Italy’s Matteo Salvini tried to be all things to all people, and failed.
The leader of the (formerly Northern) League aspired to become the next Silvio Berlusconi: the uncontested leader of the Italian right. To prove he could govern, he formed a coalition with the anti-establishment Five Star Movement and later supported the unity government of Mario Draghi.
But you can’t govern in Italy without making compromises, and that’s not something far-right voters tend to reward. Salvini has oscillated between mock statesmanship and populism, giving his supporters whiplash. Giorgia Meloni’s postfascist Brothers of Italy now threaten to eclipse him. Read more “Sway with Me: How Italy’s Salvini Lost His Credibility”
Mario Draghi isn’t wasting any time. The former European Central Bank chief became prime minister of Italy in February, announced his reform plans in April and got parliament’s approval for an overhaul of the justice system on Tuesday.
Italian courts are notoriously slow. Even routine proceedings like resolving bankruptcies can take years. It is one of the reasons startup activity is low, foreign investment is lacking and Italy is one of the worst countries in the developed world to do business in.
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.
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”
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”
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.
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.