Italy’s Renzi Wins Senate Backing Despite Policy Uncertainties

The new prime minister wins a confidence vote, but there are questions about his economic program.

Italian prime minister Matteo Renzi chairs his first cabinet meeting in Rome, February 22
Italian prime minister Matteo Renzi chairs his first cabinet meeting in Rome, February 22 (Palazzo Chigi)

Late Monday night, Italy’s new prime minister, Matteo Renzi, won a confidence vote in the Senate, clearing his first parliamentary hurdle.

The outgoing mayor of Florenco succeeds Enrico Letta who resigned earlier this month under pressure from Renzi and other members of his Democratic Party.

The parties in Renzi’s coalition are the same that supported Letta, including interior minister Angelino Alfano’s Nuovo Centrodestra and smaller, centrist politicians.

The Democrats have a safe majority in the lower chamber of parliament, but not in the Senate.

The handover did come with a partial cabinet reshuffle. Half the ministers are now women while Alfano is no longer deputy prime minister.

The Senate voted for the new government by a majority of thirty, a lower margin than the one Letta enjoyed.

Former comedian Beppe Grillo’s Five Star Movement voted against Renzi, as did former prime minister Silvio Berlusconi’s Forza Italia. The latter will work with the government to reform Italy’s electoral system, however, following a deal struck between Berlusconi and Renzi in January that should make it easier for larger parties to win majorities in both houses of parliament.

Inside the ruling coalition, there was some discontent as well. Giuseppe Civati, a representative of the leftist minority who had challenged Renzi in a Democratic Party leadership contest last year, announced a strong internal opposition. Former deputy economy minister Stefano Fassina criticized the cabinet reshuffle and argued against Renzi’s plans for deeper spending cuts.

The premier told senators he would immediately focus on lowering Italy’s labor costs by cutting payroll taxes in order reduce unemployment — which stood at 12.7 percent in December.

Estimates are vague, but according to the party’s economic chief, the measure will be worth €10 billion, much less than the expected 10 percent cut.

Other reforms may include universal subsidies for the recently unemployed and major investment in schools and infrastructure. The whole package could easily exceed the planned reduction in public spending.

Details should come from the new economy minister, Pier Carlo Padoan, a former deputy secretary general at the OECD. In his previous position, he was an advocate of austerity, as he told The Wall Street Journal last year. “Fiscal consolidation is producing results, the pain is producing results,” he said at the time.

Without a clear economic program from the new administration, though, it is difficult to tell whether his views will clash with Renzi’s.

A major change also occurred in the Ministry of Foreign Affairs where Emma Bonino, the leader of the libertarian Italian Radicals who enjoyed a sound international reputation, was replaced by Federica Mogherini, formerly in charge of European and foreign affairs for the Partito Democratico.

Other key posts were given to Federica Guidi, vice president of the Italian business association, and Giuliano Poletti, the head of the cooperatives federation. Given the divergent political lines of their organizations, their appointments raised more uncertainty about Renzi’s long-term perspective.

Along with the electoral reforms agreed with Berlusconi, Renzi promised to produce one major law each month up to 2018 — when the current legislature expires. However, if institutional reforms go through, a popular vote will be the likely outcome. Indeed, Renzi already hinted at this, saying his party is “not afraid of possible elections.” The new government might not last as long as he intends it to.

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