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Tuesday, October 01, 2013

Things looking rosier for Italian PM Letta, as Berlusconi faces potential mutiny

As we argued in our post yesterday, it was "not unrealistic" for Italian Prime Minister Enrico Letta to win tomorrow's vote of confidence in the Italian Senate, even if, on paper, he didn't have the numbers to do so.

A potentially key development now seems to confirm our first impression. Carlo Giovanardi, a centre-right Senator and a senior member of Silvio Berlusconi's party (see picture), has just confirmed earlier rumours that a new pro-Letta group of 'rebel' centre-right senators is to be formed, and will support the government tomorrow.

Giovanardi said,
"We do have the numbers [to form a new group], we are even more than 40, and we firmly want to maintain the balance of the government. This is why we will give [Letta] our vote of confidence." 
Clearly a game-changer. If this new group comes through with the votes, then Letta will have a much bigger chance of winning the vote of confidence and staying in power.

Equally significantly, if Berlusconi keeps pushing for a showdown but Letta ends up winning the confidence vote thanks to defectors from Il Cavaliere's party, this will almost inevitably have consequences for the future of the centre-right in Italy.  

Keep following us on Twitter @OpenEurope and @LondonerVince for real-time updates.


jon livesey said...

Well, if you look at it from a strictly tactical short-term view, things look better for Letta. But the underlying problems that have caused this crisis are nowhere close to being solved.

Italy is now in its seventh successive quarter of contraction and GDP has fallen below its 2008 level. Unemployment has risen continuously since 2008 and is now double, from 6% to 12%.

The trade deficit has narrowed, but that is partly because imports have stalled at 2006 levels, which in turn is due to domestic demand/retail sales falling in 12 of the past 13 quarters.

In fact, the big picture of the past twenty years is that Italy's GDP/head has gone from 115% of the EU average to barely even.

And yet, all we hear out of Italy is this endless grand opera in Rome, where politicians talk in terms of their day to day tactics, but apparently very few people talk about the underlying economic trends.

Letta may survive for a while, but Italians are in denial about what the real problem is.

Mizio said...

Dear Jon,

I perfectly agree with you. I just want to make an additional observation. Not only Italian but also other EURO members countries, such as Spain, Portugal and even France, are in denial about what I believe to be real problem of Europe: the ongoing loss of competitiveness as compared with Eastern countries, particularly China and India. The euro will not save them.

Mizio said...

Dear Jon
I agree with you. I just would like to make an additional observation. Not only Italians but also other, such as Spanish, Portuguese and even French, are in denial about what the real problem is to me for Europe: the ongoing loss of competitiveness as compared to the East, particularly India and China. The euro will not save them.