BLOG POST #2 - AIC reflection and What's up with Italy

     Thus far our AIC simulation is going very well. We started off slow, not making our intentions public or submitting action forms while we tried to gain allies. We allied ourselves with France as we hoped they would share our view in trying to decrease the US’ involvement in general. This proved somewhat true as we were able to agree to a joint peacekeeping mission in Syria which creates diversity in the militaries station throughout the Middle-East as the US are no longer the only key player. As well we sent a press release stating our opinion on how peace is to be achieved. We are currently trying to broker a deal where Israel will stop building settlements in the West Bank while all Palestinian factions will unite under one banner so diplomacy can continue. We have also participated in many secretive actions which I cannot discuss on this public forum.

     The AIC simulation has been more of a game to me then anything. I find most of the other groups on the simulation to be fairly uneducated with anything to do with the Arab-Israeli conflict. This does make it more enjoyable however because we can do things such as sending Russian peacekeepers into Syria. This is an action that would NEVER occur in real life because: one the US would never allow it, two Russia has no place anywhere in the Middle-East after their attempted invasion of Afghanistan, and three its not in the government of Syria’s best interest as it will draw international attention to the atrocities its soldiers are committing to its citizens. While most of the simulation has been fun and games I am however expanding my knowledge of the Palestinian factions. I didn’t know that there were so many competing factions and that this was one of the main reasons diplomacy was failing.

    

     I’ll start with a brief history of the Italian economy. During the fascist era of the 1920s under Benito Mussolini’s rise to power, Italy’s economy was surprisingly very liberal. Mussolini implemented a policy called Laissez-faire which means “let it be”. This virtually removed all government involvement in the economy through a reduction in taxes and trade regulations. However this did not last as once Mussolini acquired more power he reworked the economy to be mostly controlled by the government as is characteristic with fascism. Nothing good happened for Italy’s economy in the next 20 years as they were on the losing side of both WWI and WWII and forced to pay huge reparation payments. The sun started to shine again in the cold war where the US felt that Italy’s weak democracy was threatened by the increasing communist prescience to the East. This led to US monetary support. As well the demand for armaments in the region helped to stimulate Italian industry which bolstered the economy. With a few hiccups on the way Italy made excellent economic growth until the recent recession. They were hit hard by the recession. One of the main reasons they were so ineffective in dealing with the crisis is due to their current weak coalition government. This renders the government unable to make the tough, controversial, sometimes unpopular decisions necessary to escape a recession. This in combination with their failing economy caused their credit rating to be downgraded. Italian interest rates currently sit around 6.5% 

      Now to the current issue at hand. What we are currently witnessing in Europe is the failing world’s seventh largest economy. This could potentially spell disaster for Europe and the rest of the world. How the world and the EU deal with Italy will depend on how they deal with Greece and how well that solution works. If Greece is bailed out then it sets a precedent that the EU and potentially the IMF believe bailout is the best option. Because Italy’s economy is larger and more internationally important than that of Greece, it could be assumed that Italy would be bailed out as well. If Greece isn’t bailed out then Italy would have much more of a problem. Personally I can’t see the EU not bailing Italy out as it is the third biggest economy in the EU. If Italy defaulted then global investors would lose all faith in the EU. How would it be viewed if the EU let its third largest economy fail?? I hope that the EU will take pre-emptive measures so decisions aren’t being made in the face of a default as is the case with Greece now. Hopefully sufficient austerity measures will be implemented so the economy will stabilize and the debt will level out. The problem is that as Mr. Whittard said, humans generally need a crisis situation for drastic measures to be imposed. Italy and the EU need to realize that this WILL be a crisis situation if somewhat drastic austerity measures are not implemented immediately.