Letta’s Resignation Clears Way for Florence Mayor

The popular Matteo Renzi is expected to become prime minister.

Italian prime minister Enrico Letta’s irrevocable resignation on Friday has opened the door for Matteo Renzi, the mayor of Florence and leader of the ruling Democratic Party, to form a new government.

The shuffle had not been expected. After he was elected party leader in December, Renzi repeatedly insisted that he would not compromise the stability of Letta’s government. But the overwhelming support he had received in a party leadership contest resulted in a complicated cohabitation with the prime minister. Outside the government, Renzi could take strong initiatives on his own, such as striking a deal with former prime minister Silvio Berlusconi, who leads the opposition Forza Italia party, to reform Italy’s electoral system.

Already dissatisfied by Renzi’s centrist leanings, some Democrats were critical of his outreach to Berlusconi who only late last year was ejected from the Senate following a conviction for tax fraud at his media company. Letta, however, would not interfere with Renzi’s conduct.

Worried about losing momentum and facing difficulties getting the new electoral law through parliament, Renzi upset what had been precarious equilibrium between the prime minister and himself when he publicly announced his intention to form a new government under his leadership.

Arguing that Letta’s cabinet was failing to make headways with the necessary economic and political reforms, Renzi justified his decision by saying Italy had to “find a way out of the quagmire with a radical program and profound change.”

Having lost the confidence of his own party’s leadership, Letta tendered his resignation to President Giorgio Napolitano on Friday. The octogenarian head of state, who was reelected last year, had no choice but to accept the Democrat’s decision and immediately started consultations to form a new government without any involvement from parliament.

Without new elections, Renzi’s mandate would be the same as Letta’s, with smaller parties giving the Democratic Party a majority in both chambers of parliament — the largest of which, Deputy Prime Minister Angelino Alfano’s Nuovo Centrodestra, has asked for more time to form the government in order to extract policy concessions and keep relevant cabinet posts.

The anti-establishment Five Star Movement and the federalist Lega Nord did not participate in Napolitano’s consultations. Forza Italia was represented by Berlusconi, raising concerns that the former premier could negotiate with the president on the incumbent government. Even if Berlusconi confirmed that the electoral reforms he negotiated with Renzi last month are safe, he reiterated the conservatives’ opposition to the coalition government.

Sinistra Ecologia Libertà, the Democrats’ allies in the last election, will also remain in opposition, along with a small number of Democratic Party lawmakers who oppose Renzi taking over. Italian media speculate that the two might join forces.

Renzi is expected to be appointed prime minister on Monday. He has stated that his government should last until the current parliament’s mandate expires in 2018 — which would be an extraordinary feat by Italian standards.

He is expected to push for labor market reforms to reduce labor costs and improve flexibility as well as new safeguards for the recently unemployed. Under his agreement with the conservatives, he should also propose legislation to weaken the Senate which now has equal lawmaking powers to the lower chamber. Other fiscal reforms depend on the outcome of his bargaining with Alfano but public spending reduction will likely remain a priority.

Renzi’s move finds no precedent for conciseness and intensity. He has made a potentially dangerous gamble, defying part of public opinion and forcing a change in government just four months before Italy assumes the presidency of the European Union.

The European Parliament elections due in May might have played a role in his decision to replace Letta. As previous European votes tended to favor opposition parties, the Five Star Movement and Berlusconi’s Forza Italia, which are both Euroskeptic, could do well. A bad result for the ruling parties could have undermined Renzi’s popularity. If he manages to hold on to his momentum and is able to hasten some urgently needed reforms, he might stave off a defeat in three months’ time.