Deadlock Looms After Italians Return Divided Parliament

Rome, Italy at night, June 20, 2009
Rome, Italy at night, June 20, 2009 (lessandro Martino)

Former prime minister Silvio Berlusconi’s right-wing coalition emerged from Italy’s two-day election with a plurality of the seats in the Senate while the left-wing Democratic Party and its allies took control of the lower house of parliament.

The Southern European country that just over a year ago seemed to teeter on the brink of sovereign default entered a period of political instability if not paralysis as neither the right nor the left looked able to form a government.

A telephone survey published immediately after polls closed on Monday suggested that the left would win majorities in both chambers of parliament but projections in European and Italian media soon thereafter had it virtually tied with Berlusconi’s coalition in the upper chamber.

The left’s struggle to take control of the Senate was predicted in preelection polls. Unlike is the case in the lower chamber, where the party with most votes nationally gets the majority, winners’ bonus seats in the Senate are awarded on a regional basis. Berlusconi formed an alliance with the federalist Lega Nord in order to increase his chances of winning the elections in the northern industrial regions of Lombardy and Veneto which elect 73 senators between them.

Other battleground states included Campania and Sicily in the south which account for 29 and 25 Senate seats, respectively. Berlusconi’s Il Popolo della Libertà carried both regions in the last election.

While many Italians blamed Berlusconi for their nation’s economic predicament when he resigned amid rising borrowing costs and personal scandals in November 2011, the fiscal policies implemented by his successor, the former European commissioner Mario Monti, have been deeply unpopular. Monti raised taxes and reined in public spending, including central government subsidies for Italy’s many layers of government, to the chagrin of especially property owners and local party machines.

Dissatisfaction with Monti’s reform efforts, however lackluster, boosted support for Berlusconi’s conservative party, which rallied against what it described as the incumbent premier’s “German” austerity program, as well as comedian Beppe Grillo’s anti-establishment Five Star Movement which got a plurality of the votes in several regions, including Sicily.

The Five Star Movement won 54 Senate seats in total, making it nigh impossible for either camp to govern without it unless, as Grillo suggested Monday night, Il Popolo della Libertà and Democratic Party forged a grand coalition. That may only be possible if Berlusconi stepped aside.

International newspapers, including the Financial Times, tended to interpret the Italian election result through the prism of rising Euroskepticism. It described the outcome as “a clear basta to austerity” and quoted Enrico Letta, deputy leader of the Democratic Party, as saying, “The absolute majority of Italians have voted against austerity measures, the euro and Europe.” He added: “This sends a very clear signal to Brussels and Frankfurt,” the seats of the European Commission and the European Central Bank.

Günther Nonnenmacher, a political editor for the liberal Frankfurter Allgemeine Zeitung, similarly called the vote a “warning sign” for the rest of Europe. Monti, “the man who enjoys so much prestige abroad,” was punished for the austerity policies he enacted while half of Italians voted for parties that are “aggressively anti-European.”

Stefan Kornelius was more blunt in his report for the leftist Süddeutsche Zeitung, characterizing both Berlusconi and Grillo as “comedians” who deny the realities of Italy’s fiscal crisis; “are shifting the blame for the misery on enemies abroad and talk about simple solutions to all problems.”

How could this happen? Because serious politicians like technocrat premier Mario Monti and the left-wing candidate Pier Luigi Bersani hesitated, hummed and hawed and did things by halves.

German weekly Der Spiegel observed that Berlusconi’s and Grillo’s parties, which command a majority in the Senate between them, will be able to make life difficult for a centrist or left-wing coalition. “They can’t stand each other but they are both against Europe, against ‘those in Brussels,’ against the ‘diktats from Berlin.’ Consequently, they are against everything a Bersani government now wants to and has to do.”

New elections may be needed to break the gridlock. The conservative French newspaper Le Figaro even forecast the end of the “Second Republic,” an informal term to describe the period since the collapse of the country’s once dominant Christian Democrat and communist parties in the early 1990s. A similar party realignment could be imminent after Italians so massively vented their anger at the present political class by voting for Grillo’s Five Star Movement.

Italy’s Left Struggles to Take Control of Legislature

Secretary of the Italian Partito Democratico Pier Luigi Bersani speaks in Turin, Piedmont, August 28, 2010
Secretary of the Italian Partito Democratico Pier Luigi Bersani speaks in Turin, Piedmont, August 28, 2010 (Francesca Minonne)

Italy’s center-left Democrats are expected to win the most votes in parliamentary elections this weekend, but they could struggle to win a majority in the upper chamber, where centrists backing incumbent prime minster Mario Monti may end up holding the balance. Read more

South Tyrolean Separatists Reject Left-Wing Alliance

The Vinschgau Valley in South Tyrol, Italy, August 10, 2009
The Vinschgau Valley in South Tyrol, Italy, August 10, 2009 (Davide Bedin)

When Italians elect a new parliament later this month, a German-speaking minority in the far north of the country will be contemplating secession. As in other wealthy regions in Europe, inhabitants of South Tyrol feel that they’re unfairly paying for the revitalization of the rest of the nation’s economy.

Separatist sentiments in South Tyrol, which was part of Austria until after the First World War, are hardly new. The Südtiroler Volkspartei has long dominated local and regional politics. It controls three out of five municipalities in the region and commands a majority of the seats in the regional legislature. But its willingness to cooperate with mainly left-wing parties at the national level threatens to erode its support in favor of fringe independence parties on the right.

The Volkspartei is a “big tent” party. Like the Lega Nord, which seeks independence for the whole north of Italy, it has long garnered support from Christian and Social Democrats as well as conservatives. Unlike the Lega, which propped up former Italian prime minister Silvio Berlusconi’s administrations in the past, the South Tyrolean party has recently leaned more to the left. For the sake of February’s parliamentary election, it joined Pier Luigi Bersani’s left-wing alliance. Polls predict that the latter’s Democratic Party will win a plurality of the seats in the lower chamber of parliament, enabling Bersani to claim the prime ministership.

Right-wing populists in the German-speaking region are critical of what they perceive as the Volkspartei selling out to national political interests. It has allowed itself to be “an extension of a national party that will only serve the interests of the state, not those of South Tyrol,” said Eva Klotz of the Südtiroler Freiheit party last month. Südtiroler Freiheit, which is gaining in popularity among right-wing voters, advocates an independence on South Tyrolean independence.

The separatists are emboldened by recent moves on the central government’s part to consolidate tax and spending policies. The region was granted autonomy under Italy’s 1947 constitution and further powers were delegated to the regional government in 1971. Prime Minister Mario Monti, who took over from Berlusconi in November 2011 when Italy seemed on the brink of a sovereign debt crisis, has tried to force provincial administrations to rein in spending and reduce waste. Debt free South Tyrol is recalcitrant. Its governor, Luis Durnwalder, told the Austrian newspaper Die Presse late last year, “We understand the need for cuts and we must cut as well. What we cannot accept is that we are told where to cut.”

The added political interference from Rome, which all of Italy’s provinces endure, is particularly hard for South Tyrol to accept as it suffers none of the deficit spending and corruption that is present in many other parts of the country.

Similarly, the whole north of Italy resents paying extra taxes and seeing public-sector spending reduced when it’s the largely agrarian and more corrupt south where politicians have for years failed to make ends meet. Hence the popularity of the Lega Nord.

In Catalonia, Spain and Belgium’s Dutch-speaking Flanders, similar separatist movements have grown or sprung up in recent years. In the former, secessionist parties won a majority of the seats in the regional parliament in November of last year. They intend to call a referendum on independence as well, although the central government in Madrid insist such a vote would be illegitimate. The Flemish nationalists won more than a quarter of the votes in the north of the country in 2010 and emerged as the largest party from local elections held in October.

What these separatist movements have in common is that they appeal to conservative voters who consider themselves more frugal and industrious than their supposedly spendthrift neighbors, a perception that can be observed in Europe at large in countries that feel they are bearing the brunt of saving the single currency union while little progress toward fiscal consolidation and economic reform appears to be made in the south.

If, as polls predict, the Italian left with support from the Südtiroler Volkspartei wins next week’s election and preserves the budget policies of the incumbent administration, the smaller Südtiroler Freiheit might well endear itself to even more German-speaking voters who would rather their region be free of Rome’s interference altogether.

British, Germans Fear Italians to Return Berlusconi

Italian prime minister Silvio Berlusconi arrives for a European Council meeting in Brussels, June 24, 2011
Italian prime minister Silvio Berlusconi arrives for a European Council meeting in Brussels, June 24, 2011 (European Council)

The German finance minister Wolfgang Schäuble was quoted on Friday as saying that Silvio Berlusconi’s return to the premiership would “weaken Italy and weaken all of Europe.” He added: “My advice to Italians is not to repeat the error already made and not to continue voting him.”

Even if a spokesman for Schäuble denied that he had said the exact words in an interview with the Italian L’Espresso magazine and his Christian Democrat party belongs to the same political family as Berlusconi’s right-wing Il Popolo della Libertà, the Germans much prefer a centrist or left-wing government in Rome that continues the reforms enacted by Prime Minister Mario Monti last year. “Bersani,” said Schäuble, referring to Italy’s leftist prime ministerial candidate, “told me he wants to continue on the path started by Monti and this is what is important for me.”

The Economist would also rather either Pier Luigi Bersani or Monti, if not both, rule Italy. Although the former is in alliance with the far left, which opposed many of Monti’s economic and fiscal reforms, “Bersani also has a reasonable record as a reformer in past governments,” according to the liberal British newspaper.

Deeper reforms are needed as Monti, who took over from Berlusconi in November 2011 when Italy seemed to teeter on the brink of sovereign bankruptcy, failed to thoroughly liberalize his country’s economy. Through tax increases and a raise in the pension age, the budget was put on a more sustainable trajectory but Monti’s program of economic modernization has been tepid.

Labor market reforms, which should have made it easier for firms to hire and fire workers, were initially delayed, then watered down under pressure from the nation’s powerful trade unions as well as Bersani’s Democratic Party whose support Monti needed for his majority in parliament. The far-left Sinistra Ecologia Libertà, Bersani’s main ally, voted down the reforms altogether and has dismissed the possibility of ever forming a coalition that includes the incumbent premier as “fantasy politics.”

Monti similarly backpedaled on proposed drugstore and taxi market reforms. Thousands more pharmacies were supposed to be added but union opposition forced the government into retreat. Efforts to lift professional restrictions on attorneys were halfhearted. Minimum tariffs imposed under Berlusconi’s administration were abolished but in order to compensate lawyers, a maximum was set on the number that can be employed in the industry, making it even harder for law graduates to start a business.

Retailers have been the only real beneficiaries of the government’s reforms. Legally mandated shop hours and sales periods have been abolished, if to the chagrin of small businesses who fear that they will not be able to compete with chain stores.

Italy’s public debt remains among the highest in the world at nearly 130 percent of gross domestic product. Labor costs are also still high. Whereas in other Mediterranean countries, they have fallen since the start of the sovereign debt crisis, in Italy, wages have continued to climb.

The Economist warns, “If the eurozone’s third biggest economy and its largest public debtor cannot reignite growth and generate new jobs, Italians will eventually lose hope or their northern neighbors will lose patience.” Dutch, Finnish and German voters are increasingly frustrated about the seemingly lackluster pace of economic modernization in the south. If Italy fails to make progress in years to come, it is not difficult to imagine the electorates in the more competitive north of the single currency union simply giving up on the whole project.

Yet Berlusconi, who is in alliance with the separatist Lega Nord, has flourished in preelection polls as he intensified his criticisms of German austerity. In a television interview last month, he touted his willingness to stand up to German demands as prime minister. “I was one of the two, three most influential leaders in the European Council,” he said. “I continuously opposed German proposals and demands.”

He also urged the European Central Bank, chaired by the Italian Mario Draghi, to print more money so countries in the south of Europe can finance their deficits in the absence of private-sector funding. The Germans would be extremely apprehensive of such an activist monetary policy for fear of driving up inflation.

If the ultimate consequence of a disagreement over fiscal or monetary policy is Germany or Italy leaving the eurozone, Berlusconi said last summer that it would “not be the end of the world.”

In the last surveys released before a ban on election opinion polls came into effect last week, Berlusconi’s right-wing alliance was at 29.7 percent while Bersani’s left-wing parties were at 37.2. The centrist parties that support Monti’s reelection got nearly 13 percent of the votes in the ISPO poll. If neither the right nor the left secures an outright majority, Monti’s backers could be kingmakers, especially in the Senate where elections are not entirely proportional.

Berlusconi Makes Italians Offer They Can’t Refuse

Italian prime minister Silvio Berlusconi arrives for a European Council meeting in Brussels, October 26, 2011
Italian prime minister Silvio Berlusconi arrives for a European Council meeting in Brussels, October 26, 2011 (The Council of the European Union)

Italy’s right-wing leader Silvio Berlusconi on Sunday promised sweeping tax reductions if his party is elected to government later this month. Notably, he advocated the elimination of a hated property tax implemented by incumbent prime minister Mario Monti, something he said “will restore public trust in the state.”

In a passionate address to supporters in the northern city of Milan, the septuagenarian former premier said that he would scrap the tax and refund payments already made. He also promised that a conservative government would eliminate a regional business tax and cancel plans to raise the value-added tax and impose a wealth tax on rich Italians. The decline in revenue should be offset by deeper cuts in government spending, including the public financing of political parties.

With three weeks to go before parliamentary elections are due to take place in Italy, Berlusconi has managed to boost support for the right-wing Il Popolo della Libertà in the polls. His coalition with the separatist Lega Nord trails the left-wing parties led by Pier Luigi Bersani by just 5 percentage points in one recent survey. The left enjoyed a 15 point lead as recently as early January.

“We are one step away from victory,” Berlusconi was quoted as saying on the website of his party. “The left is afraid. They are losing sight of victory which they thought was in the bag.”

Berlusconi rallies against the austerity measures that have been imposed by former European commissioner Mario Monti who took over as prime minister in November 2011 when Italy appeared to teeter on the brink of bankruptcy. Monti led a technocratic administration that raised taxes, reduced pension payments and made some efforts to liberalize Italy’s labor market and service industries.

Both Berlusconi’s Il Popolo della Libertà and Bersani’s Democratic Party supported Monti’s government through last year. The former pulled its support in December, citing a collapse in home sales as a result of the new property tax, continued economic stagnation and tepid labor market reforms that were watered down under pressure from the country’s trade unions and the left.

“The situation today is much worse than it was a year ago when I left the government out of a sense of responsibility and a love for my country,” said Berlusconi in early December when his party’s decision to withdraw its support from Monti’s government triggered new elections.

Since, the former premier has touted his willingness to stand up to Germany which many Italians blame for the austerity policies that Monti has enacted. “I was one of the two, three most influential leaders in the European Council,” said Berlusconi in a television interview last month. “I continuously opposed German proposals and demands.”

He also urged the European Central Bank, chaired by the Italian Mario Draghi, to print more money so countries in the south of Europe can finance their deficits in the absence of private-sector funding. The Germans would be extremely apprehensive of such an activist monetary policy for fear of driving up inflation.

If the ultimate consequence of a disagreement over monetary policy is either Germany or Italy leaving the eurozone, Berlusconi said last summer that would “not be the end of the world.”

Opinion polls still give Bersani’s left-wing coalition with the smaller Sinistra Ecologia Libertà the best chance of securing a plurality of the seats in parliament but he would likely need the support of centrist parties that favor Monti’s reelection to secure a majority in the upper chamber. Sinistra Ecologia Libertà did not back Monti’s economic and fiscal reform efforts last year, however, and party leader Nichi Vendola has dismissed the possibility of joining a coalition that includes the incumbent premier as “fantasy politics.”

Monti, for his part, has all but ruled out a coalition with the right as long as it is led by Berlusconi. He told Italian radio last week that he had “no intention of making any agreement with parties that aren’t strongly reformist” but also said that he could “easily imagine a collaboration” with Il Popolo della Libertà if Berlusconi resigned.

If the right does win the election, Berlusconi has said that he will not return as prime minister. Rather Angelino Alfano, who is currently the party’s secretary, is groomed as his successor while Berlusconi could become the economy minister.

Italy’s Left Rules Out Centrist Coalition After Election

Pier Luigi Bersani addresses a Democratic Party congress in Rome, January 17
Pier Luigi Bersani addresses a Democratic Party congress in Rome, January 17 (Ilaria Prili)

Italy’s left-wing leader, Pier Luigi Bersani, has dismissed the possibility of breaking his alliance with smaller Green and socialist parties in favor of a centrist coalition that includes the supporters of incumbent prime minister Mario Monti.

Bersani, whose Democratic Party is expected to win a plurality of the seats in February’s election, said, “This possibility does not exist,” when asked about sacrificing Sinistra Ecologia Libertà, formerly a coalition of far-left parties, in favor of a coalition with Monti’s supporters.

Unlike Bersani’s own party, Sinistra Ecologia Libertà has not supported Monti’s economic and fiscal reforms. Partly leader Nichi Vendola characterizes the possibility of joining a government that includes Monti as “fantasy politics.” Read more

Italy’s Monti Open to Broad Coalition, Left Surges

Italian prime minister Mario Monti in Paris, France, August 3, 2012
Italian prime minister Mario Monti in Paris, France, August 3, 2012 (Elysée)

Italy’s technocrat prime minister, Mario Monti, has said in a radio interview he is willing to consider a broad coalition with Silvio Berlusconi’s conservatives, provided the former premier isn’t part of it.

Meanwhile, the left-wing Democratic Party continues to rise in the polls. It could win a plurality of the seats in both chambers of parliament. Read more