principle and it's effective at least on the paper, at least in theory but, of course, the answer to this question is quite complex these days we have a very strong government and I think this opens also to a few questions about our relations with the European Union because in fact, our current government was not elected.

[00:20:01] Hugh Sifu: What?

[00:20:02] Alberto: Was not elected.

[00:20:03] Hugh Sifu: Wait.

[00:20:04] Alberto: The parliament currently in charge was elected by people of course, by the old people but the government in charge--

[00:20:12] Hugh Sifu: The executive branch like--

[00:20:14] Alberto: Yes. We have the president of the republic so the head of state who is in fact in charge of mainly protecting the constitution so to ensure that the constitution is fulfilled and respected at all times. That's its main power, its main role. It's a role of guarantee. While the prime minister, we can say, is the most important political person in Italy.

[00:20:43] Hugh Sifu: You guys have a president/head of state and then also a prime minister?

[00:20:48] Alberto: Correct.

[00:20:49] Hugh Sifu: Okay. The prime minister is who you're saying was not elected?

[00:20:52] Alberto: No. The current prime minister is Mr. Mario Draghi and he used to be first an investment banker but then his career was more technically and institutional. He was then also president of the European Central Bank, chairman of the European Central Bank so a very, very important personality in the European Union as a whole and in the global financial system. He was selected technically by the head of state, by the president of the republic in order to replace the government that was formed after the last political elections in Italy.

The system is quite complex to explain in a few words. What happens is that you have political elections, you have all the parliament elected. Then the parliament based on the majorities is in charge of voting a government so a bunch of ministers to approve the appointment of a bunch of ministers and the prime minister on the proposal of the president of the republic based on the majorities.

[00:22:11] Hugh Sifu: The president, the head of state?

[00:22:13] Alberto: The head of state, correct.

[00:22:17] Hugh Sifu: The individuals like on a ballot, do they vote specifically for the prime minister, or is that particularly left up to the parliament?

[00:22:27] Alberto: No. The prime minister technically can also be someone completely out of the political games. It is named by the president of the republic, by the head of state based on the majorities that they have in parliament, and based, of course, on the balance of political forces represented in parliament.

[00:22:50] Hugh Sifu: How much power does the prime minister have as opposed to the parliament?

[00:22:56] Alberto: Huge.

[00:22:57] Hugh Sifu: Huge?

[00:22:57] Alberto: Yes.

[00:22:58] Hugh Sifu: It's like the president versus the Congress in the US?

[00:23:02] Alberto: Not to that extent because the prime minister in Italy has no power when it comes to the army, to defense because in terms of balance the head of the armed force in Italy is the president, the head of state, the president of the republic in order not to give too many powers to the government. We come from the 20 years of the fascist regime in Italy before World War II so one of the main objectives of the constitution was not to give too much power to the government to ensure that there was a balance that the president of the republic could at any time control the government somehow and that the parliament could make laws without too much influence from the government. De facto, in fact, what we have now is a very strong government based also on the balances that we have with the European Union and based on the fact that these days a large, large part of laws and regulations in member state of the European Union are derived from European laws or regulations.

[00:24:19] Hugh Sifu: The EU as a whole?

[00:24:20] Alberto: What we say is that there was a surrender of sovereignty from the bottom to the top, so from the member states to the European Union. This made the system change a bit meaning that the parliament is now in charge of passing laws but in a wider framework of European laws and regulations.

[00:24:46] Hugh Sifu: The Italian parliament is in charge of passing laws as long as they're operated within the European Union or are you guys allowed to make outside laws that aren't?

[00:24:56] Alberto: You can have outside laws, of course, but the relation between the European law and the member state law is a subordinated relation. If you have some matters ruled by the European Union, you can rule more but you have to respect what the European Union imposes in terms of laws and regulations.

[00:25:20] Hugh Sifu: Essentially, it's like the way that states in the US operate. They can have specific things but if the EU says, "No, you can't do this," Italy can't do it.

[00:25:32] Alberto: For certain matters.

[00:25:33] Hugh Sifu: For certain matters? Okay.

[00:25:34] Alberto: There are certain matters which are out of the scope of the European Union. For example, this is hilarious to me, because in the European Union where we also have except for some states where we have a common currency which is the Euro currency then the tax issues, the fiscal issues are left to the member states. We don't have a whole common fiscal policy-

[00:26:03] Hugh Sifu: Oh wow. Okay.

[00:26:05] Alberto: -for European Union. You happen to have different VAT rates all over Europe. You happen to have different levels of taxation of so many things. What happens in Europe is that many, many businesses choose the country of operation based on their--

[00:26:24] Hugh Sifu: Yes, level of taxes. I guess this is getting into your area of expertise. The European Union doesn't have its own taxes. If you're in Italy, you only pay Italian taxes and you wouldn't have to have an EU tax or does the EU have its own tax?

[00:26:40] Alberto: No, you don't have EU taxes in Europe, you have country-based taxes. What happens is the collection of taxes from member states part of this collection goes to the balance of the European Union based on the treaties. Each country contributes to the functioning of the European Union mainly based on its size and some other economic factors.

[00:27:10] Hugh Sifu: The US used to operate in that same manner. We also used to not have the president in control of the army until 2000. We've changed in some ways that maybe aren't the best but that's getting off on a tangent. Moving towards the EU side of things, do you find that the EU has a large say in who essentially becomes the next prime minister or parliamentary positions? You were talking about Drago if I'm saying that correctly, he used to be involved in the EU.

[00:27:43] Alberto: It's not even Drago from the Rocky Balboa movie.

[laughter]

[00:27:49] Alberto: It's Mario Draghi.

[00:27:51] Hugh Sifu: Draghi.

[00:27:52] Alberto: I personally think that the European Union has a huge role in this sense because the largest part of our economy is based on the European politics. The old budget of the Italian state like any other member state is largely dependent on the European balances. There's nothing official in it but what happened in Italy a couple of times already, I would say even more than a couple of times, when we had governments that were not supported anymore by the parliament so they didn't have in fact a majority anymore, instead of going to new elections, the head of state appointed new governments and in a few occasions these new governments were what we called technical governments and the prime ministers were mainly former officials or key persons of the European Union.

[00:29:00] Hugh Sifu: Seems right.

[laughter]

[00:29:05] Hugh Sifu: Then yes they obviously have a large say. Do you think that that is going to be something that becomes more and more prevalent? Do you think that the future of not only Italy but the entire EU is eventually going to become more consolidated to that Central European power or that European Union power?

[00:29:25] Alberto: Yes. It depends, I think, on the way you look at it. You may say also that this is one of the reasons of the crisis of the European Union. This is what probably led the Brits to vote for Brexit, for leaving the European Union. This is the basis of any entire European ideas and political parties. The main thing is some member states and some political parties are not prepared anymore to surrender this sovereignty to the European Union, because that's the theory because the European Union has shown not to be as efficient as they should be and because the results of this, let's call it unification or federalization of Europe, the results are not very good, especially for certain countries or for certain industries or parts of the economy.

[00:30:30] Hugh Sifu: Do you think that the EU has certain members that have more power than other members? I'll just stop there and then I'll ask the second part of that in a second.

[00:30:42] Alberto: I don't want to say obvious things, it's something that everybody recognizes as a proof. Definitely, Germany and France play a fundamental role in the balances of the European Union, and there the strongest partners for a number of reasons, which are basically economic reasons.

[00:31:03] Hugh Sifu: Is that essentially, what you're referring to a main reason the UK left is probably because they were in that trio of power, I'm assuming? I'm assuming they had quite a bit big say in the European Union before they left.

[00:31:17] Alberto: Yes, they're the big say but for example, for instance, the UK was not part of the monetary union. They never adopted the Euro currency, they have their pound sterling. They always refuse to be part of the monetary union so their role is always been an external role. They also had some opt-out options from different processes of legislations. I will not compare the UK to Germany and France, it's always been a balance, of course, but a different role.

[00:31:57] Hugh Sifu: I guess that brings me back to what I was going to ask, actually, before this, the role of the EU goes far beyond monetary, to social, or does it strictly stick more to the economic sense of a union as opposed to a social sense of the Union? In meaning, the US has a large social law, nowadays, where they're dictating-- I guess you can say dictating or legislating how people should interact and how people should be allowed certain freedoms. Does the EU play a part in that in Europe or is it more in an economic sense?

[00:32:43] Alberto: The European Union, as we know it today is an economic union 100%. This is always a personal opinion.

[laughter]

I'm not an official of the European Union anymore so I can say whatever I want. I'm not bounded by any regulation. I cannot disclose secret informations that I learned while an official but I can express, of course, my points of view. It is today 100% economic union, but at its origins, the European Union was meant to be union of people, social and cultural union, in order to avoid further wars and conflicts and to balance the economic situation of the different member states. Today, it's something completely different in a world where the economic power goes well beyond any other type of power.

[00:33:47] Hugh Sifu: I guess that brings up the fact of what we were talking about. Just before this, we were talking about how Greece was essentially taken-- I won't put words in anyone's mouth, but Greece's government was maybe not as effective or powerful as let's say the German government and I guess they use that economic union to essentially invest in Greece and not take control by any means but maybe I'm leading you on here. Do you want to talk a bit about how does it consolidate and how do they use that as an abuse of power to invest or maybe economically control a country?

[00:34:33] Alberto: I'll play for one second the devil's advocate and if I'm the advocate of Germans and the European Union, I will say the following words so Greece was the worst-performing country in Europe in terms of economy. The Greek system was totally corrupted and not fit for the European Union. What happened is that Greece failed in all of its objectives, and European Union intervened in order to save the situation and do whatever was needed to make the Greek economy work. Now I sit on the other side of the table-

[laughter]

-and from my point of view the--

[00:35:23] Hugh Sifu: It's alright, you're not in the European Union anymore. [laughs]

[00:35:28] Alberto: What I can say from my personal point of view is that Germany, France, and European Union and the economic interests behind the old system allowed certain centers of power and certain centers of interest to take over the Greek economy, to take control of the Greek economy, based on a situation that for sure needed some interventions but could be done in a different way, probably in a more friendly way to the economy and to the people.

The social security and the Health Care System and any other industry with the socially impacted the terrible consequences after the Greek crisis. The Greek people voted to exit the Euro currency and then basically, with the exchange of letters with the Greek government at the time, and the European DD board is the main bodies of the European Union, the Greek vote was completely unattended and they stayed.

[00:36:45] Hugh Sifu: What? They just held a meeting and didn't tell any of the Greeks about it and so by default they stayed?

[crosstalk]

[00:36:53] Alberto: It was a so-called the referendum. The question was very easy. It was do you, people of Greece, want to stay in the Euro currency, in the Euro monetary union, or want to exit? The majority voted to exit. Then, in order to make this referendum effective, some agreements between the Greek government and the European Union were required and they never came to the conclusion and basically, Greece was never able to enforce the decision of the Greek people.

[00:37:34] Hugh Sifu: That seems fair.

[00:37:37] Alberto: At the time, I just give you a name. The Ministry of the economy and finance at the time was Mr. Yanis Varoufakis, who then wrote a few books. He's a controversial person but he was the one promoting the referendum and he resigned when it became clear that the results of the referendum would never have been enforced.

[00:38:07] Hugh Sifu: Is Greece today and we're just straying so far away from Italy right now. [laughs] Is Greece today, all right, in your views and your opinions? Because I'm pretty sure that they're not too much better off after--

[00:38:21] Alberto: I think they're much worse-

[00:38:23] Hugh Sifu: Much worse.

[00:38:23] Alberto: -than they used to be.

[00:38:24] Hugh Sifu: The first part of that devil's advocate you said was that they wanted to help the economy but now they're worse off so can you connect the dots there?

[00:38:33] Alberto: Yes the devil's advocates forgot to say that Greece to the European Union was a cancer that needed some medications and cures. The cures were basically cutting the costs of functioning of the Greek state by cutting social security, cutting health care, et cetera and education, and a few other things so spending reviews.

[00:39:02] Hugh Sifu: I'm not sure if I'm following, I'm trying to piece together the overarching structure of the EU. Essentially, the EU pays for social programs like healthcare and stuff but there is no specific taxes by the people paid to it? Essentially, you have governments that have their own taxes and then part of the government's GDP if you will, or whatever, go to the EU?

[00:39:29] Alberto: It then retransfers to Member States part of this budget.

[00:39:33] Hugh Sifu: So then pay--

[00:39:33] Alberto: Yes, but they do not pay directly.

[00:39:36] Hugh Sifu: They pay back to the government?

[00:39:37] Alberto: They back governments in different forms and in different ways. The system is that--

[00:39:43] Hugh Sifu: I feel like that's just fucked. I feel like there's just so much openness for corruption.

[00:39:49] Alberto: It's a crazily complicated system whereby the member states collect their taxes from people. They then contribute to the European Union, to the balance of the European Union part of their budget based on the agreements with the European Union and other member states, and then this so-called European budget is retransferred to member states based, again, on other agreements and regulations and frameworks.

[00:40:17] Hugh Sifu: Really quick. Not to cut you off there, but does that mean that if Germany pays a shit ton of money if you will in taxes because their economy is so much better, do they then lose out essentially of that money? They're just paying to pay other countries.

[00:40:35] Alberto: It depends on the year and on the specific budgets. I don't have the numbers in front of me but what I can say generally speaking is that in recent years, and I go back to the Italian situation now, in the recent years, Italy has contributed more than it has received because some of the priorities of the European Union were there to assist the economies of new members like in Eastern Europe, so economies that needed more injection of capital in terms of infrastructure or other interventions on the economy. There's not a definite answer.

Let's say that in theory the stronger economies contribute more and receive less and vice versa, but this is not a general rule. It really depends on different factors. The overall benefit that each member state receives from being in the European Union are also linked to other factors which are not necessarily only the contribution, so the money paid back by the European Union, but also in terms of trade position in the global situation and in geopolitics or whatever.

[00:42:01] Hugh Sifu: In regards to the geopolitical abroad, how important do you think Italy specifically and then the entire EU is influencing the region in which you guys are? That Eastern Europe front, as well as maybe the Middle East and Northern Africa that we were talking about before this.

[00:42:22] Alberto: Each member state has political relations with foreign countries. Our Ministry for Foreign Affairs would talk to the US without necessarily passing through the European Union, so each member state preserves its right to have political relations with other countries but of course, when it comes to trade, to business and economy and finance, it's the European Union making the rules, also vis-a-vis the other countries. We would not negotiate except for some exception a full trade agreement, Italy and US because there's a framework of the European Union for free trade with the US.

[00:43:12] Hugh Sifu: Can you give just one example of how Italy and the US could have relations outside of the EU?

[00:43:20] Alberto: Defense. If the US wants to build a further US force military base in Italy, they will not pass through the European Union because defense is not a subject covered by the European Union. We don't have a European army, for instance.

[00:43:41] Hugh Sifu: Do you think that in the future, the EU is headed towards that?

[00:43:45] Alberto: The project I think in general terms is to have a fully operational European Union in all senses and to reduce as much as possible the member state sovereignty.

[00:43:57] Hugh Sifu: Essentially, a United States but in the EU, European Union?

[00:44:01] Alberto: Kind of. Because nobody is really clear about that. The project is so complicated and the evolutions have been so complicated that there are a few different ideas, also political ideas within the European Union and within the European institution as how the European Union should evolve in the future. What is sure is that the European Union as we know it today has shown big, big weaknesses which are leading to many member states to rethink about the role within the European Union and to rethink about the role of the European Union as a whole.

[00:44:42] Hugh Sifu: You said the European today is showing big weaknesses. Could you give just a quick example? You don't have to go in-depth about it.

[00:44:50] Alberto: The Euro currency is one of these examples. It has been welcomed by many member states and economies as the-- What we call in Italian, panacea, the medication which would cure and save everything. I'm not an economist but talking with economists, there are many economists including Nobel Prizers maintaining that the Euro currency has damaged many of the economies of the European Union except for Germany and France.

[00:45:23] Hugh Sifu: That makes sense. I can't remember exactly when Italy did adopt the EU from the--

[00:45:30] Alberto: It was February 2002. I remember it because I was a student in Milan when we changed from Italian lira to the Euro currency. All the member states, part of the monetary union started to officially adopt the Euro currency in early 2002.

[00:45:55] Hugh Sifu: I guess to explain how maybe economists don't think that it's as beneficial for some member states, what was the ratio of Euros to lira?

[00:46:06] Alberto: The Italian lira at the time, the Euro at the time was converted into 1,900-- Can I say it in Italian?

[00:46:16] Hugh Sifu: Yes. It's what, [crosstalk]

[00:46:19] Alberto: It was almost 2,000 Italian lira for €1.

[00:46:24] Hugh Sifu: [chuckles] Jesus. Did that hurt Italy?

[00:46:29] Alberto: If you go on the streets and ask people, people over 40 maybe because they're the ones remembering the effect, everybody will say it was a disaster. All prices changed from 1,000 ITL to €1, so doubled up consumer prices. This is a bit of an exaggeration in my view, but this is the perception. The perception of people is that Euro highly damaged Italy. The same goes in Spain, Greece and some other countries. While the German exchange rate was a par exchange rate.

[00:47:10] Hugh Sifu: Like one on one essentially. That sounds fantastic. [chuckles] Just really quick, back to defense, and then we're going to talk to-- I'm excited about-- Which is something I know you have a passion for, the mafia. [chuckles] One last thing on the European Union before we move on to that, is Italy allowed to essentially go outside the European Union to align with a country of their choosing without the okay of the European Union, or are your alliances closest within the European Union?

[00:47:40] Alberto: Of course, you can align with other member states on certain subjects in order to vote or to push for certain decisions to be adopted at the European Union level.

[00:47:55] Hugh Sifu: I guess what I'm asking is outside of the European Union. Is Italy allowed to align with South Africa, for example, even if Germany hates South Africa? I know that economic ties have to go through the EU, but in regards to national defense or national alliances, are they allowed to essentially break the ties, or is it a collective decision on who their alliances are?

[00:48:19] Alberto: I think you can have free alliances. Of course, the European Union is an Atlantic organization, so it's aligned with the US clearly, it's not aligned with China or Russia.

[00:48:32] Hugh Sifu: I guess that makes sense. Essentially, the closest ties are the European Union and the Atlantic alliance. They're going to all say the same thing.

[00:48:41] Alberto: Correct.

[00:48:43] Hugh Sifu: If you guys wanted to, you can align with whoever you want. All right. I'm going to stop it right there, guys. It's been a pretty long episode to this point. I wanted to break it up in two parts so you're not sitting there for an hour and a half. Tune in next week. We talk a bit more about the EU, but really mostly it is about the Italian mafia. If you're interested in the ins and outs in the government and the entire mafia, I suggest tuning in next week. As always, guys, it really helps if you review, rate, follow, share this podcast as it helps the growth and future episodes for me. Other than that, I'll talk to you guys next week with Alberto on Thoughts of a Random Citizen. Cheers.

[00:49:41] [END OF AUDIO]