Giorgia Meloni has set out her program in an inaugural address to the Italian parliament.
The far-right party leader, who won the election a month ago to become Italy’s first woman prime minister, was sworn in by President Sergio Mattarella on Sunday. She leads a coalition of three right-wing parties.
She gave the top posts in her cabinet to centrists:
- Finance: Giancarlo Giorgetti, a member of Matteo Salvini’s far-right League. Was minister of economic development under Mario Draghi.
- Foreign Affairs: Antonio Tajani, the former president of the European Parliament and a member of former prime minister Silvio Berlusconi’s center-right Forza Italia.
- Interior: Matteo Piantedosi, a former civil servant without party affiliation. Salvini had hoped to return to Interior, but was given Infrastructure. (Queue jokes about the far right making the trains run on time.)
- Justice: Carlo Nordio, a 75 year-old former prosecutor who investigated corruption in Italy’s once-dominant Christian Democracy party in the 1990s. Belongs to Meloni’s own Brothers of Italy.
Meloni’s speech was also reassuring. In place of the fiery culture-war rhetoric of her campaign came sensible proposals for family policy and immigration, empty gestures on climate policy and the environment, and firm commitments to the Atlantic alliance, EU and Ukraine.
If Meloni wants to revise the 2023 spending plan of her predecessor, Mario Draghi, she will need to submit a draft to the European Commission for review within days.
Normally, the Commission’s opinion is advisory. But this time it also needs to sign off on disbursement of Italy’s share of the EU’s coronavirus recovery fund. Italy is entitled to €191 out of €750 billion, more than any other country. But it needs to meet milestones and targets for each tranche. The next €19 billion (1 percent of Italian GDP) is due in December.
Meloni called the program an “extraordinary opportunity to modernize Italy.” Many of the milestones relate to decarbonization and economic liberalization. (More on that later.) “We all have a duty to make the most of it,” she told lawmakers.
But she also called for adjustments, as she did prior to the election — “in light of the increase in the prices of raw materials and the energy crisis.” She demanded a “pragmatic” and not an “ideological approach.” Which sounds encouraging, except ideologues seldom understand when they’re impractical.
Meloni listed increasing disposable incomes, including by cutting taxes (more on that later, too) and supporting families with children; raising pensions; expanding opportunities for early retirement; and replacing the jobseekers’ allowance (or “citizens’ income,” as the populist-left Five Star Movement called it) with… to be determined.
Those were the manifesto commitments of the center-right, as I reported in August. They didn’t do the math at the time and Meloni didn’t give budget estimates on Tuesday. Abolishing the citizens’ income would free up funds to cut taxes and raise child benefits and pensions, but it would also throw one million households into poverty in the middle of winter when gas prices are sky-high.
Meloni recognized that Italy is failing its next generation. The country spends less on tertiary education than its neighbors. Only 27 percent of Italians in their thirties have a higher degree, the second-lowest rate in the eurozone, where the average is 40 percent. 44 percent of Italians under the age of 30 are in work, by far the lowest rate in the EU, where the average is 63 percent. Even Greece does better.
Of the under-30s with a job, eight in ten work part-time. The problem is not just a mismatch of skills. Licensing requirements make it almost impossible for young Italians to start a career as a lawyer, notary, pharmacist or even a taxi driver. Regulations make it hard to start a business.
Meloni proposed to “bridge the gap between training and skills” and said Italy “owes” it to its youth to invest in schooling, but she made no concrete proposals. Draghi raised education spending by €30 billion.
Russian gas met 40 percent of Italian demand before the war. Draghi got that down to 10 percent by signing contacts with Algeria, Egypt and the Congo Republic, and approving construction of a liquefied natural gas terminal in Piombino. The hope is to be independent of Russian gas by spring.
Meloni supports nuclear power to reduce gas use. Italy gets half of its electricity from burning gas.
She favors an EU-wide energy price cap, and would decouple electricity and gas prices in Italy if the EU doesn’t reach a consensus. The high price of gas has pushed up all energy prices, because the most expensive fuel needed to generate electricity sets the price for consumers.
Households could get another €5 billion in aid. Draghi spent €52 billion, 2.5 percent of GDP, to lower energy, fuel and sales taxes and write €200 cheques to the lowest-income households. The national debt rose to 147 percent of GDP.
Meloni claimed environmentalism for the right, arguing, “There is no more convinced ecologist than a conservative.” Whereas the left would subjugate man to nature, in Meloni’s conservative vision man lives in harmony with nature, “combining environmental, economic and social sustainability.”
Meloni previously committed her party to net-zero carbon emissions by 2050, saying,
The right loves the environment because it loves the land, the identity, the homeland.
She also called the EU’s Green Deal, which shares the same goal, “climate fundamentalism”.
She didn’t repeat the accusation on Tuesday. Nor did she call for a revision of the climate-related sections of the coronavirus recovery program. A third of Italy’s €191 billion is meant to speed up the green transition, with 40 percent of the money going to subsidize home renovations for energy efficiency, such as insulations and the installation of solar panels. Those subsidies have been consistently oversubscribed.
Meloni emphasized that “Italy is fully part of the West and its system of alliances.” Her coalition partner, Salvini, once toyed with giving up the euro.
She does want to change the EU: it’s not a company that should be run by a “board of directors”.
That is code for not letting rule-sticklers in the European Commission or other unelected bodies make decisions, but to defer to politicians, who tend to be more flexible when it comes to budget rules and the implementation of reforms.
Meloni promised to “respect the rules currently in force,” but also said Italy would push for an overhaul of the Stability and Growth Pact, which limits national debts and deficits to 60 and 3 percent of GDP, respectively. The treaty has always been suspended in times of economic crisis.
The Dutch, the leading hawks in Europe, have opened the door to raising the debt and deficit ceilings. However, in exchange they want an independent watchdog of the treaty (not the Commission), which sounds like something Meloni might call a “board of directors”.
Meloni vowed to raise Italy’s birth rate, which has fallen to its lowest since unification, by cutting taxes for families, helping young couples buy their first home and increasing female employment, including by “supporting” municipalities to provide free daycare. Presumably that means money.
Only half of Italian women are in work, the lowest female labor force participation rate in the EU. Italian men are twice as likely to start a business.
Meloni made no proposals to limit abortion or gay rights, but she certainly won’t expand either. Italy recognizes foreign marriages and adoptions, but allows only same-sex civil unions and technically only adoption by straight couples. Gay couples get around this by having one partner adopt as a single parent.
Feminists and gay activists are alarmed by the appointment of Eugenia Maria Roccella as minister of family and equal opportunity. She opposed civil unions for gays, called the morning-after pill “abortion at home” and likened the screening of embryos prior to in-vitro fertilization for genetic diseases to eugenics.
Too many men, women and children have died at sea in an attempt to get to Italy.
To stop asylum seekers from crossing the Mediterranean by boat, with sometimes fatal consequences, Meloni called for EU naval patrols (critics prefer “naval blockade”) and deals with North African countries to assess asylum requests there in EU-run “hot spots”.
It’s a sensible plan. Italy receives a relatively high share of asylum seekers from safe African countries: Ivory Coast, Mali, Morocco, Nigeria, Senegal, Tunisia. Unless they fear persecution in their home country because of their political beliefs, religion or sexuality, those asylum seekers are usually denied. But few go home. Many stay in Italy illegally or try for asylum in another EU country, where they clog up the system for actual refugees.
Meloni called for “reasonable length of trials,” which is not just a legal imperative, but an economic one. Slow court cases push Italy’s economic growth down by 1 percentage point each year, according to the Bank of Italy.
Civil cases take 8 years on average. Previous governments made improvements. Draghi made money available to hire judicial staff. But a backlog of cases keeps the average down. Meloni didn’t say what she wants to do.
Italy is one of the worst countries in the developed world to start and run a business in. It takes too long to get permits, to enforce contracts and to resolve bankruptcies.
Meloni pointed out that Italy’s economy has grown just 4 percent in the new millennium, when France and Germany grew 20 percent. Spain is due to overtake Italy as the third-largest economy in Europe. Meloni called for “structural simplification and deregulation of administrative procedures to stimulate the economy.” Also because complexity invites corruption, which in Italy is at Balkan levels.
The EU recovery fund is an “opportunity,” she said, to make medium-term reforms that may not pay off in time for the next election. Hopefully that means she will continue, and not reverse, Draghi’s program, which put tens of billions of euros toward long-term growth.
Money isn’t everything. Italy also needs to speed up permitting, deregulate protected professions, and liberalize labor laws to end the duality between (often young or immigrant) contractors, who don’t save for unemployment benefits and pensions, and unproductive older workers, who are impossible to fire.
Meloni would switch to a French-style presidential system to avoid frequent changes in government and boost the confidence of investors. Meloni leads the sixty-eighth cabinet in 76 years. Italy’s presidency is largely ceremonial.
But Italy’s high rotation of prime ministers isn’t the reason investors stay away. The problem is not too much change, but not enough: despite the coming and going of prime ministers, policy remains unfriendly to business. Except the largest (Italian) businesses, who know how to work the political system.
Meloni spoke of devolution to regions. That doesn’t comport with her commitment to deregulation. It is at the regional and local level where extraneous regulations are invented, and where most of the corruption happens.
Meloni proposed to put the “southern question” at the top of the political agenda.
Incomes and living standards in the north of Italy are comparable to France, Germany and the Low Countries. The south is a different country. It is plagued by low birth rates, high unemployment and brain drain. One in three Italians lives south of Rome, but the region has only a quarter of the economy.
Meloni vowed to “bridge an unacceptable infrastructure gap.” Here she can lean on the Plan Draghi, which invested €75 billion in digitalization and mobility, with 40 percent of the money going to the south.
Faster internet and rail could help mend the north-south divide. Currently, high-speed trains don’t run south of Naples.
Meloni also pledged to “eliminate inequalities, create jobs, ensure social security and improve the quality of life” in the Mezzogiorno, but she knows this is easier said than done:
It is not an easy goal, of course, but our commitment to this will be total.
Meloni unveiled three tax plans:
- Extending the 15-percent “flat tax” on self-employed earnings from €65,000 to €100,000 per year.
The League flattened tax rates for businessowners and freelancers when it was last in power. This is essentially a tax break for entrepreneurs.
- “Fiscal respite” for citizens and small businesses to “regularize their position with the tax authorities.”
Sounds like an amnesty for people who’ve been caught cheating on their taxes, something Berlusconi — for entirely unselfish reasons, I’m sure — wanted.
- “A real fight against tax evasion, not a hunt for revenue.”
And if you believe that, I have a bridge to Sicily to sell to you.
War in Ukraine
Berlusconi and Salvini are Putin fans. Meloni, not so much. She praised the “valiant Ukrainian people,” called Putin’s a “war of aggression” and insisted that “Italy will continue to be a reliable partner in the Atlantic alliance.”
Tajani, her foreign minister, reiterated Italy’s “full support” to Ukraine. That full support has amounted to .1 percent of GDP, or half a billion euros; less in relative terms than almost all other EU member states.
At least Italy will not sabotage sanctions. An EU oil embargo is due to go into effect next year. Meloni warned,
Those who believe it is possible to trade Ukraine’s freedom for our peace of mind are wrong. Giving in to Putin’s blackmail on energy would not resolve the problem, it would aggravate it, giving way to further demands and blackmail, with future increases in energy [prices].