Draghi Has the Right Plans for Italy

Mario Draghi
Italian prime minister Mario Draghi enters a news conference in Rome, March 19 (Governo Italiano)

Two months ago, I argued Mario Draghi understands what Italy needs. Here it is.

The former European central bank chief, prime minister since February, has unveiled €221 billion in proposed investments, spread over six years. €191 billion would come from the EU’s coronavirus recovery fund.

The proposals look good on paper. Read more “Draghi Has the Right Plans for Italy”

Draghi Understands What Italy Needs

Italian prime minister Mario Draghi waves at reporters outside the Palazzo Chigi in Rome, February 13 (Governo Italiano)

Mario Draghi is off to a good start. The former central banker has won the support of Italy’s major political parties to form a government and he understands the reforms it needs to undertake.

His challenge will be convincing the parties to see those reforms through.

Receiving more than €200 billion from the EU’s €750 billion coronavirus recovery fund should help. A chunk of the money will go to vaccinating Italy’s population of 60 million, but there will be more than enough left over to invest in long-term growth.

Money isn’t everything, though. Bringing Italy’s economy back to life after it shrunk almost 9 percent in 2020 will require making the sort of choices its politicians have avoided for years. Read more “Draghi Understands What Italy Needs”

Italy Shouldn’t Need Draghi

Mario Draghi
European Central Bank president Mario Draghi walks to a news conference in Frankfurt, October 25, 2018 (ECB/Martin Lamberts)

It’s not an endorsement of Italian democracy that the country needs another above-the-fray technocrat to pull it out of the mud.

If Mario Draghi, the former European Central Bank chief, wins the support of parliament, three of the last six Italian prime ministers will have been apolitical appointees.

I hope Ferdinando Giugliano is right and Draghi will succeed where his predecessors failed, but recent history — and Giugliano points this out too — does not inspire confidence. Neither Mario Monti nor Giuseppe Conte was able break the political logjam to enact much-needed reforms. Read more “Italy Shouldn’t Need Draghi”

Renzi Picks the Wrong Fight — Again

Matteo Renzi
Then-Italian prime minister Matteo Renzi answers questions from reporters in Rome, December 10, 2015 (Palazzo Chigi)

Former Italian prime minister Matteo Renzi has pulled the plug on the country’s ruling center-left coalition.

Renzi, now a senator, has withdrawn his 48 lawmakers and three ministers (one junior) from the coalition ostensibly over a spending dispute. He wants to use Italy’s €200+ billion share of the European Union’s €750 billion coronavirus recovery fund to invest in infrastructure and the green economy. The other ruling parties prefer to use the bulk of the money for short-term stimulus.

Renzi has also proposed to tap into the European Stability Mechanism (ESM), set up in the wake of the euro crisis, to help pay for Italy’s increased health-care spending, something Prime Minister Giuseppe Conte has resisted. ESM funding would come with strings attached. Countries are free to spend their share of the coronavirus recovery fund however they see fit.

Renzi’s proposals have merit. Italy is failing its next generation. It needs structural reforms — which ESM support would require — to catch up with the rest of Europe. Spending €200 billion to prop up the Italian economy in the short term is a wasted opportunity.

But expecting the other ruling parties to meet his terms, when Renzi’s is by far the smallest of the three, is unreasonable. Throwing Italy into a political crisis when it is still suffering one of the worst outbreaks of coronavirus disease in the world is irresponsible.

Conte must now find a new majority in parliament, perhaps with members of former prime minister Silvio Berlusconi’s Forza Italia, or call early elections. Read more “Renzi Picks the Wrong Fight — Again”

Be Wary of the Return of Big Government

Union Station Washington DC
South Front Entrance of Union Station in Washington DC, July 4, 2019 (Unsplash/Caleb Fisher)

Big government is back.

Massive rescue programs have prevented business failures and unemployment on the scale of the Great Depression, even though last year’s economic contraction was nearly as bad. The European Union agreed a €750 billion recovery fund, financed, for the first time, by EU-issued bonds. The money comes on top of national efforts. The United States Congress passed a $2.2 trillion stimulus, worth 10 percent of GDP, in March and added $484 billion in April. An additional $900 billion in relief was included in this year’s budget.

Joe Biden, the incoming American president, wants to spend $2 trillion more over the next four years to transition the United States to a greener economy and create a public health insurance program. Corporate tax would go up from 21 to 28 percent.

In Spain, a socialist government has introduced the biggest budget in Spanish history — partly to cope with the impact of coronavirus, but also to finance digitalization, electric cars, infrastructure, renewable energy and rural development. Taxes on income, sales and wealth are due to increase.

In the United Kingdom, the ruling Conservative Party is building more social housing and it might renationalize rail. Unlike during the last economic crisis, it does not propose to cut spending even though tax revenues are down.

Same in the Netherlands, where all the major parties agree the government needs to do more to reduce pollution and prevent people at the bottom of the social ladder from falling through the cracks.

I’m not opposed to more government per se. I’ve argued the United States should imitate policies in Northern Europe to improve child care, health care and housing.

But let’s be careful not to throw “more government” at every problem. Sometimes government is the problem. Read more “Be Wary of the Return of Big Government”

Italian Regional Elections: Results and Takeaways

Palazzo Balbi Venice Italy
View of the Palazzo Balbi, the residence of the regional president of Veneto, in Venice, Italy, April 1, 2013 (Wikimedia Commons/Wolfgang Moroder)

Italians elected new regional councils and governors in the Aosta Valley, Apulia, Campania, Liguria, Marche, Tuscany and Veneto on Sunday and Monday.

They also voted in a referendum to reduce the number of lawmakers in the Chamber of Deputies from 630 to 400 and in the Senate from 315 to 200.

The right has gained control of one more region — Marche — but the center-left Democrats held their own in the regions they governed.

The populist Five Star Movement, which shares power with the Democrats nationally, underperformed everywhere. Read more “Italian Regional Elections: Results and Takeaways”

Italian Regional Elections Guide

Arcevia Italy
View from Arcevia, a town in the central Italian region of Marche, December 24, 2013 (Giorgio Rodano)

Seven of Italy’s twenty regions hold elections on Sunday and Monday. Four are currently governed by the center-left, two by the right. Polls suggest that balance could flip.

The seventh, the Aosta Valley, is governed by local parties representing its French-speaking minority.

Italians will also elect over 1,100 mayors, two senators and decide in a referendum whether or not to cut the number of lawmakers.

Here is everything you need to know.

Italian law forbids the publication of polls in the two weeks prior to the vote, so all the numbers cited here are at least two weeks old. Read more “Italian Regional Elections Guide”

Italy Should Heed Dutch Advice

Giuseppe Conte Mark Rutte
Italian prime minister Giuseppe Conte is received by his Dutch counterpart, Mark Rutte, in The Hague, July 10 (Palazzo Chigi)

The Dutch government is criticized in the international media for resisting EU grants (it prefers loans conditions on reforms) to help pay for the economic recovery in coronavirus-struck Southern Europe. But the critics are oddly incurious about the Netherlands’ motives.

An editorial in Monday’s Financial Times is typical. It accuses Prime Minister Mark Rutte of singlehandedly putting the EU economy at risk, but it resorts to stereotype and innuendo to explain why he’s unwilling to sign off on a €750 billion recovery fund: the Dutch are stingy and Rutte is worried about losing voters to the Euroskeptic right. (He’s never been more popular.)

Mr Rutte pays lip service to the idea of a stronger, geopolitical Europe but is unwilling to accept the price tag that comes with it, especially with national elections looming next year.

I single out the Financial Times because it should know better. There have been worse opinion columns in the Italian and Spanish press.

At least the Financial Times hints at the need for “productivity-enhancing reforms” in Italy and Spain, which have borne the brunt of the coronavirus pandemic. But it doesn’t say which reforms or why.

In an opinion column for EUobserver, I do. Read more “Italy Should Heed Dutch Advice”

Right-Wing Italians Swap Salvini’s for Even More Right-Wing Party

Matteo Salvini
Matteo Salvini, the leader of Italy’s Northern League, gives a speech in the European Parliament in Strasbourg, April 29, 2015 (European Parliament)

It’s been a bad few months for Italy’s populist right-wing leader, Matteo Salvini.

First his erstwhile governing partner, the Five Star Movement, and the opposition Democrats outmaneuvered him by teaming up to avoid snap elections which polls predicted Salvini’s League would win.

Now his antics in reaction to the government’s coronavirus policy are falling flat.

Salvini and his party “occupied” parliament (refusing to leave the chamber) to demonstrate against the COVID-19 quarantine. He has tweeted out disinformation about the disease, claiming it was created in a Chinese lab. Few Italians care.

Polls find two in three have little faith in the EU anymore, which many Italians feel has been too slow to come to their aid. (Italy has had one of the worst outbreaks of coronavirus disease in the world.) Yet it hasn’t given the Euroskeptic Salvini, who once argued for giving up the euro, a boost. Read more “Right-Wing Italians Swap Salvini’s for Even More Right-Wing Party”