Friday, December 30, 2011

Liberalisation, Free Trade, Kennels and Taxis

After more than a century of quarantining pets, you may now take your cat or dog into Britain by just showing a vaccination certificate. Most reports of this earthshaking piece of news concentrate on the pets; instead, they should point at the free trade element which is far more significant. When we think of controlling lobbies in the UK, most of us would look at the City, the defence industry, the unions (once upon a time). Wrong. It was the Kent kennel owners that managed to prevent the free movement of moggies and mutts for decades with far more staying power. I have no idea how they managed to literally act as gatekeeper and tollbooth to the UK but they did. Now that they have lost the monopoly, it’s a great day for the free market.

All this is a roundabout way of saying that if the UK government can beat Kent kennels, then there is now a chance that the Italian government can take on the Rome taxis and pharmacists across Italy and maybe win. Mrs. Thatcher took on the National Union of Miners and won; Mario Monti took on Microsoft and forced them to relax their software monopoly.

Now he has the really tough nuts to crack; he has promised to introduce a growth and liberalisation package for the Italian economy. In a 3 hour end-of-year press conference, Monti laid out his plans. There will be no special budgets (but he did point out that Berlusconi said the same a year ago and there were five). Over the next few months, he is going to start the much-vaunted liberalisation of the economy – not just taxis and pharmacists but also public services. That way, vested interests like taxidrivers, petrol stations and pharmacists will lose their monopolies and increase competition (paradoxically annoying the right and pleasing the left) and public services will be privatised (annoying the left and giving opportunities to the right). The theory is that Monti will be able to maintain support from both PdL and PD. He has also promised to make it easier to set up a business in Italy.

Overall, Italy does not score well on any of the economic freedom indices. The Heritage Foundation ratings have shown Italy falling over the last few years and is now on the edge of “moderately free” and “mostly unfree”, ranking 87 out 179, a disastrous showing after Berlusconi’s much trumpeted “freedom” for business. Monti would like to genuinely free up the economy.

On the other side, Monti has backtracked on the possibility of changing the 1970 Workers’ Statute in order to make firing easier. There was a threatened confrontation with the unions and even without changing article 18 of the statute (which guarantees that workers unfairly dismissed should be re-hired), there will be tension.

There are not only economic issues. He has promised to address civil law reform, an issue which is actually economic as much as social or justice. Civil cases drag on for years and often a successful plaintiff has wound up the business long before the winning verdict.

Two other issues are high on the agenda but which the government will avoid carefully – electoral reform and citizenship reform. Assuming the Constitutional Court gives the go-ahead within the next month or two, there will be a referendum next year to repeal the present fixed party list system. This means that Parliament will have to concentrate its collective mind if they want to have any say in the matter rather than leaving it to the vote. No one admits to supporting the present porcellum (pig’s dinner or worse) as the law is nicknamed but they do not know what to replace it with.

On the citizenship issue, there is a growing body of opinion in and out of Parliament which reckons that not giving Italian citizenship to children born and brought up here is not only unjust but counterproductive as it alienates useful member of society.

In the meantime, unsurprisingly, economic issues dominate.

The pre-Christmas budget will start to bite with the new property tax to be accompanied by a revision of the land registry which not only underestimates the value of most property but apparently is missing up to 600,000 properties… Also on the tax evasion side, cash payments above €1,000 are no longer legal for private transactions and €500 when dealing with the public administration. This in theory will make more business traceable. Retirement ages have been raised but there are still differentials between men and women and between salaried self-employed workers. The regional tax has been increased and already a fuel excise hike has been applied.

Combine the extra taxes with the recession and it is not surprising that almost a quarter of Italian families are risking poverty according to a recent ISTAT survey. Over the last year, the Milan stock exchange lost a quarter of its value (25.28%) and that followed a 12% drop in 2010.

The private and individual difficulties and suffering combine with the bleak public outlook with the continuing risk of Italy not being able to service its debt leading to a meltdown of the euro. So far Monti has very definitely changed the style of Italian government and introduced a level of international confidence that was not there before but the real test will be over the next 6 to 12 months. There is substance in the country’s economy but it will take very careful guidance and some luck too.

Kent kennel keepers? Rome taxis? Maybe he (and we) really can do it! Happy New Year.

Sunday, December 18, 2011

“New Italians”, Old Racism and New Violence

Back in July, the Northern League European MP, Mario Borghezio made a clumsy attempt to explain and justify the Norwegian murderer, Anders Breivik’s motives for his killing spree. “Some of his ideas are good, excellent”. He was forced to apologise but ended up claiming that the Norwegian chargé d’affaires had “thanked him” for the apology.

Racism in Italy is nothing like as virulent as it has been in the past in Britain, France and Germany, but it is there and not far below the surface.

Over the last week, it erupted into open violence in two episodes and was prevented in a third. Last Saturday, a group of angry Turinese turned a protest march into a lynch mob when they attacked a Roma camp at Continassa, because a 16 year old girl said she had been raped by two gypsies. As it turned out, the girl had lied but even if it had been true, it would not have justified the Piedmontese pogrom. The attackers arrived with flares and clubs and set fire to the camp.

Then on Monday, a 50 year old Tuscan right wing radical, Gianluca Casseri, killed two Senegalese street vendors in piazza Dalmazia in Florence. He went on to the market piazza S. Lorenzo and shot three others, seriously wounding them; surrounded by the police, he then shot himself. He had a long history of militancy and had written articles for the extreme right wing cultural centre, Casa Pound (which exists in many cities in Italy and tries to present itself as a “moderate”, “concerned” and “non-violent” right, inspired by Ezra Pound).

As a result of the attack, police in Rome arrested Maurizio Boccacci, leader of an extreme right wing group in Rome, Militia, charging him and others of planning attacks on the president of the Jewish community in Rome, Riccardo Pacifici, and some Romanians. Ironically, they were also accused of planning attacks on the mayor of Rome, Gianni Alemanno and speaker of the Chamber of Deputies, both former right wing militants. Both, though, have made their commitment against racism very clear.

All these episodes are a long way from mass violence against new immigrants or the old “other” (there have been Jews in Rome for longer than there have been Christians) but they show how easy it is to rekindle old hatreds or create new ones. Italy introduced discriminatory laws against Jews in 1938 and had had similar racist legislation before then in the colonies. There was never any violence to match the Nazis or even the colour bar in the US and European colonies (and some home countries too)… but then until the 1990s, there were in practice no people of colour…

The risks for the future are not just from the extremists, including some supporters of the Northern League, part of the government until last month. The real risk is from moderates (real and fake) who make low key racism respectable or increase tension, sometimes without realising. There is Berlusconi who said in 2009 that Milan “looks like an African city because of the number of foreigners”. That was an overtly racist remark but there is a much more subtle and dangerous form of language.

This week there were presentations of research on migration to coincide with International Migrants’ Day today. In one of them, the Transatlantic Trends on Immigration 2011 report was presented. TTI is sponsored by the the German Marshall Fund and the report was presented by the international relations thinktank, the Istituto Affari Internazionali at the Chamber of Deputies. It was all highly respectable, light years away from any racist radical. And yet the presenter, Pierangelo Isernia from the University of Siena, started by talking about “the problem” (others used more neutral terms like “question” or “phenomenon”) of immigration. Orally and in the report, the phrase “illegal immigrant” was used despite recommendations from the ILO internationally and Italian journalists to use “irregular”. Worse, in most of the discussion that followed, there was a constant confusion between “immigrants”, “asylum seekers”, “refugees”, a distinction which is crucial in informing the public perception of migration.

Magistrate and former junior minister of the Interior with responsibility for immigration, Alfredo Mantovano, bundled together the European Commission, the Council of Europe’s Commission for Human Rights, France and Greece as “Europe” which according to him was not helping Italy deal with immigrants. As a man of law and political practitioner, he knows the differences much better than most, and admitted as much afterwards. If someone like that and people much more open to migration do not make these distinctions, then we cannot expect the broader public to do so. It is not pedantry or political correctness – words create assumptions and reinforce perceptions so we must all be careful how we use them.

For today’s celebration of Migrants’ Day, UN Secretary General Ban Ki Moon’s message was very clear.
“Migration affects all countries – and so do myths and misperceptions about its impact. There are many false assumptions surrounding migration. One such myth is that migrants are a burden. In reality, migrants make vast contributions to host countries. As workers, they bring skills. As entrepreneurs, they create jobs. As investors, they bring capital. In advanced and emerging economies, they play an indispensible role in agriculture,tourism and domestic work. Migrants often care for the youngest and oldest members of society. People view irregular migration as a crime. Many think migrants who lack proper documents are a danger to society and should be detained, or that all women who migrate to take up low-skilled jobs have been trafficked”.

Yesterday, there were demonstrations in Florence and across the country to show solidarity for the two murdered Senegalese. Thousands marched to show their condemnation of all racist violence. It was an important sign, but as important as the numbers (of Italians and immigrants), and more important than the usual speakers from the centre-left, was the presence of a minister from the previous government, Gianfranco Rotondi, and the Northern League mayor of Verona, Flavio Tosi. Neither is representative of his party, but their example is a start to curb the old racism and prevent a new one growing.

Monday, December 05, 2011

Monti the Knife

That great cartoonist, Vicky (Victor Weisz) got it right more than 50 years ago when he drew the aristocratic Harold Macmillan as the cutthroat Macheath

, Mack the Knife. Mario Monti is as polite and well-mannered as Macmillan and is trying to deal with Italy’s debt in a similarly surgical way.

Yesterday he presented his new budget to the press; today he has taken it to Parliament and tomorrow he’ll start the television round.

The immediate result has been positive with markets going up and the spread between Italian and German bonds going down. If it’s more than a one-day-wonder, there will be hope that next week’s European summit will be able to look at Italy with less trepidation and start working on the European aspects of the crisis.

Monti promised “rigour, fairness and growth”; this budget has the first element but is very weak on the other two. The whole is worth €30 bn, almost three times the figure of €11bn first mooted when he took office a fortnight ago. New taxes make up €17-18 bn and cuts €12-13 bn. A third will go to growth and €20 bn to debt reduction.

Predictably, he has re-introduced the property tax on first houses and will increase their nominal value; luxury items will be hit (bigger boats and cars, planes and helicopters) but Berlusconi proudly claimed a victory as there is to be no wealth tax nor indeed an increase in income tax. There will be a further levy on funds which had been illegally exported and then returned under an amnesty last year. Index-linked pension raises will be stopped or reduced over €1,000 per month and retirement age will be increased to 62 for women and 65 for men. The only reduction in the cost of politicians will be a 10 person limit for provincial assemblies (for the last 30 years all governments have promised they would abolish the provinces altogether, instead another dozen have been created). There are limited tax incentives for businesses.

Monti is wholly dependent on Parliament to pass these measures and both sides have laid down clear vetoes. He obviously thought that the centre-right was more likely to actually use the veto, hence no wealth tax while the unions rather than the centre-left parties will complain about pension reform.

There is nothing dramatic or symbolic in the budget; its most striking features are what is missing. The wealth tax for a start and serious measures to deal with tax evasion (there is an upper limit of €1,000 for cash transactions, supposed to allow great transparency but unlikely to uncover those who do all their business in cash). There was no mention of cutting an order for 131 F35 planes for €15 bn, ordered in 2009. There had already been protests before Monti became prime minister. The thorny issue of la casta, the political class perceived as leaches on the country’s lifeblood, is not addressed. No cuts in parliamentarians’ pensions and privileges, their cars, their phones even their tickets to football matches. No suggestion that Church property used for commercial purposes should pay the property tax (leading to suggestions that the Catholics in the cabinet are a fifth column for the Vatican). Today’s NYT article showed Monti on a television screen dominated by a crucifix on the wall behind, a perhaps not so subtle way of pointing out where power lies. It is true that there is a high proportion of Catholics in the cabinet but often it is the practicing Catholics like De Gasperi or Scalfaro who make the strongest stands against an overbearing Vatican. No one could accuse either of them of not being real Catholics…

Despite the good results on markets, on the home front, there is less jubilation.

The contrast between here and abroad was also evident in how the Labour Minister, Elsa Fornero’s tears at the press conference were covered (she was unable to pronounce the word “sacrifice”. Most Italian commentators thought this showed “a technocrat’s humanity”. But it was devastating for the image of Italy in general and Italian women in particular. A German (female) colleague pointed out the German women have been working to the same age as men for years and both work longer than Italians will when these measures take effect. So what is there to cry about? And Irish journalists asked me, somewhat bemused, “there’s a freeze on index-linked pension increases; where's the drama?” They have been through much worse. A Spanish friend was much more direct “No, Spanish ministers don't weep during press conferences, but they make the electorate weep on a permanent basis”.

There was an interesting contrast between the moment of drama in the Italian press conference and the very low key address to the nation at the same time, by the Irish prime minister, Enda Kenny, also trying to cut spending and increase jobs and who also took over with the job of cleaning up a serious mess. His most telling remark was that next week’s European summit “must not only make tough decisions but implement them”. Touché. He also cut phones and cars for former taoiseachs (PMs). Double touché.

There is another disappointment in Monti’s style rather than substance. Tomorrow, he will go to “Porta a Porta”. This is RAI 1’s flagship talk show run by Bruno Vespa, Italy’s televisual answer to Uriah Heep. He is the man who fawned over Berlusconi and encouraged him to use the progamme as an uncontested soapbox for his views in return for Berlusconi promoting Vespa’s books. Either Monti expects a similarly comfy ride or he calculates that he can rely on the centre and centre-left but has to cover his centre-right flank and is better served there than in some other show. Neither motive is very endearing.

Monti might be imitating Macmillan with the knife but he could better act on that other line of Macheath’s “what is the crime of robbing a bank compared to the crime of founding one?”

Saturday, December 03, 2011

“New Italians”. The Good News and the Bad.

A month ago, I wrote about a project the American University of Rome was working on with the Rome City Council; the first phase came to end this week with a closing ceremony. More importantly, the whole issue of immigrants in Italy and their children has become an important part of the political agenda.

Last week an immigrant boat was wrecked on the coast of Apulia; three died. Most of the immigrants came from the Middle East and further east. They were Kurds, Afghans, Iranians, Iraqis and Bengladeshis all seeking streets paved with gold in the European Union. Then a Morroccan woman, resident in northern Italy, was killed by her violent husband when she wanted to leave him and convert. These are two episodes which underline the ongoing difficulties both of immigration and of integration for those who have made the jump.

The good news, though, is that something is moving for the great majority of immigrants and their children. Beyond the predictable difficulties that immigrants face, they have a peculiarly Italian condition. Children born and brought up in Italy of non-Italian parents, are not Italian citizens. They can only become Italian when they reach 18 and then jump through a difficult set of bureaucratic hoops. President Napolitano made his opinion abundantly clear last week when he said that denying citizenship to children born in Italy was “a real folly, an absurdity”.

His remarks were picked up by Andrea Riccardi, the minister for “International Cooperation and Integration”, a new minister and a new ministry which is already a positive sign. He said the President was right and that the present citizenship law based on blood ties (ius sanguinis) should be modified in favour of rights based on territory (ius solis). At the moment an Argentinian or Australian with Italian grandparents can claim citizenship whereas the child of foreigners born here, cannot.

There is solace too from that very opinionated voice, The Economist. It has just run a cover story

, editorial and a briefing article extolling the financial and economic advantages of migration for both host and original communities. They know it and we know it, but it is a point that has to be made again and again to dispel the “emergency” and “invasion” view of immigration.

The invasion image is, of course, part of the bad news. There are neo-Fascist groups in the area around my University on the Janiculum and this poster

was put in front of a nearby lycée (it has since been torn down). The message is clear and explicit and many believe it which is why The Economist articles are so important. When Napolitano said that children born in Italy should be Italian, former ministers Calderoli and Maroni of the Northern League said they were ready to fight at the barricades and La Russa (outgoing Minister of Defence, now in the PdL but once of the neo-Fascist MSI and hardly changed since then) threatened to bring the government down if the new Monti government dared move on the issue. They have tried to muddy the waters by implying that a new law would give citizenship to the child of any irregular immigrant – it wouldn’t.

This is where our ceremony fitted in. It was some sort of antidote to the poison not just spread by neo-Fascists in our part of town but by much more moderate folk in the whole country. We had confirmation of President Napolitano’s commitment to the issue when his Diplomatic Counsellor, Amb. Stefano Stefani replied to our invitation saying: “The Head of State wishes to inform you of his sincere appreciation… of the attention opportunely given to the issue of the new Italians which is so important for the future of Italy and Europe”. Much appreciated by us in turn, to have encouragement from the President.

We gave out the certificates to those who had taken part in last month’s seminars and received some feedback from the participants. One, an AUR student, a Tuareg, Iddar Adingad, pointed out how the seminars had broken down barriers between the immigrant groups and given them a clear idea of who the “other” was. There was a Singalese who explained how the seminars had mitigated his anti-Americanism and shown him that American ways allow migrants to flourish in the States (it it were always that easy… but direct human contact often works). He also told us of an episode where he felt empowered enough to intervene on behalf of some immigrants on a bus (again, if it were always that easy…); but both are a start


Then the serious ethnic fraternising began in the University garden with tables laid out with food from the four continents. It was a feel-good moment, and meant to be so and provides a foundation on which to build. There will be other initiatives like this one, ones which include some of the biggest groups of immigrants (there were few north Africans and no Chinese) and at least a few “old” or “ethnic” Italians.

Parallel to lobbying for a change in the citizenship law, there are other “softer” activities which are still very relevant. The Rome Public Libraries have offered prizes for video, photo and literary accounts of the lives of “new” Italians in their Concorso Biblioteche di Roma “Figli di tante patrie”.

And on Monday, the RAI’s Radio 3 will have a whole day of programmes presented by “new Italians” or foreigners resident in Italy to underline their presence and contribution.

We’re moving in the right direction.

A note on words used: even more than most political subjects, the words used to describe and analyse betray a position held. The most obvious conflict of words is over “irregular” and “illegal” immigrants. The ILO tries to persuade journalists and politicians to call them “irregular” but has scant success even with non-xenophobes. Today in Italy, since 2009, it is actually a crime to be an irregular immigrant, so “illegal” is sadly correct though if the courts really had to try and convict them all, there would be chaos.

But the term which I am interested in is what to call the people this blog describes. Often they call themselves “second generation immigrants” while others argue that they have not emigrated from anywhere – they are natives of Italy even if many are not Italian citizens. Hence my use of “new Italians”, itself a loaded word because it presumes there is an “Italo-Italian”; but for the moment it’s the best I can do.

This blog is part of the ongoing project at The American University of Rome in which we are working with immigrant communities on integration and leadership issues for both “old” and “new” Italians. This and future blogs will be headed by the title “New Italians” and Lele Luzzatti’s multicultural she-wolf.

Wednesday, November 30, 2011

The Protocols of the Elders of Brussels

Conspiracy theories are a alive and well in Italy.

Today’s editorial by Marco Travaglio in Il Fatto Quotidiano is headlined “Giù il cappuccio” (Off with the hood) which he repeats in the text. His point is that the new junior ministers in Monti’s government have political pedigrees (and sometimes not very clean ones) behind their “technical” qualifications. Fair enough… but why introduce the innuendo that they are somehow masons.

Travaglio is a liberal who for a decade or more has been the country’s conscience on corruption and malpractice, mostly Berlusconi’s but not only. So why does he stoop to plot theories?

From the moment Monti was given the job of forming a government, there was a swirl of insinuations first around him and then around his cabinet and now, around the junior ministers too.

Mario Monti after all, is an ideal target for conspiracy theories. He is apparently a man of power but ever understated, quiet and confident with a subtle sense of humour. This in a country where power is usually advertised loudly, certainly in Berlusconi’s version but even before that, ministers and cardinals had costumes and cars which showed their status. In the past the only downplayed power in Italy was the mafia, the ultimate conspiracy.

Monti’s power too, is hidden, so the conspiracy logic goes. He comes from an elite university, the Bocconi in Milan both as a student, a teacher, rector and president. A good proportion of his cabinet are also Bocconiani, enhancing the idea of an old boy network; the rest come from other universities or are managers or professionals (an admiral for Defence, a magistrate for Justice, a diplomat for Foreign Affairs). Monti is also a real catholic (in Italy almost everyone is nominally catholic but few practice beyond rites of passage – hatching, matching and dispatching) as are a significant number of the cabinet. Then there is the banking connection; Monti worked as an international advisor to Goldman Sachs and more sinister for the conspiracy theorists, he has been an active member of the Bilderberg group and the Trilateral Commission. Both are very discreet meeting places for people of influence who discuss international politics and economics off the record and as such easily branded as cabals of devious leaders planning world dominance.

His time in Brussels is well known and well documented as is the mutual respect between him and the EU establishment. But for some, that too is evidence of underhand activity.

A few days after Monti’s appointment, a very loquacious and publicity-seeking Freemason, Giole Magaldi, declared that Monti was a mason on a controversial radio chat show La Zanzara. And that an unspecified number of his cabinet were also masons.

It is difficult to judge how many Italians take the “plot” seriously but the beauty of any self-respecting conspiracy is that it’s impossible to disprove a negative so the temptation to think there must be something there is strong. The original “Protocols” were a plagiarised fraud, uncovered 18 years after they were first published in 1903 but that did not stop Hitler using the text as if it were true. Even today, copies are on sale in many countries purporting to be serious evidence of the “Jewish plot”. It is a story which is flexible (and vague) enough to bend into most real history over the last century which is why it is longlasting and devastating as an antisemitic tract.

The Monti protocols are far more banal but to sustain the plot we can see that the banks (or many of them) have indeed been supported by governments from the US to Greece. There are indeed networks running through Monti’s cabinet (it would be surprising and disturbing if none of them knew any of the others). Hardly Dan Brown stuff, though.
Monti and his colleagues have experience and achievements which can be judged on their merit; his presence in both the Bilderberg group and the Trilateral are part of this curriculum and give us an idea of what sort of policies he will put forward and the methods he will use to implement them.

So far the talk has been of anything but radical policies. The most likely are what he has promised, liberal economics tempered by social justice – hardly a plot. Especially if he succeeds.

There are indeed flaws in some of the ministers and junior ministers’ CVs. Some are definitely not neutral, non-political technicians and some apparently have some shadows in their past and potential conflicts of interest in their present. But Travaglio and other serious journalists should concentrate on that and the real policies that the government proposes, not hoods, aprons and plots.

As Monti was putting his government together, a friend wrote to me asking if he was Jewish… if he was, the last piece of the plot theory would have fallen into place. But who knows, maybe going to mass and appointing lots of Catholics to his cabinet is all just a coverup and Brussels really is run by Jewish bankers and masons… who are preparing to take over Italy.

Monday, November 28, 2011

His Final Bow - Not Yet

In his farewell video, Silvio Berlusconi said that he was not going to give up politics… on the contrary, he would double his effort to change the country. One of his supporters here in Rome put up posters saying that he too would “double” whether efforts or stakes in not clear. On the face of it, there is no reason to presume that Berlusconi is out of politics for good.

After he resigned, he pointed out, quite correctly that he had not lost a vote of no confidence and that he still has an absolute majority in the Senate where he has already said that he can pull the plug on the Monti government whenever he wants. Rather more self-servingly, he argued in the message that his move had been “statesmanlike”; in his version, he gave up power for the good of the country. Either way, it was far less than the body blow that many of the foreign media were trumpeting. It was significant that The Economist titled its article “Addio Silvio” not “Arriverderci” (see you again), a hope rather than a statement. Those celebrating his resignation in Rome a fortnight ago were too smart to think either that the country’s problems were over or that Berlusconi had left for good. There has been no political equivalent of the stake through the heart; a resounding defeat either in Parliament or at the polls.

Since then he has again told PdL senators that the government “will last as long as we want it to” and the Monti government has “suspended democracy”.

There were even suggestions that one of the reasons that Berlusconi stepped down was the dip in Mediaset shares. Three days before he went, they tumbled 12.5% . If this was the case, then the conflict of interests had come back to bite him hard and where it hurts, in his pocket. If true, it would have meant that he resigned in order to prevent the collapse of his own companies. The opposite thesis was also aired; that by leaving office, Berlusconi’s companies would have to forego the lucrative government publicity contracts. The fact that both theses are plausible shows how deep the marriage between public and private interest was in Berlusconi’s management.

Yesterday he was again back in the political business… as if he ever went away. In Verona he started what looked very much like an election campaign, one which might last until spring 2013. He launched it with a message that was almost identical to the one that put him in power in 1994. In this clip, he is generous with his favourite words libertà and comunismo going as far as to say that “we must fight for our freedom”. This would be comic in a country where communists are on the endangered species list if it wasn’t for his only concrete definition of the end of “freedom” as being a state where transactions of €200-300 must be verifiable and traceable. He said that such a regulation would put Italy in danger of becoming a “tax police state”. He was saying that “freedom” was freedom to evade taxes.

Granted he has said that he will not stand for office again; granted also that his eyes had narrowed and his face was puffy and he faltered a little on some lines but it was still an expert performance by any standards. It all depends on what sort of appeal the well-worn rhetoric will have beyond the Berlusconi diehards

Even though his departure was precipitate, it was controlled and planned. He produced a video message which was shown across the networks. The fact that a prime minister bowed out with a special message is exceptional – normally resigning leaders confine themselves to a short statement conceding defeat and wishing their successors well. Not Silvio Berlusconi. Either he is in denial and maybe even his analyst could not work that out or he is just resting. Certainly, he is not the retiring type.

Despite his claims of not seeking office again, there is a real possibility that he will make another run for power either in the near future, if the Monti government shows itself unable to calm the markets and elections are called early next year or in 2013 when the legislature reaches its natural term and if Monti is successful in bringing the Italy debt under control and giving some hope to the economy. In order to do it, Monti will have made Italians pay a high price economically and socially and the political parties will be able to blame him for the hurt rather than themselves. Given Berlusconi’s reluctance to support Monti, he will try and present himself as the return to the good times.

In either scenario, he will have his television stations – the three he owns and some residual support in two of the RAI public channels. Monti’s government has neither the time nor the style to move Berlusconi supporters out of positions of power. He still has his print media, dailies and weeklies and of course he still has in practice unlimited financial resources. He has of course lost that other commodity that used so well over the past year, government patronage – a number of his new supporters last year came over with an offer of an undersecretaryship or the like – but he can and no doubt will, promise jobs in his future government.

The other element which helped keep him in power for eight of the last ten years is almost as valid today as before; the divisions in the opposition. For the moment, at least, most of the left, all of the center-left and the center have united around Monti to address the crisis but we can be pretty sure that they will start bickering as soon as elections come round.

Worse, there is at least one dark scandal cloud hanging over the main center-left party, the Democratic Party, (PD). There are allegations of illegal financing in Milan over many years with the main person involved closely linked to the party secretary Pierluigi Bersani. Whatever the truth of the allegations, we can be sure that the Berlusconi media will hammer the story, not one to have on the front pages during a campaign. The centrist UDC is also involved in accusations of corruption involving the state owned Finmeccanica.

Today despite the economic and financial disaster that Italy finds itself it, he still has an approval rating of over 20%. The polls give the center left parties a good majority but over the last few months the biggest party and still growing, are the undecided and non-voters. In the past Berlusconi has been able to bring them out.

There is also the possibility that he will try and act from behind the scenes, hand over gracefully to the party secretary Angelino Alfano. But Alfano is a lightweight and Berlusconi likes the limelight too much.

He still has many obstacles to making a comeback. No longer prime minister, he will find it much more difficult to avoid the hearing in his four trials (three for corruption and one for abuse of power and sex with an under age prostitute) and his party too, like the center-left, is divided. He is also 75 and showing his age so it will not be easy.

After years of saying that Berlusconi was finished and about the leave the scene, it would be unwise to presume that this exit is the definitive one.

This blog is an updated version of Berlusconi's Final Act published in Foreign Policy on 16 November.

Friday, November 25, 2011


Italy’s new prime minister is the antithesis of his predecessor. Not only are there no dirty jokes, orgies and multiple properties vaunted before visiting heads of state, there is almost no spin, no promises and no instant remedies. Mario Monti’s style reflects the other side of Milan and Italy as a whole as does the other Mario – Draghi who took over as head of the European Central Bank a fortnight before Monti became Prime Minister.

And his approval ratings suggest that Italians overwhelming support him. As he was winning his votes of confidence last week, 83.8% approved of him and 78.6% approved of his government compared to 22.4% for Berlusconi and 20.5% for his government at the end of October.

He and his ministers have said almost nothing in the week that they have held office. Most have not opened their mouths in public and the ones that have, said very little. Health minister, Renato Balduzzi appeared on Lilli Gruber’s “Otto e Mezzo”, the quietest and most respectable political talk show very different from the Coliseum act that most of the others put on; he did not say very much about what the Monti government would do. The only person who has been outspoken is the development and integration minister (a new post), Andrea Riccardi who reiterated President Napolitano’s statement that the children of immigrants born and brought up in Italy should have Italian citizenship, a controversial topic for the Northern League and some of the right but not part of the government plan.

For his part Monti is working on the supplementary budget measures that he hopes to pass before Christmas. He will need to do a lot more communicating to get it through parliament and a suffering public. His main fault so far has been to move very slowly and very quietly.

Almost certainly the local property tax on first houses (ICI) abolished by Berlusconi will be reinstated. This will take some of the pressure of city administrations which had to cut services or raise charges. There’s a good chance of a wealth tax although the centre-right has said that they oppose it. According to a Demos survey this week, most Italians expect and accept the property tax, the wealth tax and possibly an increase in income tax as long as they are progressive taxes and as long as they catch tax evaders. There is a problem of course in that “tax evasion” is something that only other do, by definition – if I pay a professional or an artisan in cash, that’s not evasion; it’s only the fat cats that evade… So if Monti really does clamp down on the grey economy, there will certainly be reactions.

He will also have to face the pension issue; the same survey showed that raising the pensionable age is very unpopular but will have to be done sooner or later. The other controversial issue is the reduction of job security, something which the unions and the left have made very clear is unacceptable. But it is an issue which Monti can finesse as employers can already lay off employees if the accounts show that the firm is at risk.
Whatever measures he does propose, they will have to navigate between the shoals of the uneasy coalition of centre-left and centre-right. The parties, especially the old centre-right majority have made it very clear that they could bring down the government whenever they want.

All the talk about a technocratic government being “undemocratic” dissolves when faced with the reality of parliamentary supremacy. It is true that Monti was not elected by the people but it is equally true that their representatives will have to accept whatever measures the government proposes.

This reality even allowed Monti a joke when he said in his speech asking the Chamber for their confidence “I would ask you not to refer to parliamentary democracy and the government’s complete reliance on Parliament with the electrical metaphor of ‘pulling the plug’; it is not clear whether we might be considered an electric razor or an artificial lung”. His government is actually both.

Of course the government is weak and vulnerable to whatever winds are blowing through Montecitorio but its very weakness combined with the storms howling outside Parliament paradoxically give Monti a good chance of surviving the full term simply because no one dares to take the responsibility of bringing him down. Both the big parties are internally divided which will also help Monti.

He started well enough in Brussels but that was predictable and it would have been a disaster if he hadn’t come home with at least the verbal the support of Merkozy. Even without concrete measures from Brussels, Italians are happy to see their Prime Minister be treated as an equal by the leaders of the two other big euro economies. If he can get the supplementary budget measures through before Christmas including at least some of the controversial items like property tax on first houses, wealth tax and some labour flexibility measure, then the rest will be (relatively) easy.

Thursday, November 10, 2011


For the oncologist, a cancer can be fascinating – for the patient, rather less. Studying Italian politics is truly enthralling, living it and facing the consequences leaves one a lot less enthralled. The moves and counter moves over the last few days have the allure of the Spassky-Fisher chess clash and are a lot more understandable to the non-initiated, but as a citizen facing the possible consequences of an Italian meltdown is a frightening prospect.

On Tuesday, Berlusconi was to have faced a no confidence vote if he failed to win an absolute majority in the budget ratification vote. In the event, he took 308 votes, eight less than the 316 necessary; “traitors” as he scribbled on his notepad. The next move should have been the opposition tabling a vote of no confidence to be voted on in the next few days. Instead, Berlusconi outmanoeuvred them by promising President Napolitano that he would resign… after the package promised to the EU had been passed. The bill is a complicated one and on Tuesday evening, no one was certain whether it would take a few days or a few weeks. Until then, Berlusconi was safe and in power as no one would table a no-confidence motion while the bill was being discussed. After that, he said he hoped there would be early elections though he allowed that it was the President’s prerogative to decide. He also hoped that the promise of his resignation would calm the markets. The subtext was that in the time before Christmas, Berlusconi might be able to salavage his majority as he had done exactly a year ago.

Instead, the markets went mad. The spread between German and Italian bonds had already reached a new record 495 on Tuesday after the budget vote. Yesterday it went up up to a devastating 570. Ten year Italian bonds were at 7.47%, well over the presumed danger mark of 7%. Berlusconi’s spokesmen try to spin this by saying since he has promised to resign, this shows that it is not his presence which caused the run on the Italian treasury bonds. In fact, though, the markets like the street in Rome, once again, didn’t believe him. He has made too many promises and one to resign without even a date on it, was not plausible. The idea that there might be elections with Angelino Alfano as Berlusconi’s successor also raised eyebrows of disbelief. Alfano would be an obvious front for Berlusconi so would mean absolute continuity.

Faced with turmoil in the markets, President Napolitano made his move. He issued a statement reiterating Berlusconi’s commitment to resign, locking him into that commitment, and saying that the European recovery measures would be passed “with days”, hinting that he wanted the bill on his desk before Sunday to avoid more confusion when the markets open on Monday. Most of the opposition figures said they would support the easy passage of the bill through both houses, at worst abstaining but not obstructing.

Napolitano’s final move was to appoint Mario Monti life senator, a move seen as a prelude to asking him to form a government. Berlusconi himself accepted the proposition of a future Monti government (though some are suggesting he might be finance minister in an Amato government).

It looked as if Berlusconi was on the defensive again, check if not yet check mate.

Monti is by far the best candidate to lead a technocrat government which is the only way out of Italy’s predicament. He is well-respected in Brussels and in the European capital both as an academic economist and a very able politician. As European commissioner for competition, he took on Microsoft and won. He was appointed by Berlusconi and confirmed by the centre-left D’Alema government in 1999 so cannot be called partisan.

Yesterday evening and this morning, it seemed as if it were a done deal with Monti presumably sounding people out for possible positions in a government which would begin early next week with a “huge job to do”.

Now, we are back to uncertainty with part of the PdL calling for elections and part accepting the Monti option. Antonio Di Pietro has said that he will not support Monti but his supporters are furious. Less surprising, the Northern League will not support the technocrat. This leaves the PD, the centrists, some of the left and some of the PdL supporting the government of national unity, far less than the big majority all party support that Monti or anyone else would demand before taking up the job.

No wonder the employers’ federation’s financial paper Il Sole 24 Ore has Fate Presto (Act Quickly) on its web page in huge characters.

The package promised by Berlusconi to the EU when passed, will be a start, but then there will be difficult times, more cuts and greater hardships, possible if the new prime minister can work with most of the parliament, employers and unions and above all show that public sector cuts mean cutting politicians’ privileges.

Tomorrow the bill goes to the Senate – that will be the test… or the next move towards a still distant endgame.

Monday, November 07, 2011

A Necessary but Not Sufficient Condition

Silvio Berlusconi’s demise is imminent. It might happen tomorrow when the Chamber votes on last year’s budget statement. It might happen the day after tomorrow if the opposition tables a motion of no confidence. It might happen next week when the Senate votes on the reform package that the government put to the European institutions last week. Or he might just be able to drag it out until January.

But when it happens, then the real work will begin to put Italy and indirectly the euro back on track. And how it happens will condition the recovery.

The immediate question is when and how he leaves Palazzo Chigi; certainly there is no lack of pressure to get him out. The opposition had been screaming for months, but that is normal; the European institutions plus Merkel and Sarkozy have been making strong hints since August; his natural allies, the Church and the employers’ federation, the Confindustria have been explicit in their distaste for his person and policy for many weeks. But over the last week or so, an increasing number of party loyalists have been saying that he ought to “step aside” for the good of the party and the country.

The old Christian Democrat stalwart, Beppe Pisanu has said it explicitly for weeks and over the weekend, Berlusconi’s two most faithful followers have added their voices; Angelino Alfano, former minister of justice and now anointed successor and Gianni Letta, Berlusconi’s longterm eminence grise and fixer have tried to persuade him that it would be better to go willingly and have some control on what follows than be pushed ignominiously.

Today, at least, Berlusconi did not get the message – the night and grey light of dawn might make him change his mind.

In the meantime, the markets made their opinion abundantly clear. The spread on Monday morning between German and Italian bonds went up to its 491 points, the highest since the euro was introduced. Long term borrowing rates went up to 6.67% perilously close to 7% which is where Ireland, Portugal and Greece got into trouble. Both indices dropped mid-morning when there was a rumour that he was about to resign and then went up again when the rumour was denied. According to one calculation Berlusconi’s resignation would apparently mean a drop of 100 points in the spread.

Significantly the resignation rumours came from two Berlusconi faithfuls, the court jester Giuliano Ferrara in one of the family papers and Francesco Bechis deputy editor of Libero another centre-right paper. Berlusconi denied it using old-fashioned news agency wires but also Facebook.

He spent much of the day with his children and closest business associate, Fedele Confaloniere, presumably working out damage control action for the family’s Fininvest holdings, a good and possibly final example of Berlusconi’s priorities. The euro is at risk through Italian inaction, but the Italian prime minister is looking after family interests.

Over the weekend, Roberto Maroni, minister of the Interior and potential leader of the Northern League admitted that the coalition no longer had a majority but like other government supporters said that the only answer is early elections on the grounds that “the sovereign people” had chosen Berlusconi’s coalition in 2008 so they should choose a possible substitution – immediately.

The constitution, though, gives the prerogative to the President, hence Napolitano’s consultations over the last week to sound out possible alternatives.

If tomorrow’s vote does not pass, then Berlusconi will have to tender his resignation. If it passes without an absolute majority, then the opposition have promised that they will table an motion of no confidence which is likely to pass. Again, resignation. If enough waverers have been convinced by Berlusconi over the night, then the whole performance will be repeated next week when the European package will be voted on.

When it happens, Napolitano will have (at the moment), three choices. The first is a Letta-led government. This would mean continuity as Letta is Berlusconi’s man but it would almost certainly exclude the main opposition party, the PD which has said they will not support Letta. There is some talk of Giuliano Amato, the Socialist leader who took over from a discredited Bettino Craxi in 1991 and introduced swingeing taxes once before. The other possible leader is Mario Monti, former European commissioner, well-respected on the left and the right, in Milan, Rome, Berlin, Paris and Brussels. If takes the job and can put together a team capable of implementing equitable austerity measures and a growth package, then there is hope for Italy and the euro. But it is a tall order

I was asked for an assessment of possible “social unrest if the new government were to put through draconian reforms”. That problem will be high on Monti’s or whoever does get the job, list of risks. There are two reasons for optimism – despite the relative decline over the last decade, Italy is still a wealthy country with savings which can and are already being drawn upon. It also has one of the biggest grey economies in the EU, one which works in areas that Draco does not reach.
So it is unlikely that there will be widespread unrest like in Greece or in Italy in 1968-69 or 1977. With the double underpinning of a revolutionary left wing ideology and mass protests, it is also unlikely that we’ll see widespread terrorist violence as in the ‘70s and early ‘80s.

Still, Italy has a long history of political violence, it is part of the language of politics in the whole of united Italy. It only takes a few hundred well-organised activists as we saw last month, to set Rome ablaze and there are still a few Red Brigade diehards, exiles from a different era, still prepared to murder. And there is genuine hardship with increasing levels of poverty and discontent so Italy next revolution, the one that is just beginning, will not be completely velvet.

But before anything happens, there must be the change of the man on the throne… the substance will follow.

Friday, November 04, 2011

“New Italians” – Leadership in the Immigrant Communities

Lele Luzzati’s picture of the she-wolf playing with children of different colours while looking after her foundlings is a perfect image of an Italy we hope is being created. And with a little help from our friends we made a tiny contribution last month with a two day seminar for potential future immigrant community leaders working with the Rome city authorities.

The biggest single change in Italy over the last 20 year is not Berlusconi despite the coverage he gets – it is the dramatically changing face (literally) of the country to immigration, the first peaceful influx of people since the Roman empire.

So far, the experience has been largely positive both for Italians and for the new arrivals and their children but there is no reason to presume that it will always be like that. Already the Northern League has started trying to ride a racist tiger and other politicians are tempted by easy and vicious populism. There have been no riots like the ones in Lancashire in 2001 or in the Paris banlieues in 2005 but the Italian immigrant experience is hardly 20 years old. There are a lot of us who would like Italy to learn from the mistakes of other Europeans and north Americans… put frivolously, to make new mistakes and not the same ones that the British, the French, the Americans have made.

According to the latest Caritas report on immigration in Italy, there are 4,570,000 regular immigrants, or more than 7.5% of the population. Italy has changed dramatically over the last 20 years. When I came to Italy in the 1974, there was one foreign restaurant in the whole of Rome (Eau vive, a French restaurant run by Vietnamese nuns) and a non-white face in the street was a rarity. Today, Rome is still not comparable to London, New York or Paris but it is becoming multicultural. There are ethnic restaurants everywhere, businesses run by immigrants, carers from eastern Europe and Asia and building workers from eastern Europe. Even the village in the country where I do my weekend shopping there is an internet and remittance centre in the square run by Bengladeshis and round the corner, a new shop selling Romanian groceries.

Despite the language used by the Northern League and other anti-immigrant politicians, immigrants contribute massively to Italian society – with their labour which generates growth for the Italian economy and with their presence and their children. Italy is declining both economically and demographically.

The issues are how to integrate this presence.

Since 2003, Rome city council has had four adjunct councillors elected on a continental basis – the Americas, Africa, Asia and (eastern) Europe by resident non-EU citizens (EU citizens have had the vote and the possibility of standing for election since 1997). The have voice but no vote in the council.

Over the last few years, they have presented parts of their constituencies’ cultures – mostly their food and music; it’s more difficult to be anti-immigrant in the middle of a party. This year the fourth edition of “I mondi a Roma” enlisted The American University of Rome to organise a seminar for future leaders.

There are something under a million “new Italians” or “second generation” and 24 of them attended two full day seminars along with a wide variety of others. The aim was to give participants some of the knowledge and skills they might need as well giving them some sort of inspiration and sensation that immigration in Italy is an opportunity not a problem. They were also expected to complete exercises, some on real issues (how would you spend a €500,000 EU grant to support media campaigns for integration), some on more hypothetical but controversial issues (how would you deal with a riot in a poor part of Rome after a policeman shot a young immigrant) or less controversial (how would you mediate the different community needs in the urban renewal of a city square).

On the first day, Rodolfo Giorgetti and Stefania Congia of the Italian Ministry of Labor and Social Policy explained how immigration and diversity enrich the host country and the Ministry’s integration policies. Barbara Fridel and Simona Moscarelli of the International Organization for Migration laid out the legal rights and duties of migrants and governments and finally Maurizio Malogioglio of the Food and Agriculture Organization explained how the importance of remittances.

The four councillors gave their experiences. Madisson Godoy, himself from Ecuador spoke about how the Latin American diaspora contributes to politics at “home” and in the adopted country. Tetyana Kuzyk from the Ukraine talked about role of women – the majority of immigrants for eastern Europe are women and her surprise that Italian women only got the vote in 1946. Victor Okeadu from Nigeria addressed the broader qualities needed for leadership and Romulo Sabio from the Philippines (with a first name like that, his destiny was obviously sealed) explained how a toothpick could become a symbol of office – when the council votes the hundreds of amendments to the annuale budget, the majority has to vote no each time so before the divisions, the group leader distributes toothpicks to jam the “NO” button on the voting panel. As the adjuncts have no vote, that toothpick took on the significance of a royal mace or sceptre. Fabrizio Molina from the NGO “Nessun Luogo è Lontano” showed what political leadership can achieve and Giuseppe Casucci from the UIL’s Migration section explained what the labor movement can do for migrants. And we ended with a workshop prepared by my colleagues Isabella Clough Marinaro and Bjørn Thomassen and myself.

In the distant past, the Empire had non-natives at its head – three of the greatest emperors were foreign born; Trajan in Iberia, Diocletian in Illyria and Septimius Severus in Tripolitania. The Roman Church was rigorously Italian in its leadership from the 16th century until John Paul II but the new Italian nation was formed with the help of Garibaldini from all over the world and one prime minister, Sydney Sonnino had a Welsh mother.

There have already been some naturalised Italian members of parliament but usually by marriage. At the moment, there is one deputy originally from sub-Saharan Africa and one originally from North Africa. With luck there will be more very soon in the Chamber and in the city council.

Thursday, November 03, 2011

Revived Rituals of the Bel Paese

Once upon a time in a republic far, far away, every year or so the natives went through a fascinating, time consuming and very baroque rite to decide which of a restricted group of tribal elders should be chief for the next 11 months. Occasionally it took a week or so, other times up to four months. Soothsayers spent hours observing the auguries to try and predict the future leader; the entrails of many birds were examined (and the rest of the bird ritually eaten in specially designated temples or osterie or sometimes trattorie surrounding the sacred mound – Monte Citorio – where the public phases of the selection process took place).

No, it was not the papal election which in comparison is simple, straightforward and apart from one notable exception is quick. The exception was an almost three year conclave between 1268 and 1271 but they adjusted the system and have had no serious problems since.

This was the so-called government crises of the “First Republic”, the system of government that ran Italy from the war (or to be precise, from the 1946 referendum which introduced the republic) until 1994. It was dominated by the Christian Democratic (DC) party assisted by the Socialist Party from the ‘60s onwards. Because of the Cold War, obviously the Communist opposition could not alternate in power in a NATO country so the DC stayed in power for the whole period. It was dubbed “the imperfect two party system”. The DC was a catch-all party going from clerico-fascists on the right to christian socialists on the left with a lot of personal factions in the middle.

These jostled for power – usually positions but occasionally policies by intimating (there were almost no explicit votes of confidence) that they no longer supported the prime minister of the moment. The crisis was normally little more than a re-shuffle of ministers and undersecretaries to reflect the changing power relationship between the factions and it was acted out in a stylised way rivalling Japanese Noh theatre.

If you haven’t lived through the period or studied it, what is happening today is difficult to follow but it mimicks the old ritual.

Then, after a prime minister realised he no longer had the confidence of the houses, he would “go up the hill”, the Quirinal where the President’s palace is, to hand in his resignation. The president would then consult with all the political parties including the smallest and most marginal, and with his predecessors. Then, usually, he would give a mandate to the outgoing PM to form a new government. The prime minister designate would do the rounds, offer jobs and policy measures to see if he could build a majority. If he failed, the president would charge another, normally DC, leader who would do the same.

Over the consultations, there would be sweepstakes opened in all the papers on the chances of this or that candidate making. Political insiders were consulted on their dark arts and darker knowledge.

In exceptional circumstances, he would invite a non-political figure to form a “technical” government with ministers either from across the spectrum as with Ciampi in 1993 or with no party attachment as with Dini in 1995 although Dini himself was an outgoing minister.

Over the last few days there has been a stream of visitors at the Quirinale from opposition and government parties. They look suspiciously like the consultations of the old days although of course Napolitano is at pains to say that they are “informal”.

At the moment the medium long odds are still on Mario Monti to lead “a President’s Government” (a new term) of technocrats supported by most of the parties but there is some talk of Berlusconi’s eminence grise, Gianni Letta taking over a political government with support from enough of the opposition to guarantee a majority. Increasingly, phone in shows have people saying “why doesn’t the president get rid of Berlusconi and give the job to someone else”. All well and good, but the President doesn’t actually have the power to do so until Berlusconi steps down.

But in the meantime, he’s making contingency plans just in case…

The substance of the present crisis is a long, long way from the “First Republic”. The financial crisis is real and the issue of confidence vital for Italy and Europe. Whereas the First Republic prime ministers were part of a carousel and knew that they would be back as cabinet ministers, Berlusconi is fighting for his political life. And whereas old crises could play on for weeks or months, Belgium style, and the country continued steadily, this one is for real and at stakes is the economic future of the country.

Last night, the cabinet passed a major amendment which they promise will become law by the middle of the month. There is no wealth tax but the promise to sell off public property is there and some employment stimuli. There are measures to accelerate the civil law, way overdue but not something which will produce short term effects. Even if the whole amendment becomes law, it will not change Italy’s economy from one day to the next or even the perception of the economy.

The chances of it becoming law are decreasing hour by hour as more and more one time Berlusconi faithfuls are leaving the sinking ship. There is open bickering once again in the cabinet between Berlusconi and Tremonti. The next crunch will be the markets tomorrow and on Monday, the spread between German and Italian bonds; and that other crucial index, the government’s majority in Parliament which sinks as the spread expands.

Wednesday, November 02, 2011

“Euro” or “Ero”

As always, Giannelli is sharp and elegant and this time prescient. A few months ago, the Corriere della Sera cartoonist drew a skeletal version of Leonardo’s human figure on the one euro piece with the caption “ero” meaning “I was” – instead of “euro”. Giannelli’s day job used to be at Italy’s oldest bank, the Monte de Paschi di Siena so his insights into the financial crisis are very much to the mark.

We haven’t quite reached the point that Italy will have to leave the euro but with every day that passes, the possibility becomes less fantastical. That the situation is serious in not in doubt; this morning there was a show of unity from all the independent and centre-left papers calling for Berlusconi to resign. Even the family papers called for action with the oversize court jester, Giuliano Ferrara headlining his editorial in Il Foglio “Cavaliere, do something!”

Yesterday in the middle of the All Saints holiday, Giorgio Napolitano published a letter calling on the government to act. This is the closest a president can get to removing the prime minister. He appoints the prime minister but has no explicit power to sack him; Italy’s president is a largely symbolic figure but he does have some residual powers which come into play when all else fails… like now. Napolitano is pushing the bounds of presidential propriety but as one of the few institutional figures with consistently high approval ratings, Napolitano has obviously felt that he has to act if the government won’t. He is already consulting with opposition leaders as if there was a government crisis. But he can do no more than encourage even if he is backed up by most Italians.

Employers, the church, trades unions and not surprisingly, the opposition all want to see Berlusconi go; his approval ratings hover between a fifth and a quarter. Abroad, his fellow heads of government have gone as far (or further) than protocol allows and first Trichet and now Draghi have made the ECB’s position clear. Van Rompuy and Barroso have made their position explicit as well.

But Berlusconi supporters reacted on Monday to suggestions he should step down by saying that it was the Italian people who choose the prime minister, not the German or French governments. Up to a point… the British changed their leader in May 1940 without elections under pressure from Germany and France, there is no reason why Italy should not do the same today under their this time benign pressure and mutual self-interest. An economic Churchill figure wouldn’t be a bad idea.

Berlusconi, though, shows no sign of being prepared to step down. Minister of Labour, Maurizio Sacconi tried to raise tension by suggesting that there will be terrorist violence to stop liberalisation of job security laws. No doubt there will be more attempts at black bloc violence and it is just possible that some unrepentant individual exiles from the ‘70s might try something but there is no violent subculture ready to sprout into terrorism.

The Minister for Programme Implementation, Rotondi made a not-so-veiled threat to possible wavering support among backbenchers when he said “everyone in the PdL is in Parliament because of Berlusconi – they know that if they don’t vote for him, they will not be re-elected”.

Tomorrow the G20 meets in Cannes and the EU summit follows. Greece’s vote of confidence will create some flutters in the euro but the main problem is now Italy and intrinsic to Italy is Berlusconi.

There are two possible developments. The most direct and constructive is that Berlusconi gets the message and resigns when he gets back from Cannes “for the good of the country”, Monti takes over with an interim government going from Di Pietro on the left to Fini on the right taking in all of the PD and the PdL less Berlusconi diehards.

On that side there is general agreement that there should be a wealth tax and real pension reform, not just old age pensions but those available to anyone who has more than a certain number of year of contributions. Rhetorical and divisive measures like changing the Workers’ Statute to allow easy firing should be dropped. It is an inflammatory measure and irrelevant as companies in difficulty can already lay off workers. Monies raised should be spent on growth promotion measures to raise the GDP and lower the percentage debt.

At the opposite extreme is that the government passes a decree law with a few of the less crucial measures requested by Europe and offered in Berlusconi’s letter last week. It is pushed through with votes of confidence but neither markets nor other international organisations take it seriously enough to reduce the spread between German and Italian bonds; at the same time Greece goes into full default and Italy is next in line. Followed by more partial measures too little, too late with a collapse of government and Italian finance some time in the Spring.

The middle line is that Berlusconi holds on till January and then goes for Spring elections but a lot can happen over the next two months.

At the moment, I tend to the pessimistic option; this afternoon there are more discussions on what sort of measures to take – the government and PdL have been talking about these since August and however serious the crisis seems to be, there always seems to be time to talk and procrastinate. Berlusconi is meeting with party leaders in the afternoon and the cabinet this evening. The measures should be included in a bill which is already before Parliament.

The measures might include yet another tax amnesty (Tremonti is very much against it), sale of public property (but it is not clear if they know how much there is and what price to put on it) and above all, little or nothing for growth.

Sunday, October 30, 2011

The Italian Government between an Irresistible Force and an Immoveable Object.

Or put more simply, Berlusconi is still between a rock and a hard place. After all the hype over the last week about “last chance for the euro”, for Europe, for Berlusconi and his government and the apparent solution, what has actually happened? Here in Rome or in Brussels, Paris and Berlin?

This time there is a real risk of the government falling from the pressure of the European institutions and internally from doubting allies. The fall has been predicted so many times that I might be crying wolf but this is the most serious so far. Berlusconi once again told the world that his government is solid until the end of its 2013 mandate immediately after the all-night session with euro member heads of government and has repeated the mantra since coming back. It is just… just, possible that he will make it – Berlusconi is one of the world’s most stubborn politicians able to resist multiple storms but the odds of his making it to 2013 lengthen by the day.

The irresistible force is the European Commission and Council which gave Berlusconi clear orders to take immediate action to reform the Italian economy; the immoveable object is Umberto Bossi and the Northern League who refuse to accept any radical changes to Italian pensions.

Early Thursday morning, the European institutions accepted Italian government reform plans avoiding an immediate crisis; now the ball is back in the Italian court. Very little of the plan to the EU that is actually new – the proposal to raise pension ages to 67 by 2026 became law earlier this year or can be guaranteed to raise real income in the coming year – selling off public property is a risky business especially in a country where real transparency in public accounting is still a long way off and which in any case has little money; and nabbing tax evaders is a great idea but but not something that can be banked on in next year’s budget. Changing the law to make it easier to lay off and fire workers has already brought a reaction from the unions with demonstrations in Rome on Friday.

The first market reactions on Thursday were positive both on the Italian plan and the broader plan to support the euro and European banks. But on Friday the Milan stock market took the heaviest losses on the continent and Italy had to offer more than 6% on its 10 year bonds, the highest ever.

It was a very short relief period. Berlusconi is once again out of control verbally denigrating the euro at the same time as the EU and ECB are supporting Italy. He said on Friday that the euro is “a peculiar currency which has convinced no one” only to say he had been misquoted a few hours later. This is hardly the behaviour which inspires confidence. Antonio Politi brought in Aesop’s frog and scorpion story to explain Italy and the EU; the scorpion begs the frog to carry him across the river only to kill him in mid stream, drowning himself. “Why have you poisoned me?” asks the dying frog. “Because it’s my nature” replies the drowning scorpion.

Quoting Aesop ennobles Berlusconi’s incompetence which is muddle rather than tragic destiny. But we get the point.

The only positive result of the Prime Minister’s remarks is today’s reply from Mario Monti where the former European Commission and present president of the Bocconi University analyses the euro’s role and Italy’s need for it and suggests that Berlusconi work to give the euro some binding rules. The letter is respectful and professorial in tone but with little respect in substance; it is another indication that he might be a candidate for prime minister of a technocrat, non-political government. Last week he was the guest on Lilli Gruber’s “Otto e Mezzo” and finessed the question about his candidacy – previously he had kept well out of that possibility. If anyone can show some political leadership combined with skills as an economist sufficient to put Italy back on track, it might just be Monti.

It certainly is not Berlusconi closest ally, Umberto Bossi, the leader of the Northern League. Bossi is fighting hard to prepare his party for elections next year and to maintain his own leadership in the party. He stopped any serious pension reform – the biggest cost of pensions are people who can retire early after a certain number of years of contributions. When the Speaker of the Chamber, Gianfranco Fini reminded viewers that Bossi’s wife had retired at 39, there was a brawl in Parliament between his and Bossi’s supporters the following day. On the same day, the government lost two divisions; these too are not signs that inspire confidence.

On top of it all, the 15 page letter replying to the European Commission and Council Presidents request for an Italian plan was not countersigned by the minister for the Economy, Giulio Tremonti, neither formally nor in any public statement.
Little wonder that both Chancellor Merkel and President Sarkozy showed their scepticism over Italian reliability very visibly last week. Their smirks

were institutionally inappropriate but devastatingly telling. More than anything else the scene shows “sovereign” states are far from sovereign. The smiles also showed that the problem is with the leadership, not with the substance of the Italian economy and finance which are weak but not as catastrophic as market reactions suggest.

The danger is that the government will continue its muddle, not face either Europe or the League by which time we will all be in the middle of the river. The more hopeful scenario is that Berlusconi will have to demand more votes of confidence and Bossi finally pulls the plug…

Thursday, October 20, 2011

Wanted – grownups – desperately

The other evening I was talking to an Argentinian who gave me graphic descriptions of their 2001 crisis – not the default and the financial side which is fairly clear in an abstract sort of way, but the social side. He explained that just about everyone had to go down a rung or two or more on the social ladder. Not a pretty sight and even less pretty to be part of.

But of course it can’t happen now… and can’t happen to us. Can it? Well, something similar is happening in Greece. But the rest of us are safe… there are lots of clever people in charge and some of them know what to do. After all, in this one, we’re all on the same side, aren’t we and they’re grownups, aren’t they?

The present crisis is, or should be, different from other blights which try society from time to time. Natural disasters are just that, natural and we understand the corruption or incompetence which accentuate the damage and suffering caused by an earthquake or tidal wave. Those involved in conflict whether on the battle field or in politics think that they will win and even when we condemn their motives or methods we know why they do it.

Today, no one will profit from a collapse of the euro and a prolonged recession in Europe and North America. Certainly not those who lose jobs, savings or businesses; not the mainstream politicians who just look ineffectual and will lose to some radical populists riding the recession tiger. Even the much reviled speculators, bogies blamed for all our woes, do not want a total collapse. They can make a lot of money on severe short term losses as George Soros did in 1992 when the pound went down with his help but over the medium and long term, growth will give them many more possibilities for profit. So this time, we all have the same interests it would be nice to think that there were some grownups who could save us.

As children, the grownups do actually take charge and most of the time, they stop us falling down holes, electrocuting or poisoning ourselves or doing all the dangerous things that infants love to do without realising the consequences.

Here in Italy, no one expects very much – the Berlusconi-as-Nero caricature is working overtime at least in the foreign press; by now, most Italians do not even grant him the stature of a Nero style villain bunga-bunga-ing while the euro and the Italian economy burn.

Those who should be acting as grownups for Italy do not either because they do not have the power to sanction, like the ECB which can only advise and cajole or because it would be diplomatically unacceptable which is the case with Merkel and Sarkozy who cannot be seen to be giving orders to a fellow head of government of a sovereign state. With an Italian as the new head of the ECB there is a better chance of some of the advice being taken as Mario Draghi is not only a very competent banker, he also cannot be seen to be soft on his own country. The ECB and the French and Germans have been pleading with the Italian government to implement public spending cuts and growth encouragement measures at least since August but Berlusconi happily tells the world that there is no hurry.

We also know that the markets like stability and clarity and here again, the government is squabbling over who to appoint at governor of the Bank of Italy to replace Draghi (who was appointed to the ECB in June) . The Prime Minister’s main worry at the moment is pass a law preventing the publication of telephone taps which are already part of the court’s public evidence (it is already illegal to publish taps which are not part of the public court documentation).

It was only in July that Berlusconi and economy minister Tremonti admitted that there was a crisis here – before that they assured us that everything was fine. Now it is not just Italy which is at risk but the whole euro. If the euro were to collapse, it is unlikely that the other European, political institutions would survive and certainly not in their present form. This is a doomsday scenario which would make Argentina look mild but the fact that it can even be made explicit is cause for serious worry.

The only way to avoid it is for there to be a radical change in the direction taken by European leadership but as George Monbiot argues, “Governments and central bankers now have an unprecedented opportunity to learn from the catastrophic mistakes they’ve made. It is an opportunity they seem determined not to take” .
Soros who knows more than most about financial crises argues that there must be a new agreement among Europeans which gives more power and funds to the Commission “a European treasury with the power to tax and therefore to borrow. This would require a new treaty, transforming the EFSF into a full-fledged treasury” and it should be done quickly “Once the principle of setting up a European Treasury is agreed upon, the European Council could authorize the ECB to step into the breach, indemnifying the ECB in advance against risks to its solvency”. He concludes ominously “That is the only way to forestall a possible financial meltdown and another Great Depression”.
So if we cannot find the grownups, we will be looking to a new version Brother, can you spare a dime. Worse, we might be looking at the end of the EU.
Merkel has already told us not to expect too much from the Sunday summit and Sarkozy is gooey about his daughter… the prospects are not good.

Monday, October 17, 2011

Flames in Rome

The most shocking aspect of Saturday’s riot in Rome was the fact that it did not come as a shock. For 10 years now in Italy, at least since the violence at Genoa’s G8 in 2001, there has been the strong possibility of protest marches being hijacked by relatively small numbers of very well organised, well prepared thugs.

It happened in Rome last year after the 14 December vote of confidence and for the whole of last week, all the papers were talking about the likelihood of violence on Saturday. I have no special sources but from very public ones, it was obvious to warn my American students wanting to show some solidarity with the “Occupy Wall St.” protest to be very careful as there were plenty of signs that something nasty was going to happen. As it happened, they were careful but they did come back with some good primary material for the course on political violence…

Yet both the organisers and the police had made no plans to deal with what was a very effective takeover of the whole demo. Most Italian demonstrations have their own servizio d’ordine, a group of people from the organisers who see that none of their own people cause trouble. Trades unions and more established protest movements have a long experience of managing crowds and acting as buffers between the demonstrators and the police or public. This time the organisers very explicitly had no internal security. When the violence began, there were many spontaneous attempts to contain it but mostly they didn’t stand a chance against well prepared and disciplined spoilers. One 52 year old tried to stop a gang starting on a bank, and lost two fingers from a hand; in another area, there was the paradox of the usually radical and anti-police, anti-establishment left wing Cobas getting help from the celerini, the riot police normally their antagonists.

On the other side, the different police forces were badly prepared, low on morale and in the wrong places. It could hardly have been worse. The close control and divisory tactics that other police forces have developed were not used on Saturday. There is footage of carabinieri, police or finance guards (the three main national police forces, all of whom were present), standing around in the midst of the melée uncertain of what to do next. Like other police forces, though, the Italian ones have had to deal with swingeing cuts in their budgets and like the British at least, they have been accused of being heavy handed in the past (and some suffered either financially or in their careers) so many were afraid of being too aggressive. Finally, the majority was deployed around the sensitive areas in the centre (Parliament, ministries, Berlusconi’s residence) rather than with the demonstrators so that when the violence began there were no police.

Those were the tactical errors. There have been much more longterm mistakes made too.

It is axiomatic that economic hardship increases social tension and might lead to violence. Some politicians and commentators have been warning government of the dangers for months. Antonio Di Pietro and the deputy and journalist Furio Colombo clamour like Cassandra. The response has been to accuse them of encouraging violence.

The clear message from the demonstrations across the world was that banks and governments had either misbehaved or been incompetent and that the young in particular were not prepared to give up their futures for others’ crimes or stupidity. Their expectations have been crushed and they are angry.

But on Saturday all the demonstrations apart from Rome were peaceful and here, the vast majority was peaceful and furious that a few had stolen the show.

Those few are usually referred to as the Black Block as if it was a single organisation. They aren’t – they are small numbers of mostly young people, mostly male who use left wing usually anarchist rhetoric and fascist methods. They use black block techniques developed and tried in Germany and elsewhere over the last 25 years; according to one interviewed in La Repubblica this morning, they have used the Greek unrest as a training camp. Wherever they learnt, they are extremely effective. Calm and unworried as they hack away at armoured glass or a police vehicle; prepared by donning protective clothing before beginning the mayhem and by leaving caches of molotov cocktails and ball bearing or paving stones – the ubiquitous sanpietrini which can be used as an instantly available missile in most of Rome; careful to destroy CCTVs and warn off cameramen but also sometimes oblivious of the hundreds of cameras around.

Those who are able and prepared to use the violence seen on Saturday are quite able to use more serious violence in terrorist attacks and we can only hope that law enforcement agency will be capable of dealing with the symptoms and more importantly, that government agencies are prepared to address the underlying causes and work with the majority on non-violent protesters.
Not very likely, I fear. The Interior Minister, Roberto Maroni was the only member of government who made a public appreciation of the non-violent protest. The new head of the European Central Bank (and until the end of the month head of the Bank of Italy) Mario Draghi said before the violence began that the protesters had a point.

But the rest of government tried to put all the blame on “the left”. Berlusconi did not go as far as saying that Bersani, Vendola and Di Pietro, the leaders of the main centre-left parties, were responsible but the innuendo was there – and no doubt will continue. Anything to move attention from fundamental economic difficulties.

They will return to the surface soon enough – but so will the prospect of political violence.