New Italian administration could spring a surprise on the EU high command
The new coalition government in Italy has passed its first confidence tests in both houses of the Rome parliament with unexpected ease. Giuseppe Conte, who entered politics a year ago as the caretaker prime minister of an odd couple coalition of the rightwing League and the internet radicals of the 5-Star Movement, appeared the master of his brief and of both chambers.
From being the grey lawyer from nowhere he has become “little Napoleon” grumbled Lucia Annunziata the celebrity editor-commentator of Huff Post Italy, and he and the wily President Sergio Mattarella put together another unlikely coalition – this time in only a matter of days. The lead partnership is made of the 5-Star and the Democratic Party, with the tiny Leu leftwing party joining with one seat in the new cabinet.
Though ideologically aligned in many respects – after all, part of the PD, the Democratic Party, came from the old PCI, the Communist Party of Italy – they have been sworn enemies to date, calling each other “charlatans,” and “mafiosi.”
But this is the government that the EU high command wanted, and forged. It is in a way the Looking Glass Government. But like Alice’s adventures in that strange land, nothing is quite what it seems. It is going to be tough for Europe and tough for Italians.
Just months ago, the government partners of the League and 5-Star would routinely slag off the EU Commission. Matteo Salvini of the League, with scant originality, coined the slogan of “Italy First” for his party. But Conte, a non-party man initially, had caught the selectors’ eye in Brussels.
The moment of conception appears to have been at the Biarritz G7 summit. Merkel, Macron, Juncker and his successor Von der Leyen, endorsed Giuseppe Conte’s blueprint for a new coalition based on the PD and 5-Star. Moreover Conte seemed to have known he would get the endorsement of the charismatic former prime minister of the PD Matteo Renzi. Previously Renzi had been hard over against chumming up to 5-Star.
The line-up of the new government has a distinctly pro-EU flavor – but with a powerful twist that Brussels may come to rue. The new finance minister is Roberto Gualtieri, a highly experienced Euro-hand. He steps down from chairing the powerful budget and finance committee in the European parliament.
The new Italian Commissioner is the former prime minister Paolo Gentiloni, who has secured the important economics portfolio. This position gives Italy far more leverage than the post held by his predecessor, Federica Mogherini, who held the grand but rather vapid title of high representative for foreign affairs in the departing Commission.
Gentiloni should have a crucial role in how the budgetary rules are applied to members of the Euro zone, the rules of the game under the “Stability and Growth Pact.” Here the Italians seem to have learned from the mistakes of the Brexit negotiations and the crunch tactics used by the EU on Greece. Learning from the likes of the former Greek finance minister Yannis Varoufakis and May’s non-negotiation body language, the Italians have decided to go for complaisance and camouflage rather than outright confrontation.
Italy’s debt to GDP ratio is the worst in the Euro zone, apart from Greece. Currently it stands at some 132% of GDP, some €2.3 billion annually. Just a few months back the government fell because it wanted to borrow up to 2.4% of GDP a year. Brussels said this would lead to unwarranted instability, and a 2.1% figure was agreed. Otherwise VAT would be pushed to 24%.
In his speech presenting the new government programme to the Chamber of Deputies Giuseppe Conte said he would stick to the 2.1% figure for this budget. But, he warned, the whole principle of the budgetary control mechanism was unacceptable for Italy, and he was quite clearly putting Brussels on notice: “We need to improve the Stability and Growth Pact and its application, to simplify the rule, and support investments.” The government would like the borrowing allowance to be relaxed to 3% of GDP or more.
The government will sink or swim on the debt crisis – and this is set to be the battleground for the first major internal clash in the EU of Von der Leyen’s commission. The Italian economy is flatlining – with perpetual threat of recession. Standards of living are being eroded. Average per capita income fell 15% between 1995 and 2016. Investment is needed – especially for the South, the Mezzogiorno, which faces a perfect storm of crisis from weakening tourism, unplaced migrants and asylum seekers, to deepening concern over the Xylella parasite in the olive crop.
Conte himself is backing a major overhaul of state education and a youth unemployment programme. Unemployment remains stubbornly in low double digits – 10% or slightly above – and unemployment of 25 year olds and below is at least double that figure.
Another major policy concern is infrastructure – transportation especially. Crumbling roads, airports and stations have long been the bane of commuters and are visibly affecting the tourist industry. The most glaring example was the collapse of the Morandi Bridge in Genoa on 14th August last year, killing 43, and making more than 600 homeless. The New York Times revealed scandalous laxity by the highway company, ultimately owned by the Benetton family interest. Moreover, the company charged with running the highway and bridge was involved with the regulatory authority, which had been privatized in a dash for cash by yet another indebted Italian administration.
Many of the autostradas began in postwar reconstruction, the era of the Marshall Plan, and one or two go back further to the Fascist era. Repair and replacement require a huge effort of engineering and planning on the scale of a new mini-Marshall Plan.
The biggest cause for the parliamentary opposition, newly minted under the command of Matteo Salvini, leader of the League, is migration. Salvini staked his reputation and future leadership of Italy on his tough record as interior minister in the outgoing League-5-Star coalition. He passed laws and regulations refusing landing rights to NGO vessels with shipwrecked refugees rescued from the Mediterranean. These measures still stand, and two vessels, the Alan Kurdi and the Ocean Viking, have been kept waiting for permission to land their fugitives. The Ocean Viking with 84 rescued refugees aboard has been at sea since August 31st.
The numbers of migrants venturing out in flimsy craft from North Africa have fallen dramatically this year – by more than half in some months. In part this may be due to the frightening chaos in Libya, and to a lesser extent Tunisia and Egypt. Conte has promised a more humane approach from his new government.
Deftly, he has replaced the abrasive, not to say raucous, Salvini as interior minister with Luciana Lamorgese, a senior civil servant who has advised on migration and similar matters for more than 35 years.
Salvini has made it plain he is not going away. He said the day Conte won the confidence motion as was “the day of Italy’s betrayal.” He said he would fight on. “We cannot escape the judgment of the Italian people for long: we are ready. Time is a gentleman, un galantuomo, and we will win in the end.”
Salvini hoped to trigger a new election when he pulled the plug on the last coalition in early August. Riding high in the polls, he expected 5-Star to cave in. He has miscalculated badly. This month his poll figures have dropped, from about 34 points to 32. It is doubtful if he could create a working partnership if there was an election now. He could only work with the nationalist right “Brothers of Italy” and the shrinking rump of Berlusconi’s Forza Italia.
The new alliance leaders, the PD especially, have manoeuvred with skill. This is down to the tactical play of the new party leader, Nicola Zingaretti, young brother of the actor Luca Zingaretti who plays Inspector Montalbano. Experienced in European as well as Italian local politics, he has played a masterly hand. He allowed the youthful 5-Star leader Luigi di Maio to become foreign minister – at 33 the youngest ever. Not taking a ministry himself, Zingaretti has more freedom to pull the strings.
He is too easily underestimated. The British and American press seem to think that the ex glam-rock pm Matteo Renzi, with his tiresome self-identification with Tony Blair, could or should be running the show. Very possibly, Zingaretti, Conte and President Mattarella himself quite like this.
One aspect of 5-Star’s time in government has been almost completely overlooked – their immense skill at horizontal inter-connected politics. This goes well beyond crowd funding by laptop. Their media platforms, forums, and apps like the 5 Stelle Blog are full of ideas and debates – and most of the chat is unexpectedly good-natured. They appear to have captured a crucial youth lobby.
Can it last – will it last? Much depends on generating some feel-good factor in the economy, and whether issues like migration and community safety and security don’t turn toxic. Above all, the economy and education must give hope and purpose back to the under 30s.
The new Italian government starts with low expectations – but it could be a big surprise for the EU high command. Next year’s budget will be an important battle. I have a hunch, oddly, that this coalition will endure to the next general election, due in 2022.