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.
Thursday, November 03, 2011
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…
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.
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.
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.
Thursday, October 13, 2011
The Zombie Government
While the rest of Europe is worrying about the possible implosion of the euro, Berlusconi is once again marshalling his forces for a vote of confidence tomorrow.
The reason this time is a combination of a disintegrating coalition and sloppy parliamentary management. The government was defeated on Tuesday on a division on article 1 of last year’s budget account. This should be and normally is a formality; it would only be controversial if there were suggestions that the books had been cooked which there aren’t. The money has been spent after all, and Parliament has to approve the account. Instead the article was turned down by one vote which means that the rest of the bill cannot be discussed.
The Italian system does not have whips so there is no one whose job it is to see that parliamentarians actually turn up to divisions and with a good majority this is usually not a problem (even though they have lost quite a few votes over the last few months). On Tuesday there were two key ministers (Tremonti and Bossi) who arrived late for the vote (the Chamber votes electronically with deputies at their own places) despite being in the building. An ex-minister Claudio Scajola who had had a long meeting with Berlusconi that morning also did not turn up.
Berlusconi called the defeat a “technical hitch” but it is much more serious than that. According to the constitutionalist, Michele Ainis, the government has put itself in a catch 22. It cannot re-present an identical bill for six months and it cannot change an account which has already been closed. And without the previous year’s account approved, the government cannot move on to this year’s. President Napolitano has said that the Prime Minister must sort out the puzzle so there will be some sleight of hand by lawyers and accountants in order to allow the ship of state to keep spending. It is just possible that the president will not accept whatever solution is presented, but unlikely.
That is the form and the letter of the law. On the substance, the defeat was yet more proof that the coalition is disintegrating. An increasing number of parliamentarians in Berlusconi’s Popolo della Libertà (PdL)(People of Freedom) would like him to step aside and let someone else run the country and the party until the elections and his ally, Umberto Bossi and the Lega Nord (LN)(Northern League) has said explicitly that the government will not last till 2013. This morning Berlusconi gave a 19 minute speech explaining why he was going to continue and that Tuesday’s defeat did not count. Bossi was sitting next to the prime minister and his body language was most eloquent – he couldn’t stop yawning.
His probably successor, the Interior Minister, Roberto Maroni, went and sat on the LN benches rather than his ministerial seat, another very explicit move.
The right wing commentator, Marcello Veneziani wrote about “leaders who hadn’t died and babies who haven’t been born” this morning (in one of the Berlusconi family papers). He pointed out, rightly enough, that reports of Berlusconi’s political death have been much exaggerated, for the last 333 days, he said (but he could have said for the last 17 years). And he points out that despite the many proclamations, the opposition leader has not been born yet. Also true. He does not add, though, that both facts are to the utter detriment of a country which is in serious economic trouble and risks dragging the rest of the euro zone down with it.
Veneziani and some other courtiers like the editor of another family paper, Il Foglio, Giuliano Ferrara do indeed criticise Berlusconi but from the role of court jester; none of his political associates have the courage to act decisively enough to end the misery. He is like a bull in the ring, weakened by the picadors and made angry by banderilleros but there is still no matador.
It is a zombie government, not clinically dead but close to being brain dead, lurching from one crisis to another, golem-like and out of control. Worse, actually, because Berlusconi is very much alive to his own appetites and aversions.
If Berlusconi loses the vote of confidence, he will have to resign but knowing his stubbornness, he will try and put together a new government. Some of the opposition and some of the majority too would like to see a “technical” interim government to see Italy through the acute moment of the financial crisis but there is no consensus yet. The other alternative is early elections.
My own guess is that he will win the vote tomorrow but that the next crisis is just round the corner and the chances that this government will run its full term to 2013 are decreasing by the minute. But I might be proved wrong tomorrow. Either way, spring elections are more and more likely and the overall prospects are not good.
The reason this time is a combination of a disintegrating coalition and sloppy parliamentary management. The government was defeated on Tuesday on a division on article 1 of last year’s budget account. This should be and normally is a formality; it would only be controversial if there were suggestions that the books had been cooked which there aren’t. The money has been spent after all, and Parliament has to approve the account. Instead the article was turned down by one vote which means that the rest of the bill cannot be discussed.
The Italian system does not have whips so there is no one whose job it is to see that parliamentarians actually turn up to divisions and with a good majority this is usually not a problem (even though they have lost quite a few votes over the last few months). On Tuesday there were two key ministers (Tremonti and Bossi) who arrived late for the vote (the Chamber votes electronically with deputies at their own places) despite being in the building. An ex-minister Claudio Scajola who had had a long meeting with Berlusconi that morning also did not turn up.
Berlusconi called the defeat a “technical hitch” but it is much more serious than that. According to the constitutionalist, Michele Ainis, the government has put itself in a catch 22. It cannot re-present an identical bill for six months and it cannot change an account which has already been closed. And without the previous year’s account approved, the government cannot move on to this year’s. President Napolitano has said that the Prime Minister must sort out the puzzle so there will be some sleight of hand by lawyers and accountants in order to allow the ship of state to keep spending. It is just possible that the president will not accept whatever solution is presented, but unlikely.
That is the form and the letter of the law. On the substance, the defeat was yet more proof that the coalition is disintegrating. An increasing number of parliamentarians in Berlusconi’s Popolo della Libertà (PdL)(People of Freedom) would like him to step aside and let someone else run the country and the party until the elections and his ally, Umberto Bossi and the Lega Nord (LN)(Northern League) has said explicitly that the government will not last till 2013. This morning Berlusconi gave a 19 minute speech explaining why he was going to continue and that Tuesday’s defeat did not count. Bossi was sitting next to the prime minister and his body language was most eloquent – he couldn’t stop yawning.
His probably successor, the Interior Minister, Roberto Maroni, went and sat on the LN benches rather than his ministerial seat, another very explicit move.
The right wing commentator, Marcello Veneziani wrote about “leaders who hadn’t died and babies who haven’t been born” this morning (in one of the Berlusconi family papers). He pointed out, rightly enough, that reports of Berlusconi’s political death have been much exaggerated, for the last 333 days, he said (but he could have said for the last 17 years). And he points out that despite the many proclamations, the opposition leader has not been born yet. Also true. He does not add, though, that both facts are to the utter detriment of a country which is in serious economic trouble and risks dragging the rest of the euro zone down with it.
Veneziani and some other courtiers like the editor of another family paper, Il Foglio, Giuliano Ferrara do indeed criticise Berlusconi but from the role of court jester; none of his political associates have the courage to act decisively enough to end the misery. He is like a bull in the ring, weakened by the picadors and made angry by banderilleros but there is still no matador.
It is a zombie government, not clinically dead but close to being brain dead, lurching from one crisis to another, golem-like and out of control. Worse, actually, because Berlusconi is very much alive to his own appetites and aversions.
If Berlusconi loses the vote of confidence, he will have to resign but knowing his stubbornness, he will try and put together a new government. Some of the opposition and some of the majority too would like to see a “technical” interim government to see Italy through the acute moment of the financial crisis but there is no consensus yet. The other alternative is early elections.
My own guess is that he will win the vote tomorrow but that the next crisis is just round the corner and the chances that this government will run its full term to 2013 are decreasing by the minute. But I might be proved wrong tomorrow. Either way, spring elections are more and more likely and the overall prospects are not good.
Sunday, October 09, 2011
Ghosts of the Past, Politics of the Present in Spain and Italy
The magniloquence of the work is mindboggling – under any circumstances, it would have been extraordinary; it is all the more so as Spain in 1940 had been devastated by the civil war and was trying to survive in a Europe which itself had just begun to tear itself apart. The decree starting the works proclaimed it was to be a monument “to perpetuate the memory of those who died in our glorious crusade” and to the “Victory” (the decree is republished without a hint of irony on a Francoist site describing the Valle de los Caídos a “place of peace and reconciliation”). Franco believed that the “crimes” of the Republicans could be “redeemed by work”, a sinister echo of the Auschwitz motto Arbeit macht frei.
He very consciously compared himself to Philip II and his own monument in the nearby El Escorial, built in much more prosperous times. The imagery is mostly Catholic with the mysteries of the rosary adorning the huge entrance crypt and a mosaic day of judgement in the cupola above the altar, but the nave is guarded by four hooded figures on either side, hinting at crusading warrior monks but actually representing the three armed forces and the fascist Falange militia. The founder of the Falange, José Antonio Primo de Rivera is buried there on Franco’s orders and when Franco died, he too was buried there.
There is no doubt as to the monument’s message.
For 30 years after Franco’s death in 1975, it stood as a very visible reminder of a past which Spain was uneasily coming to terms with. On Franco’s deathday in November, a few, mostly elderly supporters would come and commemorate the Caudillo but the monument was hardly a focus for a Francoist revival.
Then in 2006, the present government passed the Ley de Memoria Histórica, the law of historical memory one of whose effects was to close the Valle de los Caídos as a “political” monument. The intention was to close it completely but since it contains a church, the constitutional guarantee of religious freedom kept it open. So as we drove into the park surrounding the monument, we had to assure the wardens (state employees) that we were going for the 11 o’ clock mass (a sung mass, by the way, which makes full use of the cavern’s amazing acoustics). No one checks to see that one is praying but there is a certain confusion over what exactly the place is for.
Spain, like so many other places has a problem digesting its past.
By chance, Friday was also Yom Kippur, the day of Atonement for Jews and one way in which human individuals come to terms with their past and make amends to their fellow men for their misdeeds. All societies have some mechanism for dealing with individuals’ past and many are highly institutionalised but we have not yet worked out how to deal with our collective past; most attempts are pretty messy, Italy and Spain particularly so, but in very different ways.
Mussolini’s birthplace, Predappio, is a pleasant little town in Romagna apart from the sale of Fascist souvenirs (until 2009 when it was banned though it continues online) and the pilgrimage to Mussolini’s tomb complete with honour guard. Both the Fascist junk and the paraphernalia around the tomb are or should be illegal since just after the war when antifascist Italy created the crime of apologia del Fascismo (defence of Fascism). But few have been prosecuted for it and no one convicted.
Predappio and the other shrines to a regime that was both murderous and seedy are extremely disagreeable in a western European democracy and in an ideal world should not be there all. But we are not in an ideal world.
Recently two Neapolitan artists suggested closing Mussolini’s crypt but no one seriously suggests using the 1952 law to do so. It would almost certainly create a backlash which would boost fascist nostalgia.
The issues of the memory of Franco and Mussolini are very different. Franco was overall much more canny; he allied himself to the Roman Catholic Church and said he fought in their name while Mussolini was at best a pragmatic supporter of the Church and vice versa. Franco carefully avoided World War II while Mussolini jumped in with both feet… and lost; with the result that Franco died in his bed an old man recognised if not respected by the whole world while Mussolini was killed by partisans and reviled by all but his most diehard supporters.
Despite a massive building programme, there is no monument to Mussolini apart from the few small ones erected in his life time most of which were destroyed immediately after the war. The family chapel in Predappio is no more grandiose than thousands of others across the country.
So all in all, the softly-softly approach to Mussoliniana is probably the right one, politically and morally although the revisionism by some right-wing politicians is distasteful and dangerous. It is not the best solution but it’s probably the least bad.
In contrast, dealing with Franco’s physical legacy or the memory of any fascism with the law is surely a mistake. El Valle de los Caídos is too big to ignore – short of using tons of dynamite, it is going to be there for a long time and it is part of Spanish history and unlike the Mussolini family crypt, it belongs to the Spanish state. The memory of fascism can only be digested with history – an accurate account of the past critically analysed and presented in a way which is understandable to all.
Criminal law can and should be used to address today’s manifestations of fascism – racism, intolerance, political violence and authoritarianism – not to lay 70 year old ghosts.
Sunday, October 02, 2011
The Power of Referendums
Referendums are an arcane branch of politics; electoral systems even more so – combined they are normally as stimulating as a valium-camomile cocktail. But once again, Italy is different and yesterday’s news that the promoters of an election reform referendum managed to gather more than 1.2 million signatures is news indeed, and of much more interest than Berlusconi’s latest Montenegrin “fiancée”. If passed the referendum would abolish the very unpopular electoral law (nicknamed “porcellum”, a multiple pun I won’t try to translate, but the sense is close to “pigsty”or what is in one) in which parliamentarians are in practice nominated by party bosses
.
There are immediate consequences which change the political agenda, the power relationships between the parties and the public perception of politicians and politics in general. And then there will be medium term consequences on how (and who) Italians elect to Parliament.
Referendums are one of the few forms of direct democracy that we have in modern societies. Apart from the Swiss who have them on everything from putting in a new pedestrian crossing in a tiny village to weighty national matters of religious freedom, most of the rest of us use referendums sparingly as they can easily become a bludgeon in the hands of expert and well-funded populists. De Gaulle changed France with plebiscites bypassing the other institutions. California worries that powerful lobbies and interest groups can use the referendum to further sectarian interest.
Italy’s founding fathers recognised some of the risks and ringfenced referendums. The first was not even in the constitution – in 1946, Italians voted in favour of a republic over a constitutional monarchy. Then they drew up the new constitution which allows referendums in only two circumstances. The first can repeal or confirm a constitutional amendment passed with less than a two thirds majority.
The second and much more common referendum can be used only to repeal (not propose) existing ordinary legislation and in any case, key fields are excluded: budget matters, international treaties and amnesties. In order to call for one, half a million signatures have to be collected in three months and for the result to be valid, more than half of the registered voters have to cast a vote.
This type of referendum lay dormant for 25 years until conservative elements in the Church and the Christian Democratic party (DC) had the bright idea of using it in 1974 to repeal the newly passed divorce law. The initiative backfired badly with 60% voting against repeal and began a season of civil rights reform spearheaded by the Radical Party (PR) using mainly the referendum or threat of referendum to legalise contraception and abortion, liberalise drug laws, reform family law, and reduce and then abolish military service.
As well as being a direct instrument of change, the threat of a referendum was often enough to put an issue on the agenda and push through a reform like the legalisation of abortion in 1978.
Along with the major factors which changed Italy in the early ‘90s (end of the Cold War, anti-corruption trials and the debt), the 1991 and 1993 referendums which changed the electoral systems were an important catalyst.
Then in the 2000s, those who wanted to maintain the status quo realised that the best strategy was to rely on low turnout to avoid a quorum. It worked until this June when when Italians voted on three referendums producing resounding quorums and showing once again that a majority was so fed up with the political classes that they would have voted to have sunrise in the west if the government was against it.
The 1.2 million signature deposited yesterday are proof that this tide is still flowing, and strongly. To reach half a million is not difficult but to more than double the figure is impressive and presages a very high turnout and massive ‘yes’ vote if and when the referendum is held. The next stage is for the Court of Cassation to check the signatures’ validity. There is no doubt that the half million threshold has been reached. Then in January, the Constitutional Court will pronounce on the legal validity; they will almost certainly accept it. Then, if there are no early elections next spring, Italians will vote the referendum.
In the meantime, all the parties have to decide what to do. It is a truism that referendums are divisive. Angelino Alfano, the People of Freedom’s new secretary and Berlusconi’s designated successor wants to avoid that division; instead of defending an unpopular law, he would like to change it so that there would be no referendum. While his ally, the Northern League’s Roberto Maroni has said he’s in favour of the referendum even though the law which will be repealed was drafted by a party colleague, Roberto Calderoli who also wants reform rather than repeal.
It is decision time for the opposition too. The Democratic Party (PD) (and it’s predecessors) has always been lukewarm on the idea of direct democracy and this time made little effort to gather signatures apart from Arturo Parisi who almost left the party in order to gather signatures. Now the PD support it. Other opposition parties, right, left and centre support the referendum led by Di Pietro’s Italy of Values (IdV) and Vendola’s Left, Ecology and Freedom (SEL).
There is little chance of changing the law before April so the government finds itself between a referendum rock and an early election hard place. The only way to avoid the referendum is to have early election. In the midst of a financial crisis and prime ministerial sex scandals, there will be little time for an electoral reform debate.
Which is a pity as the electoral system determines the style and texture of a democracy. The present fixed proportional representation party lists allow the party to determine who is elected and cuts any direct link between voters and the elected representative. There is a majority premium for the winning coalition in the chamber.
If the referendum passes, Italy will revert to a mixed system with 75% of deputies elected in single member, UK or US style constituencies/districts and 25% from fixed party lists. Voters will have a much bigger voice in who represents them and will at least know who it is.
But for the moment, it is all politicians who are considered fair game, a bit like lawyers in some other countries. On that score, have you heard the latest Sicilian politician joke? The Regional Government paid one of its employees 200 hours overtime in August… to clear snow. And, you’re right, it’s not a joke.
Monday, September 19, 2011
Padania – inventing a nation. Frankenstein Jnr in northern Italy.
More than 2,400 years ago, Plato observed that every nation needs a foundation myth and described how it might be done, and a lot more recently Eric Hobsbawm and Terence Ranger in The Invention of Tradition analysed some of the lies and half-truths that most of us use to create our national identity. So we’ve had a long time to understand the dark art of nationbuilding.
Even so, watching Umberto Bossi’s crude antics aiming at manufacturing “Padania” is surprising and more reminiscent of Frankenstein (Junior)’s efforts to create life than the 19th century British enhancement of Boudicca or the German glorification of Herman/Arminius.
On Friday, Bossi performed the “traditional” late summer ritual of taking an “ampolla” (a flask to you and me) of water from the source of the Po. According to Bossi, this is a druidic rite (and the “Padanians” are Celts as we all know) honouring the great river god that gives life to “Padania”. The origins of the ancient tradition are lost in the mists of time of the mid-1990s. When he was in better health, he would carry the bottle down the length of the river stopping on the to milk the crowds and with equal ceremony pour it into the lagoon in Venice… uniting “Padania” – geddit? This year he just managed the beginning and the end of the trip.
The whole charade is weird patchwork of very visible spin and PR mixed with the genuinely traditional Italian propensity for a walk and picnic on a pretty hillside in late summer – the scampagnata.
The previous week was taken up with another attempt to graft “Padania” onto another real Italian tradition – the bicycle race. We had the first (and probably last) Giro della Padania with real cyclists albeit most were past their prime. It was won by Ivan Basso, former Giro d’Italia winner from Varese like Bossi. Once again, “Padania” was being symbolically united by the race except that it was greeted partly with boredom and partly with protests.
The “Padanian” identity is constructed on a supposedly Celtic heritage; the area was after all called Cisalpine Gaul by the Romans, Gaul on this side of the Alps for us Romans, and was largely inhabited by Celtic Gauls. But like Transalpine Gaul on the other side, it was then invaded by Germanic tribes – Franks and Lombards to name just two that gave their names to the places they occupied. Since then, there has been a lot of coming and going in the Po valley which is neither ethnically nor linguistically very pure… it’s true that the League’s leader in the European Parliament has the nickname Obelix because he looks like Depardieu fatted up for the part and that another leader the rubicund Roberto Calderoli could pass for a plump and florid Irishman (but also Englishman or German for that matter).
While the French make a world famous cartoon strip of their Celtic-Gaulish heritage or call their cigarettes Celtiques or Gauloises, Bossi has made a political party and his own very successful career.
In a country where local identity is stronger than almost anywhere else in the world and where many of those identities are based on former political unity or present linguistic or gastronomic unity, “Padania” does not feature as one of them. Most define themselves first as “Piedmontese”, “Sicilian” or “Tuscan”, “Sienese”, “Venetian” or “Neapolitan”; no one seriously thinks of themselves as “Padanian”.
The League’s other symbols also show the magpie tendency of filching anything that glitters and some things that don’t. Their green is a shade somewhere between Ireland and Qaddafi’s Libyan flag – maybe geographically appropriate given the position of northern Italy but not what they are trying to suggest. Their symbol, supposedly "the alpine sun"
looks more like a call for legalising weed – not part of their programme either. When the leaders stand together in solemn moments, their right hands cover their hearts, a quintessential American gesture, not a Lombard (or Piedmontese or Venetian) one. In insults too, they have followed the American example with Bossi frequently raising his middle finger
(most recently towards the Italian national anthem) rather than using the much more athletic Italian and French gesture of putting the left hand on the crook of the right elbow and sharply raising the forearm.
As for music, the Northern League has appropriated one Italian symbol though. From its first performance in 1842, the Hebrew slaves’ chorus in Nabucco was taken as a call to freedom – initially from Austrian domination and then more generally for the whole of Italy. For a time in the 1940s, there was the suggestion that it should become the anthem of the new Italian republic. Now the Northern League use it sing of liberation from Italy much to the annoyance of supporters of Italian unity and Verdi fans..
For the last month, Bossi has again been using the language of secession. In the mid and late ‘90s the party programme moved between wanting a completely independent state (their telephonists at the Chamber of Deputies answered the phone with “Lega Nord, Padania Libera”) and the division of Italy into a three republic confederation. The difference is that Bossi and some of his colleagues are now ministers of the Republic of Italy and have sworn to defend its interests.
Over the summer, they combined unity and secession in a single gesture; the four ministries run by leghisti were transferred to Monza just outside Milan. Never mind that they still have not been staffed and opened and never mind that the other regions of the north were left out. It was Bossi’s devolution equivalent of the secessionists’ military exploit some years ago when a few of them “invaded” Venice with a tractor dressed up in sheet metal to look like a tank: an empty sham, thankfully.
The secessionist rhetoric is actually a superficial inconsistency. The real construction of Padania is a non-starter. Instead, Bossi and his supporters are defending themselves against internal attack – a possible takeover by his rival, the Interior Minister, Roberto Maroni. The physically and politically ailing Bossi wants to consolidate his position within the party. Outside the party but within the centre-right, he wants to distance himself from Berlusconi and the People of Freedom, ready for elections not later than 2013 but very probably sooner. During the Po water ceremony, he pointedly made no commitment to supporting the government for another 18 months.
So despite all the noise, we’re more likely to see an indepenent Scotland or Catalonia than “Padania” but that won’t stop Bossi’s rant.
Even so, watching Umberto Bossi’s crude antics aiming at manufacturing “Padania” is surprising and more reminiscent of Frankenstein (Junior)’s efforts to create life than the 19th century British enhancement of Boudicca or the German glorification of Herman/Arminius.
On Friday, Bossi performed the “traditional” late summer ritual of taking an “ampolla” (a flask to you and me) of water from the source of the Po. According to Bossi, this is a druidic rite (and the “Padanians” are Celts as we all know) honouring the great river god that gives life to “Padania”. The origins of the ancient tradition are lost in the mists of time of the mid-1990s. When he was in better health, he would carry the bottle down the length of the river stopping on the to milk the crowds and with equal ceremony pour it into the lagoon in Venice… uniting “Padania” – geddit? This year he just managed the beginning and the end of the trip.
The whole charade is weird patchwork of very visible spin and PR mixed with the genuinely traditional Italian propensity for a walk and picnic on a pretty hillside in late summer – the scampagnata.
The previous week was taken up with another attempt to graft “Padania” onto another real Italian tradition – the bicycle race. We had the first (and probably last) Giro della Padania with real cyclists albeit most were past their prime. It was won by Ivan Basso, former Giro d’Italia winner from Varese like Bossi. Once again, “Padania” was being symbolically united by the race except that it was greeted partly with boredom and partly with protests.
The “Padanian” identity is constructed on a supposedly Celtic heritage; the area was after all called Cisalpine Gaul by the Romans, Gaul on this side of the Alps for us Romans, and was largely inhabited by Celtic Gauls. But like Transalpine Gaul on the other side, it was then invaded by Germanic tribes – Franks and Lombards to name just two that gave their names to the places they occupied. Since then, there has been a lot of coming and going in the Po valley which is neither ethnically nor linguistically very pure… it’s true that the League’s leader in the European Parliament has the nickname Obelix because he looks like Depardieu fatted up for the part and that another leader the rubicund Roberto Calderoli could pass for a plump and florid Irishman (but also Englishman or German for that matter).
While the French make a world famous cartoon strip of their Celtic-Gaulish heritage or call their cigarettes Celtiques or Gauloises, Bossi has made a political party and his own very successful career.
In a country where local identity is stronger than almost anywhere else in the world and where many of those identities are based on former political unity or present linguistic or gastronomic unity, “Padania” does not feature as one of them. Most define themselves first as “Piedmontese”, “Sicilian” or “Tuscan”, “Sienese”, “Venetian” or “Neapolitan”; no one seriously thinks of themselves as “Padanian”.
The League’s other symbols also show the magpie tendency of filching anything that glitters and some things that don’t. Their green is a shade somewhere between Ireland and Qaddafi’s Libyan flag – maybe geographically appropriate given the position of northern Italy but not what they are trying to suggest. Their symbol, supposedly "the alpine sun"
looks more like a call for legalising weed – not part of their programme either. When the leaders stand together in solemn moments, their right hands cover their hearts, a quintessential American gesture, not a Lombard (or Piedmontese or Venetian) one. In insults too, they have followed the American example with Bossi frequently raising his middle finger
(most recently towards the Italian national anthem) rather than using the much more athletic Italian and French gesture of putting the left hand on the crook of the right elbow and sharply raising the forearm.
As for music, the Northern League has appropriated one Italian symbol though. From its first performance in 1842, the Hebrew slaves’ chorus in Nabucco was taken as a call to freedom – initially from Austrian domination and then more generally for the whole of Italy. For a time in the 1940s, there was the suggestion that it should become the anthem of the new Italian republic. Now the Northern League use it sing of liberation from Italy much to the annoyance of supporters of Italian unity and Verdi fans..
For the last month, Bossi has again been using the language of secession. In the mid and late ‘90s the party programme moved between wanting a completely independent state (their telephonists at the Chamber of Deputies answered the phone with “Lega Nord, Padania Libera”) and the division of Italy into a three republic confederation. The difference is that Bossi and some of his colleagues are now ministers of the Republic of Italy and have sworn to defend its interests.
Over the summer, they combined unity and secession in a single gesture; the four ministries run by leghisti were transferred to Monza just outside Milan. Never mind that they still have not been staffed and opened and never mind that the other regions of the north were left out. It was Bossi’s devolution equivalent of the secessionists’ military exploit some years ago when a few of them “invaded” Venice with a tractor dressed up in sheet metal to look like a tank: an empty sham, thankfully.
The secessionist rhetoric is actually a superficial inconsistency. The real construction of Padania is a non-starter. Instead, Bossi and his supporters are defending themselves against internal attack – a possible takeover by his rival, the Interior Minister, Roberto Maroni. The physically and politically ailing Bossi wants to consolidate his position within the party. Outside the party but within the centre-right, he wants to distance himself from Berlusconi and the People of Freedom, ready for elections not later than 2013 but very probably sooner. During the Po water ceremony, he pointedly made no commitment to supporting the government for another 18 months.
So despite all the noise, we’re more likely to see an indepenent Scotland or Catalonia than “Padania” but that won’t stop Bossi’s rant.
Saturday, September 17, 2011
Not even a perch at the victors’ table
Every Italian schoolchild knows that the Piedmontese prime minister sent troops to fight with the British and French in Crimea in the hope that at the end of the war, Piedmont would have a place among the powers to negotiate the peace settlement. Not for the last time, the Piedmont’s and then Italy’s crack bersaglieri were playing diplomats more than warriors.
In the event, Piedmont took its place at the Paris peace conference and forged a new and strong link with France. Cavour negotiated a deal which led to French support against Austria and the unification of Italy under the king of Piedmont. Cavour and the bersaglieri served their king and country well.
More than 150 years later, Italy has been once again fighting side by side with the French and British, this time much closer to home, in Libya. And this time, the Italian contribution was crucial; without Italian bases, the NATO effort would have been much more difficult; Italian aircraft played an important role and the navy even more so.
Much more importantly, Italian interests are closely intertwined with Libya for both oil and gas and development contracts. Libya is also a former Italian colony (the invasion began 100 years ago this month) with much of Tripoli and Benghazi looking like La Spezia. Today it is the principal stepping stone for irregular immigration into Italy from sub-Saharan Africa (with migration control used by Col. Qaddafi as a carrot and stick).
And yet, for the moment at least, Italy has reaped fewer benefits from its support of the rebels and the National Transition Council than Piedmont did in 1856.
On Thursday, Sarkozy and Cameron performed a good revival
of the Entente Cordiale and yesterday Recep Erdogan
showed Turkey’s contemporary diplomatic muscle rather than rekindling their former Ottoman glory. Next week is President Obama’s turn to do the victory parade with the Libyan leader at the UN. Along with the heads of state and government, the diplomats and businessmen beaver away with less pomp and photocalls but more substance.
Where is Italy in all this? The embassy has re-opened and the foreign minister, Franco Frattini has assured Italians in his usual stunningly banal manner that all is well. Berlusconi is far too busy trying to persuade Chancellor Merkel that he did not make disparaging and sexist remarks about her and that she should be prepared to use German euros to buy Italian debt. He would like to show the money markets, the ECB and the European Commission that his latest budget really is going to rein in the Italian debt.
He is also trying to keep his ever more wobbly coalition together as voter confidence in him, his party and his ally the Northern League plummets.
Most importantly, he and his lawyers are in emergency damage control mode to try an prevent the flow of revelations that suggest that he has been at the centre of a massive prostitution ring and is being blackmailed by the pimps and quite a few of the girls.
This means that he does not have time to go to Tripoli in order to try and establish a new relationship with Libya – it would certainly never be quite as chummy as the one he had with Qaddafi but there could be solid working relations based on mutual interests. Even if he did have time, he could certainly not find space on any of the flights going into Tripoli at the moment. Even his once good friend Erdogan presumably wants his company like a hole in the head. Ditto Obama, Sarkozy and Cameron none of whom have had a soft spot for Silvio.
Despite all Berlusconi’s boasting about the success of his personal foreign policy, he risks not even being offered a stool at the victory banquet.
PS. An undenied report of a couple of months ago suggests that a consignment of weapons confiscated from Serbian forces by NATO in the ‘90s and given to the Italian army for destruction, were not destroyed and left their deposit in Sardinia in June for an unknown destination. If the weapons went to the NTC, the delivery could have been public as Italy had already recognised the provisional government. If they went to Qaddafi forces, we would have the curious scenario of weapons (some of them heavy) confiscated by NATO being supplied by a NATO member to be used against NATO forces. If true, it could be one reason why Italy is keeping such a low profile and not just because of Berlusconi’s whoremongering.
In the event, Piedmont took its place at the Paris peace conference and forged a new and strong link with France. Cavour negotiated a deal which led to French support against Austria and the unification of Italy under the king of Piedmont. Cavour and the bersaglieri served their king and country well.
More than 150 years later, Italy has been once again fighting side by side with the French and British, this time much closer to home, in Libya. And this time, the Italian contribution was crucial; without Italian bases, the NATO effort would have been much more difficult; Italian aircraft played an important role and the navy even more so.
Much more importantly, Italian interests are closely intertwined with Libya for both oil and gas and development contracts. Libya is also a former Italian colony (the invasion began 100 years ago this month) with much of Tripoli and Benghazi looking like La Spezia. Today it is the principal stepping stone for irregular immigration into Italy from sub-Saharan Africa (with migration control used by Col. Qaddafi as a carrot and stick).
And yet, for the moment at least, Italy has reaped fewer benefits from its support of the rebels and the National Transition Council than Piedmont did in 1856.
On Thursday, Sarkozy and Cameron performed a good revival
of the Entente Cordiale and yesterday Recep Erdogan
showed Turkey’s contemporary diplomatic muscle rather than rekindling their former Ottoman glory. Next week is President Obama’s turn to do the victory parade with the Libyan leader at the UN. Along with the heads of state and government, the diplomats and businessmen beaver away with less pomp and photocalls but more substance.
Where is Italy in all this? The embassy has re-opened and the foreign minister, Franco Frattini has assured Italians in his usual stunningly banal manner that all is well. Berlusconi is far too busy trying to persuade Chancellor Merkel that he did not make disparaging and sexist remarks about her and that she should be prepared to use German euros to buy Italian debt. He would like to show the money markets, the ECB and the European Commission that his latest budget really is going to rein in the Italian debt.
He is also trying to keep his ever more wobbly coalition together as voter confidence in him, his party and his ally the Northern League plummets.
Most importantly, he and his lawyers are in emergency damage control mode to try an prevent the flow of revelations that suggest that he has been at the centre of a massive prostitution ring and is being blackmailed by the pimps and quite a few of the girls.
This means that he does not have time to go to Tripoli in order to try and establish a new relationship with Libya – it would certainly never be quite as chummy as the one he had with Qaddafi but there could be solid working relations based on mutual interests. Even if he did have time, he could certainly not find space on any of the flights going into Tripoli at the moment. Even his once good friend Erdogan presumably wants his company like a hole in the head. Ditto Obama, Sarkozy and Cameron none of whom have had a soft spot for Silvio.
Despite all Berlusconi’s boasting about the success of his personal foreign policy, he risks not even being offered a stool at the victory banquet.
PS. An undenied report of a couple of months ago suggests that a consignment of weapons confiscated from Serbian forces by NATO in the ‘90s and given to the Italian army for destruction, were not destroyed and left their deposit in Sardinia in June for an unknown destination. If the weapons went to the NTC, the delivery could have been public as Italy had already recognised the provisional government. If they went to Qaddafi forces, we would have the curious scenario of weapons (some of them heavy) confiscated by NATO being supplied by a NATO member to be used against NATO forces. If true, it could be one reason why Italy is keeping such a low profile and not just because of Berlusconi’s whoremongering.
Monday, September 12, 2011
They don’t get it…
Italian politicians have a pretty high opinion of the themselves on the whole. They are furbi or cunning, and are, after all, the heirs of the inventor of modern politics, Niccolò Machiavelli and no one is sharper than him…
The self-congratulatory Berlusconi has declared himself the best prime minister Italy has ever had and has rated himself on par with Justinian and Napoleon as a lawgiver. His colleagues are no less modest.
But they are now dangerously distant from the national and international reality. For the third time in two months, there is an emergency austerity budget before Parliament – this is yet another attempt to inject some confidence into the Italian economy; like the others, it will be very painful for all taxpayers and especially the poorer ones.
As part of the belt-tightening move, Parliamentarians cut some of their allowances in an early draft. The version that the Senate passed on Wednesday and that the Chamber is likely to pass this coming Wednesday reduced that reduction so we’re almost back to square one. And since the Government called for a vote of confidence on the bill, there no possibility of amending it.
The proposal to abolish the provinces (Italy has four levels of government to most other countries’ three) has been tabled as a constitutional amendment meaning that even if this legislature runs its full course, the amendment will not have the time to be passed.
Cutting Parliamentarians’ perks, allowances, pensions and salaries will not solve Italy’s debt problem. Even drastically reducing the number of politicians at all levels will not bring Italy’s debt down to the euro norms but addressing the questions will make it just a little bit easier to persuade the rest of the country that the austerity measures are fair. But the politicians don’t get it.
Four years ago, Gianantonio Stella and Sergio Rizzo published La casta (The Caste) documenting politicians’ privileges in painful detail. It became a bestseller and the title has become normal usage. Over the last few months, revelations and bitter criticism have increased. One summer example: lunch in the Senate restaurant costs less than €10, a plate of turbot €2.50 served in a delighful Baroque dining room by elegant waiters…
Parliamentarians are also given a generous pension after just a single legislature ostensibly to guarantee that they do no abuse the position of power that they held. And even very eminent older politicians have been vehemently defending this precious guarantee of democratic righteousness.
More important on the international scene is the government’s stubborn unwillingness to accept that Italy is in the middle of a major crisis and one which risks seriously damaging the euro, possibly even destroying it.
The president of the employers’ federation, Emma Marcegaglia said last week that the government should act or let someone else do it. The Milan stock exchange has been in free fall for almost two months.
The European institutional leaders have also been putting pressure on both President Napolitano and on the government. These last few days have seen the publication of intercepts between Berlusconi and a fixer-pimp who is alleged to have been blackmailing the prime minister which apparently include disparaging sexist remarks on Angela Merkel, one of Italy‘s potential saviors. This is juicy stuff but even if the language is presumably less graphic, I would be far more interested in the conversations between the ECB’s present and future presidents, Trichet and Draghi and Chancellor Merkel and in what they have been saying to Napolitano. The Italian president, after all, is not responsible for the budget and strictly speaking is overstepping his institutional powers when he urges the Prime Minister to act decisively.
It is relatively easy to explain why the parliamentarians are so arrogant in their defence of privilege. First, they are indeed out of touch with their electorate; they are elected from fixed party lists and not directly from a defined constituency or district. The second reason sounds absurd but is still true; the majority of Italians are not yet angry enough with la casta to do anything concrete about it. Twenty years ago disgruntled Romans threw coins at Bettino Craxi to show their contempt at his venality. This has not happened yet.
As for the government, the explanations are more nuanced. Berlusconi has two contradictory spins. The first is that there was no crisis until a couple of months ago and even now, the Italian economy is actually sound. Nothing has changed dramatically in the financial or business world since July, except that now the markets no longer feel that Italy’s debt is secure; the dastardly speculators are wrong according to Berlusconi. But blaming the markets is like blaming the thermometer when you have a temperature. Berlusconi doesn’t get it.
His second explanation is that he didn’t create Italy’s massive debt, as he repeated just yesterday, it was the catto-comunisti, the Catholics and the Communists in the ‘80s. It was actually his friend and protector, Bettino Craxi more than anyone else who made Italy’s debt balloon out of control (and sponsored Berlusconi rise). And he can hardly claim he is the new kid on the block who has to clear up the mess left by a predecessor, like Enda Kenny in Ireland or David Cameron in Britain, or even Papadreou in Greece.
Italian growth has been low or even negative for almost 20 years now and Berlusconi has been in power for all but two of the last ten years.
Then there are the personal and electoral reasons; Berlusconi finds it impossible to deliver bad news and harsh measures because his popularity is more important than the country’s or Europe’s interests. This is for psychological reasons as well as for obvious electoral interests. His allies even more, are terrified of facing an electorate after cutting resources.
They also have an underlying presumption that “it’ll all turn out all right in the end”. This is part facile optimism and part the idea that there are “grown-ups” in “Europe” who will sort everything out. “We’ll raise the pension age but only if Europe tells us to” said Berlusconi a couple of days ago.
The problem is that Italy’s mess is too big for “Europe” (Commission, ECB and Germany) to sort out without a major effort by Italy itself.
But they don’t get it.
The self-congratulatory Berlusconi has declared himself the best prime minister Italy has ever had and has rated himself on par with Justinian and Napoleon as a lawgiver. His colleagues are no less modest.
But they are now dangerously distant from the national and international reality. For the third time in two months, there is an emergency austerity budget before Parliament – this is yet another attempt to inject some confidence into the Italian economy; like the others, it will be very painful for all taxpayers and especially the poorer ones.
As part of the belt-tightening move, Parliamentarians cut some of their allowances in an early draft. The version that the Senate passed on Wednesday and that the Chamber is likely to pass this coming Wednesday reduced that reduction so we’re almost back to square one. And since the Government called for a vote of confidence on the bill, there no possibility of amending it.
The proposal to abolish the provinces (Italy has four levels of government to most other countries’ three) has been tabled as a constitutional amendment meaning that even if this legislature runs its full course, the amendment will not have the time to be passed.
Cutting Parliamentarians’ perks, allowances, pensions and salaries will not solve Italy’s debt problem. Even drastically reducing the number of politicians at all levels will not bring Italy’s debt down to the euro norms but addressing the questions will make it just a little bit easier to persuade the rest of the country that the austerity measures are fair. But the politicians don’t get it.
Four years ago, Gianantonio Stella and Sergio Rizzo published La casta (The Caste) documenting politicians’ privileges in painful detail. It became a bestseller and the title has become normal usage. Over the last few months, revelations and bitter criticism have increased. One summer example: lunch in the Senate restaurant costs less than €10, a plate of turbot €2.50 served in a delighful Baroque dining room by elegant waiters…
Parliamentarians are also given a generous pension after just a single legislature ostensibly to guarantee that they do no abuse the position of power that they held. And even very eminent older politicians have been vehemently defending this precious guarantee of democratic righteousness.
More important on the international scene is the government’s stubborn unwillingness to accept that Italy is in the middle of a major crisis and one which risks seriously damaging the euro, possibly even destroying it.
The president of the employers’ federation, Emma Marcegaglia said last week that the government should act or let someone else do it. The Milan stock exchange has been in free fall for almost two months.
The European institutional leaders have also been putting pressure on both President Napolitano and on the government. These last few days have seen the publication of intercepts between Berlusconi and a fixer-pimp who is alleged to have been blackmailing the prime minister which apparently include disparaging sexist remarks on Angela Merkel, one of Italy‘s potential saviors. This is juicy stuff but even if the language is presumably less graphic, I would be far more interested in the conversations between the ECB’s present and future presidents, Trichet and Draghi and Chancellor Merkel and in what they have been saying to Napolitano. The Italian president, after all, is not responsible for the budget and strictly speaking is overstepping his institutional powers when he urges the Prime Minister to act decisively.
It is relatively easy to explain why the parliamentarians are so arrogant in their defence of privilege. First, they are indeed out of touch with their electorate; they are elected from fixed party lists and not directly from a defined constituency or district. The second reason sounds absurd but is still true; the majority of Italians are not yet angry enough with la casta to do anything concrete about it. Twenty years ago disgruntled Romans threw coins at Bettino Craxi to show their contempt at his venality. This has not happened yet.
As for the government, the explanations are more nuanced. Berlusconi has two contradictory spins. The first is that there was no crisis until a couple of months ago and even now, the Italian economy is actually sound. Nothing has changed dramatically in the financial or business world since July, except that now the markets no longer feel that Italy’s debt is secure; the dastardly speculators are wrong according to Berlusconi. But blaming the markets is like blaming the thermometer when you have a temperature. Berlusconi doesn’t get it.
His second explanation is that he didn’t create Italy’s massive debt, as he repeated just yesterday, it was the catto-comunisti, the Catholics and the Communists in the ‘80s. It was actually his friend and protector, Bettino Craxi more than anyone else who made Italy’s debt balloon out of control (and sponsored Berlusconi rise). And he can hardly claim he is the new kid on the block who has to clear up the mess left by a predecessor, like Enda Kenny in Ireland or David Cameron in Britain, or even Papadreou in Greece.
Italian growth has been low or even negative for almost 20 years now and Berlusconi has been in power for all but two of the last ten years.
Then there are the personal and electoral reasons; Berlusconi finds it impossible to deliver bad news and harsh measures because his popularity is more important than the country’s or Europe’s interests. This is for psychological reasons as well as for obvious electoral interests. His allies even more, are terrified of facing an electorate after cutting resources.
They also have an underlying presumption that “it’ll all turn out all right in the end”. This is part facile optimism and part the idea that there are “grown-ups” in “Europe” who will sort everything out. “We’ll raise the pension age but only if Europe tells us to” said Berlusconi a couple of days ago.
The problem is that Italy’s mess is too big for “Europe” (Commission, ECB and Germany) to sort out without a major effort by Italy itself.
But they don’t get it.
Saturday, August 06, 2011
Italy’s Real Deficit
For the last month, Italy has been buffetted more than most by the financial storm hitting Europe and the US. In the last week, the storm became a hurricane and there is no guarantee that it won’t continue or even worsen next week.
Far from being the most relaxed time of year with everyone by the seaside or about to go, politicians are looking forward to a hard, fraught and working August.
The longterm reasons are clear enough; the national debt has been growing since the Eighties while the economy has stagnated. The country became less and less competitive with globalisation and since joining the euro, devaluation has no longer been an option to reduce debt and make Italian goods and services more attractive. Servicing that debt is becoming more and more expensive as the perception of the country’s reliability declines. Italian 10 year treasury bonds are close to 4% higher than German one, the so-called spread has moved between 350 and 400 points over the last week, only just below Spain’s and occasionally above it.
Italy’s debt is today around 120% of its GDP (and was higher than the 60% Maastricht criteria maximum when Italy joined the euro – like Greece’s debt and creative accounting, this is another and much bigger original sin of the euro). The increase since the 2008 crisis has been more due to slow or negative growth rather than greatly increased spending. It’s hardly a happy state, but it’s not catastrophic either and it very definitely did not appear out of the blue in the last few months.
The budget deficit has also been creeping up and is well over the ECB limit but a good part goes to pay interest on the debt and without that, the budget is close but within the limit. Again, a grey outlook but not disastrous. Certainly nothing like Greece.
Italy’s banks and savings are pretty sound as well – there are no bubbles in housing or anything else as in Ireland or Spain.
By most accounts then, Italy should be bumping along the bottom without a major crisis. But it isn’t and the reason is blindingly obvious. The crisis is caused by real flaws in the system and the numbers behind them, but above all, it is the result of lack of leadership.
This is the country’s most crucial deficit.
Since Lehman Brothers blew up, the Prime Minister has been telling Italy that there is nothing to worry about. The crisis, according to Berlusconi, was an international one and Italy was in a much stronger position to weather it. This was actually partially true, but only if something was done to address the much older structural problems.
For most of the last year, the prime minister and the economics minister, Giulio Tremonti, sniped at each other with the first saying that everything was fine and the second calling for spending cuts. When it came to passing a serious austerity budget, Tremonti was told first that “no one is indispensable” and then that the budget was “a collective responsibility of the cabinet”. As it turned out to be – last month’s bill was a mess that pleased no one, least of all the markets. It promised to balance the budget by 2014, after the next elections with most of the cuts delayed. It was obvious then that it was not enough so after disappearing from the scene for more than a fortnight, and after a run on the Milan stock exchange, Berlusconi spoke on Wednesday to reassure the country and the markets. Amazingly, once again, it was the markets that were wrong, not the government.
It was a dreary, lacklustre speech obviously written by a not very harmonious committee (and political philologists had a field day guessing who was behind it). The only time Berlusconi woke up from his stupor was when he was heckled about the stock market. He replied “I have three companies quoted on the Milan exchange – I’m a businessman on the front line of this battle of the markets”. Funny… I thought he was prime minister of Italy. Once again, there seems to be no translation of “conflict of interest” – or at least not one that Berlusconi understands. He promised that funds already allocated would actually be spent and promised the usual run of committees to see where savings in politicians’ perks and privileges could be made – as if the world had long since learnt that a committee is just a semi-polite way of stalling.
The following day, Thursday, he met with what Italians call le parti sociali, employers’ groups, trades unions, trade and business organisations. They gave him and his ministers a six point plan some of which to be executed now, in August; a balanced budget by 2014, reduction of costs of politics and administation, including the abolition of the provinces (Italy has four tiers of government compared to most countries’ three. That could be done immediately and the number of comuni or municipal governments greatly reduced. Politicians’ privileges could be cut tomorrow), liberalisation and privatisation (on one index of “economic freedom”, Italy was 64th in 2008 and 76th in 2009 ), freeing up of investments, simplification of the public administration and the labour market. The unions did not agree to privatisation but accepted the rest. It was a measure of the urgency that parties who are normally antagonists, got together in order to pressure the government.
The best result was a press conference in which Berlusconi said that “if I had any money, I would buy shares in my companies because they’re sound” and then added: “If you want to invest you should buy them too”. Old salesmen never lose their patter, apparently. He also contradicted Tremonti in front of all the cameras once again underlining their disagreements.
It was not till yesterday, after the European markets had closed that he again called a press conference to say that some of the budget measures would be brought forward and that government and parliament would be open over August to work something out.
This was after the markets had battered Italy very seriously for a week, after the parti sociali had begged him to do something quickly, after ECB president, Jean-Claude Trichet had asked Italy to act , after the EU Economic and Monetary Commissioner Olli Rehn had done the same . The European institutions cannot bail out Italy and we all know that – if Italy fails, the whole euro is in trouble. Now the US ratings have been downgraded which will produce more pain. Next week will give us more surprises.
The man who sold himself as a man of action, a Milanese businessman who deals with facts, not hot air, has once again shown himself to have feet of clay. There are no easy solutions for Italy and if Berlusconi stepped down, there would be no rosy dawn – but it would a start in reducing at least one on Italy’s deficits.
Far from being the most relaxed time of year with everyone by the seaside or about to go, politicians are looking forward to a hard, fraught and working August.
The longterm reasons are clear enough; the national debt has been growing since the Eighties while the economy has stagnated. The country became less and less competitive with globalisation and since joining the euro, devaluation has no longer been an option to reduce debt and make Italian goods and services more attractive. Servicing that debt is becoming more and more expensive as the perception of the country’s reliability declines. Italian 10 year treasury bonds are close to 4% higher than German one, the so-called spread has moved between 350 and 400 points over the last week, only just below Spain’s and occasionally above it.
Italy’s debt is today around 120% of its GDP (and was higher than the 60% Maastricht criteria maximum when Italy joined the euro – like Greece’s debt and creative accounting, this is another and much bigger original sin of the euro). The increase since the 2008 crisis has been more due to slow or negative growth rather than greatly increased spending. It’s hardly a happy state, but it’s not catastrophic either and it very definitely did not appear out of the blue in the last few months.
The budget deficit has also been creeping up and is well over the ECB limit but a good part goes to pay interest on the debt and without that, the budget is close but within the limit. Again, a grey outlook but not disastrous. Certainly nothing like Greece.
Italy’s banks and savings are pretty sound as well – there are no bubbles in housing or anything else as in Ireland or Spain.
By most accounts then, Italy should be bumping along the bottom without a major crisis. But it isn’t and the reason is blindingly obvious. The crisis is caused by real flaws in the system and the numbers behind them, but above all, it is the result of lack of leadership.
This is the country’s most crucial deficit.
Since Lehman Brothers blew up, the Prime Minister has been telling Italy that there is nothing to worry about. The crisis, according to Berlusconi, was an international one and Italy was in a much stronger position to weather it. This was actually partially true, but only if something was done to address the much older structural problems.
For most of the last year, the prime minister and the economics minister, Giulio Tremonti, sniped at each other with the first saying that everything was fine and the second calling for spending cuts. When it came to passing a serious austerity budget, Tremonti was told first that “no one is indispensable” and then that the budget was “a collective responsibility of the cabinet”. As it turned out to be – last month’s bill was a mess that pleased no one, least of all the markets. It promised to balance the budget by 2014, after the next elections with most of the cuts delayed. It was obvious then that it was not enough so after disappearing from the scene for more than a fortnight, and after a run on the Milan stock exchange, Berlusconi spoke on Wednesday to reassure the country and the markets. Amazingly, once again, it was the markets that were wrong, not the government.
It was a dreary, lacklustre speech obviously written by a not very harmonious committee (and political philologists had a field day guessing who was behind it). The only time Berlusconi woke up from his stupor was when he was heckled about the stock market. He replied “I have three companies quoted on the Milan exchange – I’m a businessman on the front line of this battle of the markets”. Funny… I thought he was prime minister of Italy. Once again, there seems to be no translation of “conflict of interest” – or at least not one that Berlusconi understands. He promised that funds already allocated would actually be spent and promised the usual run of committees to see where savings in politicians’ perks and privileges could be made – as if the world had long since learnt that a committee is just a semi-polite way of stalling.
The following day, Thursday, he met with what Italians call le parti sociali, employers’ groups, trades unions, trade and business organisations. They gave him and his ministers a six point plan some of which to be executed now, in August; a balanced budget by 2014, reduction of costs of politics and administation, including the abolition of the provinces (Italy has four tiers of government compared to most countries’ three. That could be done immediately and the number of comuni or municipal governments greatly reduced. Politicians’ privileges could be cut tomorrow), liberalisation and privatisation (on one index of “economic freedom”, Italy was 64th in 2008 and 76th in 2009 ), freeing up of investments, simplification of the public administration and the labour market. The unions did not agree to privatisation but accepted the rest. It was a measure of the urgency that parties who are normally antagonists, got together in order to pressure the government.
The best result was a press conference in which Berlusconi said that “if I had any money, I would buy shares in my companies because they’re sound” and then added: “If you want to invest you should buy them too”. Old salesmen never lose their patter, apparently. He also contradicted Tremonti in front of all the cameras once again underlining their disagreements.
It was not till yesterday, after the European markets had closed that he again called a press conference to say that some of the budget measures would be brought forward and that government and parliament would be open over August to work something out.
This was after the markets had battered Italy very seriously for a week, after the parti sociali had begged him to do something quickly, after ECB president, Jean-Claude Trichet had asked Italy to act , after the EU Economic and Monetary Commissioner Olli Rehn had done the same . The European institutions cannot bail out Italy and we all know that – if Italy fails, the whole euro is in trouble. Now the US ratings have been downgraded which will produce more pain. Next week will give us more surprises.
The man who sold himself as a man of action, a Milanese businessman who deals with facts, not hot air, has once again shown himself to have feet of clay. There are no easy solutions for Italy and if Berlusconi stepped down, there would be no rosy dawn – but it would a start in reducing at least one on Italy’s deficits.
Saturday, July 23, 2011
All the President’s Powers
Power is like a liquid, sometimes erupting under pressure to cover all around it, sometimes seeping through cracks to find its own levels. The Italian President has no volcanic properties but when there is a vacuum he can and does fill it.
There has been much talk over the last ten days about Giorgio Napolitano increasing the role and importance of the president. Some say that he is overstepping his constitutional powers, others are grateful for a steady hand in the present storm. Either way, he has been much in evidence.
The recent austerity budget had a rough ride to Parliament; Tremonti wanted it tougher, Berlusconi and most of the cabinet wanted it much softer and threatened to fire Tremonti. The European Commission and the markets wanted some sign of life in Palazzo Chigi. It was at this point apparently, that Napolitano intervened first to make sure that the bill would make it through the cabinet into Parliament and then to ensure that the opposition would not obstruct it wheb it arrived. The result was the fastest budget in history – it was maybe too little, too late; on Monday the response was underwhelming, but since then the markets at least have stabilised. But whatever the mediumterm results, it was a smart piece of manoevering by the Quirinale. Nowhere in the constitution does it give the President budget powers but for a few days at least, he had taken over from the prime minister who was absent both physically and politically throughout.
Then in the middle of the week, he again took the political initiative when he gave the magistrature a severe rap on the knuckles. He told a group of newly appointed magistrates “to avoid conduct which creates undue confusion between roles and encourages the existing intolerable and sterile clash between politics and the magistrature”. For someone who is supposed to be a largely symbolic leader and head of the judiciary, these are strong words.
First of all condotta is stronger and more negatively marked than “conduct” and much more so than “behaviour”. Not so long ago, Italian schoolchildren were marked on “conduct” and there is a whiff of schoolmasterly disapproval behind the word. The phrase also presumes that magistrates are overstepping their roles and moving directly into politics and accepts that there is indeed a clash between “politics” and the judiciary. It is a “when did you stop beating you wife?” statement.
It also takes for granted that “politics” is something apart from the law and the judiciary. At least since Craxi in the Eighties, elected politicians have tried to argue that they are somehow apart from the rest of society with privileges and immunities due. When one of them has been investigated for alleged wrongdoing, they close ranks and defend “politics”. Berlusconi of course has taken this to paroxistic levels but even a magistrate and former speaker of the chamber, Luciano Violante has made the distinction between “legality” and “politics”, a point he repeated last week.
The President is the titular head of the judiciary; the not-so-veiled subtext of his speech was that prosecutors and judges should pull their punches in order to keep the country going. If they continue with their investigations, arrest warrants for parliamentarians, telephone taps, Napolitano implied, then there might be another corruption scandal as in 1992 and in the present economic climate, Italy cannot afford it. Even less than mediating the passage of the budget, the constitution certainly does not give the President the power to instruct judges and prosecutors not to apply the law.
It was a remarkable speech because any investor listening could only presume that there is more rot to be uncovered by investigaters and more institutional instability just below the surface making Italy even more unreliable than it looks.
The more partisan interpretation is that Napolitano was trying to defend his former party comrades some of whom are under investigation. This is unfair as, unfortunately Napolitano has long separated “moral questions” from political ones.
In any case, the following day after widespread criticism, he argued that he had just recommended magistrates not to do anything that might weaken their efforts to guarantee legality especially when dealing with politicians.
Normally Italian presidents, Napolitano included, sail high – well above the day to day scrummage of party politics. They open public works and talk about progress or go to schools and extoll the benefits of education. The only political negotiation that they are involved in is the formation of a new government but they are normally behind closed doors.
This time Napolitano has come out into the open, first to see the budget through Parliament and then to try and damp down the growing public insufferance for the whole political class. It is true that power fills vacuums and that there is a dire lack of leadership in Italy today, but if the decisionmaker of last resort becomes involved in day to day politics, he is likely to lose his prestige without even resolving the issues. And that would leave Italy even more dangerously uncovered and vulnerable to a more violent type of power.
Last blog on the president, 6 Feb. 2011 Of cabbages and kings
There has been much talk over the last ten days about Giorgio Napolitano increasing the role and importance of the president. Some say that he is overstepping his constitutional powers, others are grateful for a steady hand in the present storm. Either way, he has been much in evidence.
The recent austerity budget had a rough ride to Parliament; Tremonti wanted it tougher, Berlusconi and most of the cabinet wanted it much softer and threatened to fire Tremonti. The European Commission and the markets wanted some sign of life in Palazzo Chigi. It was at this point apparently, that Napolitano intervened first to make sure that the bill would make it through the cabinet into Parliament and then to ensure that the opposition would not obstruct it wheb it arrived. The result was the fastest budget in history – it was maybe too little, too late; on Monday the response was underwhelming, but since then the markets at least have stabilised. But whatever the mediumterm results, it was a smart piece of manoevering by the Quirinale. Nowhere in the constitution does it give the President budget powers but for a few days at least, he had taken over from the prime minister who was absent both physically and politically throughout.
Then in the middle of the week, he again took the political initiative when he gave the magistrature a severe rap on the knuckles. He told a group of newly appointed magistrates “to avoid conduct which creates undue confusion between roles and encourages the existing intolerable and sterile clash between politics and the magistrature”. For someone who is supposed to be a largely symbolic leader and head of the judiciary, these are strong words.
First of all condotta is stronger and more negatively marked than “conduct” and much more so than “behaviour”. Not so long ago, Italian schoolchildren were marked on “conduct” and there is a whiff of schoolmasterly disapproval behind the word. The phrase also presumes that magistrates are overstepping their roles and moving directly into politics and accepts that there is indeed a clash between “politics” and the judiciary. It is a “when did you stop beating you wife?” statement.
It also takes for granted that “politics” is something apart from the law and the judiciary. At least since Craxi in the Eighties, elected politicians have tried to argue that they are somehow apart from the rest of society with privileges and immunities due. When one of them has been investigated for alleged wrongdoing, they close ranks and defend “politics”. Berlusconi of course has taken this to paroxistic levels but even a magistrate and former speaker of the chamber, Luciano Violante has made the distinction between “legality” and “politics”, a point he repeated last week.
The President is the titular head of the judiciary; the not-so-veiled subtext of his speech was that prosecutors and judges should pull their punches in order to keep the country going. If they continue with their investigations, arrest warrants for parliamentarians, telephone taps, Napolitano implied, then there might be another corruption scandal as in 1992 and in the present economic climate, Italy cannot afford it. Even less than mediating the passage of the budget, the constitution certainly does not give the President the power to instruct judges and prosecutors not to apply the law.
It was a remarkable speech because any investor listening could only presume that there is more rot to be uncovered by investigaters and more institutional instability just below the surface making Italy even more unreliable than it looks.
The more partisan interpretation is that Napolitano was trying to defend his former party comrades some of whom are under investigation. This is unfair as, unfortunately Napolitano has long separated “moral questions” from political ones.
In any case, the following day after widespread criticism, he argued that he had just recommended magistrates not to do anything that might weaken their efforts to guarantee legality especially when dealing with politicians.
Normally Italian presidents, Napolitano included, sail high – well above the day to day scrummage of party politics. They open public works and talk about progress or go to schools and extoll the benefits of education. The only political negotiation that they are involved in is the formation of a new government but they are normally behind closed doors.
This time Napolitano has come out into the open, first to see the budget through Parliament and then to try and damp down the growing public insufferance for the whole political class. It is true that power fills vacuums and that there is a dire lack of leadership in Italy today, but if the decisionmaker of last resort becomes involved in day to day politics, he is likely to lose his prestige without even resolving the issues. And that would leave Italy even more dangerously uncovered and vulnerable to a more violent type of power.
Last blog on the president, 6 Feb. 2011 Of cabbages and kings
Tuesday, July 19, 2011
Prime ministerial succession in Italy and Britain
There’s talk of David Cameron having to step down and of course the chorus of calls for Silvio Berlusconi to resign is rising. So a little comparison of the two systems might be interesting.
Both countries have prime ministerial systems – that means that the head of government stays in power for as long as he or she has the confidence of Parliament. If they lose that confidence, either in an explicit vote or because they lose the support of their party or their coalition, then they will normally give their resignation to Queen or President. The latter then follows a clear procedure to find a successor which sometimes takes a few days but has on occasions taken months. The former normally has a pre-chosen successor ready in waiting.
The Italian method is well tried and pretty straightforward, only as with many things in this country, it can take some time.
Despite the plethora of no confidence votes recently and despite the 57 governments since Italy became a republic, almost none of them fell after a vote. Normally, internal opposition made it known to the serving prime minister that he no longer had the support of the House (it was normally the Chamber of Deputies). He would then offer his resignation to the President who would follow the Constitution, consult with party leaders and former presidents, try and find a likely candidate to take over and give him a mandate to form a government. The negotiations sometimes took months. In the so-called First Republic, this process was even used after general elections. Since then, from 1994, the candidate for prime minister has been explicit but even then, sometimes it has taken time to form a government.
Today, there is a contradiction between the prime minister who was listed as the leader of a coalition (and therefore is in a sense an “elected” prime minister, or at least someone with a personal popular mandate) and the constitution which still gives supremacy to parliament. So Berlusconi argues that he is “anointed by the people” and that if he loses support (as he did in 1994), there should be new elections (which did not happen then). So if and when he goes, especially if it is soon, he will certainly demand new elections and almost certainly he will not get them. The most likely scenario is that Napolitano will follow the constitution, consult party leaders and, most likely, find a suitable non-party “technician” to lead a government of national unity. Alternatively, in theory at least, there could be a new centre-right leader with the same majority but somehow that does not seem likely.
In Britain, without a codified constitution, everything is much more flexible. Since World War II, six serving prime ministers have stood down: Churchill (1955), Eden (1957), Macmillan (1963), Wilson (1976), Thatcher (1990), Blair (2007). The first three were Tories who at the time had an informal consensus system of choosing leaders – the party grandees decided who was the best chap to run the show and he became leader. If they were in power, then he became prime minister. Any backbiting or infighting was kept well behind closed doors. Wilson was succeeded by James Callaghan in a vote by Labour MPs. Thatcher was ousted by her own party most of whom felt by 1989 that she was a liablity to their chances of winning the next election. It was a bitter and difficult series of campaigns in which Thatcher felt she had been betrayed by her party and said so very openly. Again as with the Labour party, it was the MPs who elected John Major as her successor and PM. Gordon Brown was elected leader of the Labour Party to replace Blair in what was in practice a non-contested election.
In all these cases, the party in power had a clear majority in the Commons so the leadership and the premiership went together. This is not the case today.
Today, if Cameron were to resign, the Conservatives would have to elect a new leader but he or she would not automatically become PM. For the first time since the war, Britain has a coalition and just as we were in uncharted waters last year when there was no majority, so there are no precedents today.
There have been some suggestions that “Nick Clegg must lead” and create a new Lib-Lab coalition with Ed Milliband’s Labour Party. That is a possibility but at the moment, not a very likely one. Another is that Clegg could take over the existing coalition but I can’t see many Tories accepting that. Or they could follow previous precedents which would mean a new Conservative leader taking over the party and Downing Street.
It will be new, it might be messy but paradoxically, despite the uncertainties, it will definitely be quicker and cleaner than the Italian succession whenever that takes place.
I’ll come back to the questions of the Italian succession very soon as it is a pressing problem.
The Economic Pain Grows in Italy
For those of us not versed in the dark arts of accounting or international finance, there is little more solid than money; I have it or I don’t, I can borrow it or lend it and measure it down to the last penny. But confidence is an altogether different commodity, far more abstract and difficult to gauge. This week, Italy is having to persuade us that the world should have confidence in the country.
This week Italy is trying to persuade us that the world should have confidence in both its political and financial stability. It will not be easy.
One index are the ratings agencies evaluation of a country’s creditworthiness and another is the divide beween Germany’s interest rates and the other eurozone rates. On both scores, confidence in Italy is declining day by day.
Until recently, Italy had avoided the worst of the world and European crises. There was no housing bubble as Italian banks demand copperbottomed collateral before they will lend the ordinary housebuyer a cent. There were almost no toxic assets as Italian banks are amazingly conservative in their investment policies. Once upon a time few Italian bankers spoke a word of English; today most of them speak the words and grammar but to their credit they don’t speak the language of the City or Wall Street or the innovative financial operators who filled the market with dubious products over the last decade.
Despite a declining economy, Italians still save and private saving is among the highest in Europe. It’s debt is the second highest in Europe at 120% but its budget deficit is not outrageous and is close to balanced when interest payments are taken out. Italy seemed condemned to a slow and fairly dignified relative decline, a bit like Venice in the 19th century.
But the workings of the financial markets are not slow and Berlusconi and his government are anything but dignified so Italy’s fate is rather different.
The problem is leadership. Silvio Berlusconi won elections not just because he owns half the country’s television stations (though that helps) but because he projects optimism. He has always been very careful not to deliver bad news himself and is highly critical of anyone in the opposition who suggests that all is not well economically. But for the last year, it has been a hard act to keep up; it is not because he is accused of having sex with under age prostitutes nor even that he is on trial for having set up slush funds or for paying English lawyer David Mills to perjure himself or for paying a judge to award him Italy’s biggest publisher in a takeover case. In any case his supporters either don’t believe the accusations or they don’t care even if they’re true.
His optimism falls flat because there are too many Italians underpaid, unemployed of underemployed; too many companies are either struggling or have already given up the ghost. In Italy, he is no longer credible and abroad, the EU, the ECB and the ratings agencies look at Italy’s debt and wonder where it will end.
Enter Giulio Tremonti. The economics minister has rarely been off centre stage, actually, but now he spends more time there than Berlusconi. He arrived, like a good portion of Berlusconi’s ministers and parliamentarians as a business associate, his principal accountant. But unlike the other ex-employees, Tremonti has never been a yes-man and has earned a reputation for solid if not hugely innovative policy. He left the cabinet over policy differences in the last Berlusconi government and for most of this legislature, he has been closer to Berlusconi’s coalition partner Umberto Bossi and has been making thinly veiled moves towards succession.
Over the last year, Tremonti has repeated that Italy needs to reduce its debt and that a major austerity package was inevitable. Berlusconi in contrast has been trying to deal with decling approval ratings and an increasingly divided coalition, quite apart from his court cases. Obviously he is less than enthusiastic about an austerity budget. He has to manoevre between the EU rock and the Tremonti hard place. He knows that if he fired Tremonti, internationl wrath would follow. Last month, Berlusconi said pointedly that cabinet decisions were collective and Tremonti could not dictate a budget and last week he accused Tremonti of “not being a team player”.
Tremonti himself does his best to make himself unpopular, calling a cabinet colleague “a cretin” in a stage whisper in front of an open mike during a press conference. He is alone in the government but has some support from business and the Church. If he was forced to resign, then he would be in a good position to put himself forward as an economically safe alternative to Berlusconi. His only problem at the moment, is the criminal investigation into one of his close staff at the ministry who was also hosting his boss in an €8,500 per month flat.
Beyond the personal and policy differences between the two men, there are big divisions between Berlusconi’s People of Freedom and Umberto Bossi’s Northern League. Berlusconi knows that he must reduce the deficit, Bossi is just concerned about how to stop the hæmorrage of votes and knows that austerity does not win elections.
This week parliament starts debating Tremonti’s €47 bn budget. It should have calmed markets but in the discussions, the main issues were lost. It is a fudged budget – first of all, most of the cuts will affect the next government: €2 bn this year, €5 bn in 2012, and €20 bn each in 2013 and 2014 – with elections due in April 2013 at the latest. Secondly, most of the cuts are regressive – higher health service charges, fixed, whatever your income; cuts on medium range pensions, and cuts on payments to local and regional authorities who provide much of Italy’s social security and health service.
There is no certainty that even these cuts will be implemented. There is the likelihood of government amendments “to improve the bill” said one spokesman, reducing the pain – Tremonti has said that anything is possible but overall savings must stay the same. There is even the possibility of re-introducing a clause which would save Berlusconi’s Fininvest company €570m. The figure was awarded to Carlo De Benedetti as civil damages. In 1991 Berlusconi’s lawyers had bribed a judge to give him rather than De Benedetti the country’s biggest publisher, Mondadori. The criminal case against Berlusconi was dropped because of the statute of limitations but others were convicted. The civil case recognises Berlusconi as responsible.
The original draft budget had a clause which would have delayed payment until the third and final level of judgement. It was yet another blatant example of Berlusconi’s conflict of interests and was removed after an outcry and the preventive interventation of the President of the Republic. Now there are suggestions that it might be re-introduced. Neither Moody’s nor the ECB, nor, one presumes Chancellor Merkel who called Berlusconi on Monday 11th July had this in mind when they pressed for an austerity budget.
So there are many obstacles before even this budget passes and if it is not implemented, then the confidence problem remains.
If the budget passes more or less in its present form, on the other hand, then confidence will remain fragile but intact. If Tremonti is forced to go, if the Northern League decides they are better off in opposition, if parliamentarians worried about having to face an electorate, reduce the cuts, then that confidence will break and the future would be very bleak for Italy and for Europe too.
However bad the Greek crisis is, the Greek economy is tiny. Italy is the third biggest economy in the eurozone with a massive debt that it has difficulty servicing. The only answer would be radical changes in the economy and in order to do that, there would have to be radical changes in politics, not just in the present leadership, that goes without saying, but in most of the discredited political class.
Every generation since the beginning of the 20th century, Italy has reinvented its politics, usually under pressure from outside forces, the world wars, 1968 and the end of the cold war. The time is ripe for change and the financial crisis might just be the stimulus Italy needs.
This was published in The Daily Telegraph on 12 July.
A week later, after the austerity budget has become law - it was rushed through Parliament on Thursday and Friday and President Napolitano signed it into law on Friday evening; already Italians are paying more for their health service - things look even worse. The markets have so far not shown confidence in Italy and the discontent at the perks and privileges of the political class are growing
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