The intriguing Italian elections

The Italian and  European elites who control power have been shocked by the outcome of the Italian elections. They had gambled on the certainty of a coalition government consisting of the Democratic Party led by Pier Luigi Bersani and the new party, Civic Choice, created by Mario Monti, the technocratic  Prime minister who ran the government during the  15 months. Mr Monti should have been the guarantor of the continuity of austerity and structural reform policies in the widely forecast center-left government. But the unexpected outcome of the elections has wiped out this scenario.

Gaining a paltry 8 percent of the vote, Monti’s new party has become irrelevant either a coalition of  the center-right or the center-left. In effect, his government’s policies have been massively repudiated by the electorate. More generally, the vote has punished the entire political establishment that had shared the responsibility of his technocratic government. The Berlusconi’s Party of Liberty, even though achieving a better result compared with the dire predictions of last months, lost more than six million votes in comparison with the 2008 elections, down from 37 to 22 per cent of the vote. At the same time, the whole rightwing coalition, including the Northern League  and some other smaller parties, has lost more than 8 millions of votes, falling from 49 percent in the 2008 elections to 29 percent. In other words, this is the worst result for the center-right parties during the Republican era. What is stunning Is that the Democratic Party has not benefited at all from this upheaval, even losing more than three million votes compared to the 2008 elections, getting 25 per cent of the vote against the 33 per cent in the previous elections - the whole center-left coalition getting about 30 per cent.

The vote has instead rewarded, beyond all forecasts, the Five Stars Movement, born just three years ago, and driven by the old comedian-turned-politician Beppe Grillo. A  movement, which by gathering the mass discontent and protest, has been able to get the support of a quarter of voters (25 per cent), drawn for the most part from the PDL and League, but also in no small measure from the leftwing  voters frustrated by the support of the Democratic Party for Monti's government.

In those unexpected results we can read two fundamental features. The first is the rejection of Berlusconi's politics that has in different ways plagued the political scene for the last twenty years. The second is the repudiation of the policies carried out by Monti’s government - a rebuff that has involved and punished the Democratic Party , which was, albeit reluctantly, its main supporter.
Mr. Monti, a formerly acclaimed member of the European Commission acted as the “proconsul” of Brussels (and Berlin) in Rome. He imposed harsh austerity policies, raising taxes and reducing government spending, with the result of throwing the country into the worst recession of the last half century. At the same time, to meet the so-called reformist strategies of Brussels,  Monti’s government cut pensions, while extending the retirement age up to 67 years and over, with the result of  hundreds of thousands of workers left jobless and without a pension. At the same time, in compliance with the Brussels requirements, the technocratic government eliminated the guarantees of the Workers' Statute, substantially liberalizing layoffs - a target that even past Berlusconi’s governments  had been unable to impose.

One cannot be surprised if in this political framework the anti-establishment Five Stars Movement has been able to master so large a consensus among workers and the middle class, and particularly among youngsters.  Mr. Monti was used to justifying his unpopular measures in terms of the need to avoid the fate of Greece. This was, indeed, an unfounded comparison. The Italian sovereign debt was of the same order as the Greek  -- around 120 percent of GDP, but with two key differences: the Italian deficit budget was among the lowest in the eurozone, three times less than the Greek one, and the interest on debt had always been handled through a large primary surplus hovering around 4-5 percent of GDP. Not to mention that, even in a context of low productivity, Italy has the largest export-oriented manufacturing cluster within eurozone, after the German one. The comparison with Greece had just a terrorist function, aimed at justifying the unpopular and ineffective economic and social measures, the result of which is the perverse mix of recession and unemployment, and the  increase in the sovereign debt.

 The Democratic Party has paid a high political price for the  support given to Monti’s technocratic government. Nevertheless it is a matter of fact that, as a function of the electoral law that largely awards seats to the winning coalition, the Democratic Party has gotten the absolute majority in the lower house and the relative majority in the Senate. According to the constitutional praxis, Giorgio Napolitano, the head of state, should ask Mr. Bersani to form the new government. But to accomplish this, Bersani has to get the majority of votes in the Senate, and this depends on the support of Grillo’s Movement, as the possible support of Monti’s small party is insufficient.

At this end, Mr. Bersani will present a limited array of PD’s targets largely convergent with the Five Stars Movement’s political platform – key measures for the reform of politics and institutions, such as electoral reform, the law against corruption and conflicts of interest, a reduction of the number of MPs and of parliamentary allowances that are the highest in Europe. Briefly, he will offer a concrete attempt to clean up politics, and will respond to the harsh criticism directed toward the political class. Not less important, a second array of proposals will be aimed at tackling the recession and the growing unemployment through a program of public investment and income supports for the jobless. This proposal  is the most urgently needed and, at the same time, the most complex as it involves a renegotiation of the European budget constraints in order to obtain sufficient fiscal room to promote economic recovery and employment.The first part of this program is destined to clash with  Berlusconi’s alliance. While the second one, designed to  loosen the austerity policies, has to confront the rigid attitude of the eurozone’s Authorities, fierce watchdogs of the fiscal compact.

What, if this scheme is rebuffed by the Parliament, making  impossible the birth of a PD-lead government with the Five Stars Movement's support? According to Mr Bersani there is no other solution but to come back to new elections. Another option running in the political debate is to create a sort of Grand Coalition that would include both the Democratic Party and Berlusconi’s PDL. The rationale would be the need to continue the prosecution of the stabilization program in accord with European requirements. This large coalition might even be headed by a personality outside both parties, reestablishing in different forms the experience of a Monti’s government without Monti, and in this case with the direct participation of the two main parties.

This solution would in the end result a the slow suicide of the Democratic party. And it is not a coincidence that Mr. Bersani, along with the majority of his party, is strongly opposed. But this option is not dead. A minority of the old guard of the Democratic party, as well as the young challenger of Mr. Bersani in the primaries, Matteo Renzi, would prefer a large coalition government, including  Berlusconi’s party. And this solution would be cheered by the eurozone leadership, starting with the German government, as a clear pledge of continuity with Monti’s politics.

As we are writing, Mr.Bersani strongly rejects this option. His target is a government characterized by a clear discontinuity with the past government. If this option should fail, then new elections would be unavoidable. It would occur after the appointment of a new head of state, as Giorgio Napolitano is close to the end of his  mandate. In effect, it is not difficult to guess that an involvement in a spurious coalition with Berlusconi’s party would lead to the self-destruction of the Democratic Party, following the gloomy fate of the left-wing parties of Greece, Portugal and Spain.

 Just because Italy is not Greece, and now that even François Hollande’s French government feels the bites of the short-sighted and arrogant German hegemony, the destiny of the eurozone is unavoidably linked to the fate of Italy, a founder country of the European Union. Mark Mazower of Columbia University has written: “For Europe may be approaching a stark choice…Those preaching austerity probably do not see themselves as contributing to a crisis of democracy, but they are. The Italian elections should remind Eurozone leaders to pay attention to their voters” (Financial °Times, March 1,2013).

Doubtless, the Italian post-electoral scenario is going to open intriguing and hardly predictable outcomes for Italy as well for the future of eurozone.