The Italian Mind

Reflections from the Boot

Archive for the tag “Monti”

The Don’t-Wanna-Be Candidate

In preparation for the next election round, the Italian political scenario is getting more and more flustered. Leadership-building efforts, however, are far to be finalised. Political parties and their leaders are testing public confidence and assessing how voters may react to this or that alliance. A few points are clear so far: the centre-left Democratic Party (PD) and the centre-right People of Liberty (PdL) seem unwilling to form alliances. With PD at 26% in polls, the PdL is experiencing a sharp fall in prospective votes, which is down to below 20%. Silvio Berlusconi has not yet revealed whether he will run as a candidate and party leader or not but his return may well have consequences for Italy as a whole. Moreover, internal fights between doves and hawks are further undermining the Party’s credibility.

From left: Alemanno, La Russa, Gasparri

Colonels without a General‘ is the title of an article appeared recently on the digital version of one of the most prominent Italian magazines, l’Espresso. It refers to the portion of PdL leadership who feels the Party is no longer up to its tasks. Mainly composed of ex-National Alliance members – the right party that merged into Berlusconi’s Forza Italia when PdL was established – this movement will likely leave the party to form a new one. Together with the Mayor of Rome Gianni Alemanno, Ignazio La Russa, Giorgia Meloni, and Maurizio Gasparri – all Ministers during previous Berlusconi’s governments – are willing to re-establish a modern version of the ‘Italian Social Movement–National Right’ Party, originally founded by post-fascist politician Giorgio Almirante, who – among other things – was the political mentor of Gianfranco Fini, who replaced him at the helm of the National Alliance Party. Someone said this is a modern version of famous Ceasar’s phrase ‘Quoque tu Brute?

From left: Bersani, Renzi, Vendola

On the other (political) hand, PD’s leader Pier Luigi Bersani seems unable to embody and represent the many flavours of centre- and far-left movements, let alone to solve the ‘Renzi’ issue.
In its quest for parliamentary seats, the PD is increasingly closer to the ‘Left, Ecology and Freedom‘ (SEL) movement, a recently established Party that may account for 7-8% of votes. SEL’s leader Nichi Vendola, currently the governor of Puglia region – has opposed Mario Monti’s government initiatives on several occasions. He is also a strong supporter of neoliberal issues such as civil and labour rights, especially those concerning radical trade unions and LGBT issues (he himself is openly homosexual and on many occasions reaffirmed his intention to get married in Italy).
Matteo Renzi, one among the most promising politicians in Italy and currently the Mayor of Florence, is an advocate of primary elections. Thanks to his staunch opposition to Bersani’s internal leadership, Renzi has earned the appellation of ‘scrapper‘ and will confront Bersani during the Party primaries, even if no one knows when and on what rules they will be celebrated. Strangely, but probably thanks to his innate communication skills, he also gained consensus among centre-right voters. Centre-right parties and movements, however, show less care of the issue than they should, convinced as they are that the political elimination of Renzi will arrive soon by hand of his own party’s hawks.

The third side of the coin is represented by a large pool of centre movements, actually larger than in the recent past. This is the richest ‘voting pot’ so far, as it includes disillusioned voters from both the above parties, undecided voters, and traditional centre parties voters. Will Pierferdinando Casini, leader of the Christian Democratic Union, Gianfranco Fini, leader of ‘Future and Freedom for Italy‘ – a movement born after the harsh separation between Fini and Berlusconi – and Francesco Rutelli, a former representative of the Italian Radicals and later of centre-left movement Alliance for Italy, succeed in convincing all the potential voters to trust them?
Together with Renzi, they are strong supporters of Monti’s Agenda, an ambitious State reform programme Mr. Monti’s technocrat government has started just after it came into office.

Monti: looking over the horizon

But no matter how you change the order of factors, the percentages of votes each of these actors can obtain will never be enough to form a stable government. Hence, the find-an-ally factor.
The same applies to Grillo’s Five Stars Movement, except that he seeks no allies, either before or after elections.

No significant and effective leader seems to emerge from this picture.So, Mr. Monti, you are the favourite candidate to become Prime Minister, again. Were you aware of that?

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Italy’s GDP Growth Slower Than Expected

Italy’s Recession Graph

During his intervention at the annual Ambrosetti Workshop in Cernobbio on Lake Como, the Italian Prime Minister Mario Monti referred to the upcoming elections of next May saying it is “inconceivable that a democratic country as Italy cannot find qualified candidates on the ballot to lead the country”. Monti declined the opportunity to run for another mandate as PM, his current appointment ending in 2013.
These words are paramount to recent news about the slower growth of Italian GDP, which recorded a contraction, based on the data published yesterday by the Italian Institute of Statistics (ISTAT). The fourth successive contraction has raised concerns about the ability the government of technocrats has to get public finances back on track. Gross Domestic Product dropped 2.6 percent compared to the estimate of 2.5 percent on an annual basis. In spite of that, the Prime Minister has shown optimism. “The data available do not reveal an economic recovery has started yet – Monti said – but it is now within reach and I believe it will soon arrive,” he added.
So far, Monti’s cabinet choices – however hard to withstand for many tax-overladen Italians – have only succeded in cutting consumer spending and boosting unemployment, thus slowing GDP growth. The Italian economy has been contracting for four straight quarters now and its recession will very likely continue during 2013.

Will Italy Overcome the Crisis and Make it to Next Year Elections?

Italy’s spending cuts are at the heart of reforms

“Recession in Italy is close to an end and the euro zone must not represent a source of friction amongst northern and southern Europe”, the Italian Prime Minister Mario Monti said recently at a conference in Rimini. He also added that the euro zone’s third largest economy is in better shape than it was actually a year ago.
Since taking over from Silvio Berlusconi, Monti has triggered a programme of reforms, including strong overhauls on the labour market and pension, spending cuts and deregulation. Monti said the government would not expected such reforms to stimulate the growth of a heavily-hit economy in the short term. Instead, he explained he had hoped the falling of borrowing costs would make it simpler for recovery to commence.
Monti also repeated once again he is concerned for the tensions arisen among northern and southern European countries in the euro zone, and the Union is endevouring to resolve its recession and preserve the single currency.
“It would be tragic – he said- if the euro, the highest form of European aspiration to integration and unity turned out to be a factor of disintegration, and the cause for prejudices, of north standing against south”.
Internally, Monti has underlined once ahgain that budget-rigour goal is instrumental to the growth of public finances. The Government will focus on debt reduction and asset sales among the coming months as it puts together measures to raise competition, put an end to energy costs and support start-up companies. Monti, who imposed austerity in the initial half of his 18-month term, is asking his ministers to draft policies in order to pull Italy out of its fourth recession in almost ten years. He is well known as one who jumped in in Italy’s deficit with both feet and lowered money borrowing costs thanks to a program that included tax increases on fuel, real estate and luxury goods, all vastly unpopular among the population. The Minister for Economic Development, Corrado Passera – however – didn’t say whenever the new government measures to promote the economy could be finalised.

Is Italy up to the task now?

Italian PM, Mario Monti

Mario Monti, the Italian Prime Minister

After its former Prime Minister Silvio Berlusconi resigned about one month ago, Italy has not enjoyed any improvement in terms of market trust. With the BTP-BUND spread index sill high between 450 and 500 base points, Italy seems to have a long and difficult march ahead before seeing the light at the end of the tunnel. For those who strongly asked Berlusconi step aside for the good of the nation this suffices to say Mr.B was not the real issue. In fact, the market trust is based on the ability to pay debts and the Bel Paese is now facing one of the most difficult moments in republican history.

Italy lived a similar experience only once in its modern history. In the aftermath of WW2, the country was in ruins – literally – and the (re-)founding fathers had to take a serious burden on their shoulders. The souls of people took sides, with fascists and resistance fighters being the two faces of the same coin. But the past and current situation, albeit having several commonalities, show some significant differences. There are no ruins today, no country to rebuild, no consciences to wash clean, just as no post-war liquidity injections or support plans will arrive from outside as an helping hand. The Communist block vanished more than 20 years ago, and terrorism is not a single threat but rather a most complex one.

The war Mario Monti, the Italian economist President Giorgio Napolitano decided to appoint Prime Minister to rescue the Italian situation, is a different one and will be fought on a different ground. Europe as a whole, including leaders like the German Chancellor Angela Merkel and the French President Nicholas Sarkozy, has this very clear. The debt fire the US have started with the subprime mortgage crisis in late 2006 still burns and is way out from being extinguished. Will Mr. Monti’s choices be enough to cope with it? Will his cabinet decisions the right extinguisher?

I will cover the issue of the attitude of Italian people versus their politicians in another post. Briefly, the ordinary people do not like the ample basket of privileges the people’s representatives enjoy, at all. And this is one point for Monti. The members of his cabinet – and Monti himself – are not politicians. They have not been elected nor are they supported by any political party. Practically no one of the ministers or undersecretaries has ever had anything to do with politics. On the contrary, all of them are technocrats and of course their area of expertise coincides with the task each of them has been assigned. Mr. Giampaolo Di Paola, for example, was a 4-star Admiral holding the post as Chairman of the Nato Military Committee before becoming the Minister of Defence. Mrs. Annamaria Cancellieri, a Prefect, has gained several experience on the field all over Italy until reaching the Ministry of Interior’s top position. The same can be said about all the ministers in the cabinet, which brings to another point: support.

Rarely has been observed such an overwhelming trust vote majority in the Italian Parliament. Instead Mr. Monti’s cabinet obtained 281 votes at the Senate and 556 at the Chamber of Deputies, an all-time win. It is too soon, however, to say the government will last. Both center-left, center and center-right parties, the Democratic Party (PD), the Union of Christian Democrats (UDC) and the People of Liberties (PdL) respectively, have granted their support to what they recognise to be the most pressing needs Italy has to address: cut public spending and lift revenues, change the pension system, reintroduce a property tax on first homes and make it easier for companies to hire and fire workers, to help bolster Italy’s anemic economy. In sharp contrast to Mr. Berlusconi’s cabinet, whose clashing vested interests blocked economic reform, Mr. Monti’s cabinet draws from academia, banking, business and the upper echelons of the civil service. Some ministers have strong ties to the Roman Catholic Church, whose support is still needed for any Italian government to gain traction.

Italy’s debt accounts for $2.6 trillion and is the highest in the euro zone after Greece and one of the highest in the world. After the strong opposition of Germany to the rescue plan for Greece, no one can imagine what the scenario may be in case of an Italian default, especially if we consider the momentous impact such a possibility could have on the stability – or even the existence – of the European single currency. Or perhaps, everybody knows.

The new Italian government is certainly an improvement with respect to the previous one. The problem is that this may not satisfy markets, which in fact are quite unstable when Italian matters are at stake. Indeed, that is a tall order for a prime minister with little experience in the rough and tumble of Italian politics and no politicians in his cabinet. Mr. Monti said the lack of politicians gave the cabinet independence, but it remains to be seen whether that translates into the clout needed to change the laws and customs of a postwar welfare state built on a patronage culture that dates back centuries.

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