Italy’s Coming Tests
WASHINGTON—After two long months, Italy has finally overcome the institutional paralysis that it slipped into after inconclusive general elections in February. The solution has involved the unprecedented re-appointment of President Giorgio Napolitano and the formation of a grand coalition government led by Democrat Enrico Letta but including key ministers from former Prime Minister Silvio Berlusconi’s camp. As a new, relatively young, and diverse cabinet — a third of whom are women and one of whom is African Italian — sets out to tackle a daunting mix of emergencies, the question everybody is wondering is whether they will succeed. But a second and no less critical question is how the success of this experiment is to be measured and what its political legacy will be.
Italy’s economy — which has been stagnating for almost two decades, well before the most recent crisis — is the most visible indicator of a society that has been unable to seize the opportunities of an increasingly global economy while suffering all the disruptions caused by a more competitive international context. Differences between the political left and right will — and should — continue to influence attitudes towards globalization, and to inform competing approaches to economic and social development. But some of Italy’s challenges have become so pressing — from stemming a high and rising unemployment to preventing the decay of its manufacturing sector — that traditional differences between the left and right may not be as relevant in the short term. Emergency measures such as easing business conditions for small and medium enterprises, which are shutting down in large numbers, and alleviating the fiscal pressure on households struggling with their budgets, for example, command wide majorities in the Parliament. Consensus, however, may be much harder to find on an agenda extending beyond the correction of the austerity policies implemented by the previous government to finally encompass structural reform. In 2011-12, Mario Monti’s allies in the center-left and center-right coalitions accepted that Italians should make their share of sacrifices, knowing that austerity would help Italy’s fiscal consolidation, its credibility in Europe, and the Italian economy’s standing in international markets. Parties dragged their feet, however, when reforms sought to fundamentally alter the system of entrenched interests on which their support depended, from large bureaucracies to professional orders.
Whether the new grand coalition government will meet the double test of overcoming Italy’s vested interest groups, while addressing marginalized segments of society — including Italy’s increasingly unemployed youth — will, therefore, be the first key criterion to assess its success. If only the first test is met, tensions between “insiders” and everyone else would only further deepen, most likely leading to more political developments like the sudden rise of the anti-establishment Five Start Movement. If neither test is met, the outcome could be dire. Without a much-needed boost to growth, there would be no meaningful way out of the crisis. A decline would become almost inevitable. A possible paradox is that the more the government will tinker with long-overdue reforms, the more public opinion may dismiss it as an irrelevant experience. But if far-reaching structural reforms were to be passed, by, for instance, completing the work done during the Monti government in areas such as labor market reform, popular backlash could be equally great. Success, therefore, could be measured in the ability of the new government to gain credibility before citizens by implementing political-institutional reforms, including cutting the cost of politics, to then use it as political capital for implementing economic reforms that are unpopular with many of the traditional constituencies. Another key question about the new experiment is what its political legacy will be. It is pointed out that a grand coalition government already signifies the rehabilitation of Berlusconi and “Berlusconism.” This would be irreconcilable with the deep-rooted opinion among many in the Italian left that the Berlusconi years were an anomaly in the history of Italian Republic and an aberration in the evolution of Italian democracy. On one hand, it is hard, if not impossible, for the new government not to be also a judgment on those that preceded it. On the other, the experiment that is just starting should be mainly evaluated for what it will do and lead to rather than what made it possible.
As in all transitions, its overall sense will only fully emerge when the exact mix of old and new will be fully known. A critical indicator will be the time that passes before the differences among the parties constituting the grand coalition become too wide to be bridged. A defining tension that the new government will be confronted with will be indeed the one between the time required to fulfill its reform agenda and the political meaning of its tenure.
Emiliano Alessandri is a Senior Transatlantic Fellow with the German Marshall Fund of the United States in Washington, DC.
The views expressed in GMF publications and commentary are the views of the author alone.