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Wednesday, April 03, 2013

How many wise men does it take to fix Italian politics?


Markets remain deceptively calm as uncertainty rumbles on in Italy. Italian President Giorgio Napolitano has created two commissions, now known as the ‘wise-men’, which will seek to find some common ground between the various political parties in Italy and therefore, potentially, provide a basis for a coalition government. Although, they only have 8 to 10 days to do so.

The first committee with look at economic, social and European affairs, while the second will focus on institutional (in particular electoral) reform. Napolitano has been at pains to stress that the committees will not determine an agenda for a new government or set any policies; they will simply look to facilitate fresh dialogue and find areas which the parties can work together on.

So where does each party stand now? What are the prospects of finding some ground to build a coalition upon?

Pier Luigi Bersani and his centre-left group:
  • Bersani has continuously ruled out entering a grand coalition with Berlusconi’s centre-right group and yesterday reiterated this position, adding that such a government would be paralysed.
  • That said, Bersani has warned that new elections would be “disastrous”. Having failed to form a viable government after being given the mandate by the President it is unclear exactly what Bersani wants, particularly with his options dwindling quickly.
  • An SWG poll suggests Bersani’s party’s trust in him has fallen to 30% while behind the scenes trust in Florence Mayor Matteo Renzi has reached 55% (+6%), while 66% of Italians say they would like him to guide the centre left instead.
Silvio Berlusconi and his centre-right group:
  • By some polls this group is now ahead. In any case they remain a formidable force and are playing their hand by insisting on a grand coalition or fresh elections.
  • Yesterday, Berlusconi’s party accused the centre left of pandering to “factional interests” rather than needs of the country.
Beppe Grillo and his Five Star Movement:
  • Has ruled out taking part in a coalition government. Has also ruled out providing a formal backing to a technocratic government. May consider providing support to a government on certain issues but remains unclear exactly what conditions would be needed for this.
  • Has been critical of the ‘wise-men’ calling them "domestic carers for democracy".
So, the groups remain split along some fairly fundamental lines. Some elements of consensus may be found but it remains unlikely that these will be enough to form a workable long term coalition. A more likely outcome remains a grand coalition being put in place to push through some electoral reform ahead of new elections. A similar scenario with another technocratic government is also possible.

At the same time the new Presidential elections loom large. Voting begins on the 18 April with Napolitano’s term officially expiring on 15 May. This is likely to lead to further delays in forming a government. Napolitano looks set to pass the problem onto his successor, with many criticising the formation of the working groups as a way to eat up time. He can also not call new elections, meaning that the new President would be responsible for doing so – realistically then they cannot take place until June.

Another month or two of uncertainty seems likely in Italy, and any certainty may only come with new elections being announced (itself a source of further uncertainty). Markets have been calm so far, but with the acute problems in Cyprus dying down the spotlight could once again turn on Italy.

7 comments:

Rik said...

They probably have to be put under stress otherwise nothing happens.
At best after long talks a caretaker/minority/technocrat/wannabe Germans/grandcoalition government but nearly certain with elections just around the corner nothing will happen. Probably time for a new Dijsselbloom quote.

Btw Draghi is handling pretty stupid imho. This was nearly certain to leak out.
On the ground nothing changes. But this is the best PR for Grillo imaginable especially as he also do not have representatives in the wise-group'. Smells democracy EU-style. Only thing that is lacking is calling his voters stupid, populists, jeopardise the peace in Europe and more of that hogwash. From another angle that might be a way to get a clear winner next election.
The PR game is played horribly except by the usual 2: Berlusconi and Grillo.

Rik said...

They probably have to be put under stress otherwise nothing happens.
At best after long talks a caretaker/minority/technocrat/wannabe Germans/grandcoalition government but nearly certain with elections just around the corner nothing will happen. Probably time for a new Dijsselbloom quote.

Btw Draghi is handling pretty stupid imho. This was nearly certain to leak out.
On the ground nothing changes. But this is the best PR for Grillo imaginable especially as he also do not have representatives in the wise-group'. Smells democracy EU-style. Only thing that is lacking is calling his voters stupid, populists, jeopardise the peace in Europe and more of that hogwash. From another angle that might be a way to get a clear winner next election.
The PR game is played horribly except by the usual 2: Berlusconi and Grillo.

Anonymous said...

Use of the word "fix" was telling. It does not take any wise men, just the power of the EU Institutions, like last time. They will impose their people.

The correct answer should be "the entire electorate".

The problem is not the electoral system in Italy nor the foolishness of the voters, as so often said or implied in the press and media. The problem is the political parties refuse to accept they have been on a wrong course for years, promising what they cannot deliver, but they will not change their offering to the people.

In essence, as in Britain, all political parties are wedded to the institutions of the 1960s and to a like mind-set. What the people want is accountable government in the interests of the people. What they continue to be offered is a corrupt political class ruling (not governing) in their own interests.

Rik said...

@anonymous 11.01
1. Anyway, but now absolutely nothing is happening. Which means nearly certain negative growth for as long as that takes. Which is also not a sustainable situation not for the Italians and not for the rest of Europe as they become more and more a danger as well.

2. It doesnot need the entire electorate. If Grillo gets around 35% in an election at least something will happen. He gets a majority in the lower house and can block everything.

3. Anyway his policies economic ones at least hardly look realistic. Italy simply can never get the money to implement all of these not even remotely, either inside or outside the EZ/EU.

4. The problems is imho the Italian population they have to make a choice of the alternatives that are realistic.
The thing they want staying in the Euro and the rest as pre-crisis and Germany pays for the party (the BungaBunga alternative) is simply not one of the realistic alternatives.

5. Realistic now is go for:
1.-the austerity/cut red tape route;
2.-go for the exit.
With the first option probably in a few years time giving the opportunity to have something to bargain with except the present blackmail (which seems less and less credible btw). So basically have a 1a continue austerity route or 1b new reneg.

6. I would assume any rational person would go for option 1 b.
But you have to move to that and get the process started. It simply isnot at the moment.
Now it simply moves to a point where at one moment the compost will hit the ceiling ventilator and they will be in a Cyprus-like situation. And have not much choice other than the Compiegne deal on the table.
Same with Spain btw.

7. The North has increasingly fewer room to do things if they want things aproved in local parliaments. So conditions will have to be toughened the get any deal at all.
From that angle and the fact that the blackmail card has been called and appeared to be not much more than a bust you should as a proper PIG get new cards even if you want to repeat with bluffing. An unstructured collapse of half your banks is several times worse as that is the most likely scenario as things go now.

Anonymous said...

@Rik 3:13
1. I assure you much is happening; we can almost hear the sound of arms being pulled up the backs of the Cyrpiots.

2. That fewer than everyone votes for a particular party is not the point. In a democracy the entire people should have their say in whatever method of voting they have come to prefer and trust. They have not had the chance and nor, even, have their elected representatives. the Cypriot parliament was not allowed to vote for the new "solution" as they got the wrong answer first time.

5. Clearly an exit from the Euro, devaluation and selling more cheaply the products and services the nation can offer can be the only alternative to decades of grinding austerity and export of its citizens.

7. I am not sure whose parliaments you have in mind but there is increasing doubt what the German one would approve, let alone Cyprus or Italy.

The best option economically would be for Germany to leave the Euro and for the rest to slowly go their own way after the inevitable devaluation of the latter and appreciation of the former country's currency.

The best economic option is unacceptable to the current political class who have invested so much time and all their reputation (such as it ever was) in a scheme that could not work.

Rollo said...

One. Pity there is not one.

Rik said...

@anonymus
Problem being in the South overall is that they protest a lot but simply do very little. Both politicians and voters.

There is a lot of talk put at the end of the day as the alternatives for austerity packages are shorter term at least much worse all have backed off.

Reasons I would say a combination of: lack of balls, European welfarestate mentality and wishful thinking.

Which also makes that exits will be one at the time most likely. So the only realistic option is for the respective PIG or Co to get out themselves and probably out of the EU as well. As that are the rules.

Democratically of course Cyprus is a disaster. But also clear that the population had even less an idea how the situation was than the government. Like in the other problem countries basically still thinking that someone else would pick up their bill. Completely unrealistic.