Tag Archives: austerity

Italy

Monti resigns as prime minister in light of Berlusconi’s political return

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It’s been an incredibly fast-moving weekend for Italian politics — shortly after Silvio Berlusconi announced he would return to the leadership of his floundering Popolo della Libertà (PdL, People of Freedom) on Saturday, prime minister Mario Monti announced that he would resign as prime minister upon the completion of Italy’s 2013 budget, meaning that the next Italian election could come sooner than April 2013 as previously planned.

Monti’s resignation is not the incredible bombshell that it seems — it will still take some time to pass the 2013 budget, and the coalition that supports Monti, comprised of the PdL and the center-left Partito Democratico (PD, Democratic Party), seem likely to provide support for that budget.  Earlier today, after the Italian stock market dropped and Italian bond yields crept upwards to around 4.8%, Monti reassured global markets and Italians alike that he would continue to govern through the next election.  Monti was appointed prime minister in November 2011 after Berlusconi’s government found itself in the throes of a crisis of confidence over Italian fiscal policy with bond yields of over 7%, not to mention the corruption and sex scandal that had enveloped Berlusconi in his final years in office.

Monti has spent much of 2012 passing budget cuts, tax increases and market reforms through Italy’s parliament — Monti remains well-respected in Italy, although his austerity measures in particular have become increasingly unpopular.  As such, the upcoming Italian election was always going to determine the outcome of Monti’s reforms, and it will fall to the next government to consolidate and continue Monti’s reforms.  Indeed, Italy had already started turning toward election season, and although Monti is not running in his own right, he has indicated he could return to lead a second Monti government in the event, not unlikely, of a hung Italian parliament.

The PD, together with a handful of smaller leftist allies, selected just eight days ago the broad center-left’s candidate for prime minister, the PD’s current leader, Pier Luigi Bersani, in a race that saw much of Italy cheering on the youthful, energetic mayor of Florence, Matteo Renzi.  Although Bersani has emphasized the importance of stimulating economic growth and creating more jobs, he’s largely indicated he would continue Monti’s broad path of fiscal readjustment.

Earlier in November, a handful of business leaders formed a new coalition, Verso la Terza Repubblica (VTR, Toward the Third Republic), a centrist group that will run in the 2013 election for the express purpose of returning Monti to government.  Its leaders include Ferrari CEO, former Fiat CEO and former president of Confindustria (Italy’s employer’s federation), Luca Cordero di Montezemolo.  A handful of smaller parties are also contesting the election in their own right, ranging from autonomist parties in Italy’s north and Italy’s south, the remnants of Italy’s old Christian Democrats, and parties ranging from fervently communist to nearly neofascist.

So, at most, Monti’s imminent resignation will accelerate the Italian election to February.

In one sense, that’s good news for Berlusconi’s opponents — the less time that Berlusconi has, with his ample amount of money and media power, to attack Monti’s reforms and his leftist opponents, the less likely it is that Berlusconi can turn around polls that show the PdL in third place, behind the PD and behind blogger Beppe Grillo’s anti-austerity Movimento 5 Stelle (M5S, the Five Star Movement).

On the other hand, the PdL was set to contest regional elections on February 10 and 11 in Lombardia (in northern Italy and home to Italy’s financial and fashion capital, Milan) and in Lazio (in central Italy and the region surrounding Italy’s capital, Rome), and losses in those elections could have been even more embarrassing in advance of a later spring vote.  In Lombardia, Roberto Formigoni, who has served as regional president since 1995, announced the dissolution of the regional legislature after one of his PdL allies was arrested on the charge that he bought votes from the southern organized crime organization ‘Ndrangheta in the 2010 regional elections.  In Lazio, the PdL’s Renata Polverini resigned as regional president after just three years in office after being implicated in a public expenses scandal.

Italy

Five reasons Berlusconi returned to run in the upcoming Italian election

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After leading a symbolic ‘walk-out’ among his center-right Popolo della Libertà (PdL, People of Freedom) from the Italian senate on Thursday in opposition to the austerity measures and other reforms of caretaker prime minister Mario Monti, Il Cavaliere himself, Silvio Berlusconi (pictured above), today announced that he will lead the PdL as its candidate for prime minister in the upcoming Italian general election against a broad center-left alliance anchored by the Partito Democratico (PD, Democratic Party).

So much for a ‘third republic’ in Italian politics — with the selection of the Italian left’s old-guard’s candidate, Pier Luigi Bersani, in the center-left’s broad primary earlier this month against Florence mayor Matteo Renzi (the latter remains Italy’s most popular politician), Italy remains, for now, stuck in the same-old politics as before.

Indeed, a Berlusconi-Bersani face-off would not have raised eyebrows a decade ago.

This time around, though, Berlusconi will face none of the political luck or goodwill that’s marked most of his career — he left office in November 2011 with Italian 10-year bond rates at an unsustainable 7% amid a growing financial crisis that threatened not only Italy, but the entire eurozone.  In addition, Berlusconi has little to show for his stint in office in the way of policy accomplishments, was convicted (subject to appeal) for tax evasion earlier this autumn, and he’s been shamed by accusations of sex with underage women at the now-famous and much derided ‘bunga bunga’ parties and using his influence for the benefit of at least one of those women, a Moroccan immigrant.

So his return to office in many ways would be met with not just disdain, but outright hostility, from outside investors and much of the European political establishment, including the leaders of the European Union, French president François Hollande and German chancellor Angela Merkel.

Berlusconi’s return has been met with chilly responses across the Italian political spectrum.  Monti, who is not contesting the election but has indicated he would be available to lead a second government in the event of a hung parliament, cautioned against populism and warned that Italy must avoid returning to a position whereby Italy’s finances threatened trigger the eurozone’s wider implosion.  Beppe Grillo, a blogger and social critic, as well as the leader of the populist and anti-austerity Movimento 5 Stelle (M5S, the Five Star Movement), savaged what he called Berlusconi’s ‘exhumation.’

Berlusconi’s one-time ally, Gianfranco Fini, who served as deputy prime minister, foreign minister and a former president of Italy’s lower house, the Chamber of Deputies (Camera die Deputati), and who is running under the newly-formed Futuro e Libertà per l’Italia (FLI, Future and Freedom), also sounded alarm, noting that the PdL decision exposes Italy to additional risks.

Given the long odds — the PdL stands far behind the center-left coalition in every poll conducted for next year’s election (and sometimes behind the Five Star Movement, too) — why would the 76-year-old Berlusconi make a bid for a fourth term as Italy’s prime minister?

Here are five reasons why he could be making the race.

Continue reading Five reasons Berlusconi returned to run in the upcoming Italian election →

Italy

Bersani routs Renzi in ‘centrosinistra’ primary to lead Italian left next spring

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Florence’s brash, young mayor Matteo Renzi and his campaign to lead the Italian left threatened to remake Italian politics at a time of upheaval and uncertainty greater than at any point in the past two decades.

But the rank-and-file of the Italian left chose the more familiar path on Sunday, elevating instead the familiar, older and more staid, even boring, president of Italy’s largest center-left party, the Partito Democratico (PD, Democratic Party), Pier Luigi Bersani (pictured above, enjoying a post-election beer).

The 61-year-old Bersani easily defeated the 37-year-old Renzi with around 61.1% of the vote (with just 38.8% for Renzi) — a victory so complete for Bersani that Renzi was winning only in Tuscany, the central Italian region that’s home to Florence, and even there, only with about 55% of the vote.

For many reasons, I argued last week that Bersani’s victory was very likely: his control of the PD party machinery, Italian cultural values that respect longevity (i.e. can you think of anyone in the past 50 years that could be described as ‘Italy’s JFK’?), close ties to Italy’s largest union, the Confederazione Generale Italiana del Lavoro (CGIL, General Confederation of Labour) and support from the candidate who placed third in the first round of the primary election, Nichi Vendola.  Vendola is the openly-gay, two-term regional president of Puglia, a more leftist candidate who is the leader and founder of the Sinistra Ecologia Libertà (SEL, Left Ecology Freedom), which will join with a handful of other small leftist parties in supporting Bersani as a candidate for prime minister in Italy’s general election, scheduled to be held on or before April 2013.  Vendola memorably said, on the same day as his endorsement, that Bersani’s words were ‘profumare di sinistra‘ — perfumed with leftism.

Current technocratic prime minister Mario Monti is not running in the upcoming election.  Monti has shepherded labor reforms, budget cuts and tax increases through the Italian parliament since the PD joined with the main center-right party, the center-right Popolo della Libertà (PdL, People of Freedom) in November 2011 to appoint Monti in the midst of a public finance crisis that resulted in Berlusconi’s resignation.

So what happens next?

Continue reading Bersani routs Renzi in ‘centrosinistra’ primary to lead Italian left next spring →

Italy

Bersani leads as Italian ‘centrosinistra’ primary heads to Sunday runoff

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After last weekend’s first round of the primaries to choose the Italian center-left (‘centrosinistra‘) candidate for prime minister in advance of expected national elections in April, the current leader of Italy’s largest center-left party, the Partito Democratico (PD, Democratic Party), Pier Luigi Bersani looks like a favorite — even if just slightly — to win the runoff this Sunday.

Bersani (pictured above) won 44.9% of last weekend’s primary vote of around 3 million Italian voters, while the youthful mayor of Florence, Matteo Renzi, placed a close second with 35.5%.  The two faced off in a television debate earlier Wednesday, although the two candidate disagree more on tactics and broad themes than individual policies.

The regional president of Puglia — Italy’s southeastern corner — Nichy Vendola, who is openly gay and the most leftist of the three candidates, as well as the founder and leader of the more radical Sinistra Ecologia Libertà (SEL, Left Ecology Freedom), placed third with 15.6% — the SEL and a handful of other small parties have agreed to unite behind the winner of the centrosinistra primary as the prime ministerial candidate of the broad Italian left.

So with the centrosinistra primary set to end with the December 2 runoff between Bersani and Renzi, it appears that Bersani will win, despite the momentum behind Renzi’s candidacy and his promise to bring a new generation of leadership to Italy.  Vendola, earlier today, endorsed Bersani after indicating earlier that Bersani’s words were more ‘profumare di sinistra‘ — perfumed with leftism — than Renzi’s.

The battle between Renzi and Bersani is less ideological than generational — at 61, Bersani personifies the boring and staid leadership of the past 20 years of the Italian left.  At age 37, however, Renzi is something quite new in Italian politics.  His campaign’s theme is essentially that Italy is in need of a new generation of leadership — namely, Renzi’s, on the basis that a Renzi premiership would open a new and more productive era in Italian governance.  He’s not only called for an end to the era of former prime minister Silvio Berlusconi, but for a clean sweep of the Italian left as well.  Renzi’s even picked a fight with Sergio Marchionne, the CEO of Italian carmaker Fiat.

Both Renzi and Bersani have pledged to continue the era of budget discipline enacted by Italy’s current ‘technocratic’ prime minister Mario Monti, who took office in December 2011.

Monti has consistently refused to run for prime minister in his own right in the upcoming elections.  Monti, however, has indicated that he would be available to serve as technocratic prime minister again in the event of a hung parliament, and business leaders overwhelmingly favor a second Monti government to see through the budget cuts, labor reforms and tax increases that have brought Italy back from the brink of financial crisis.

Both candidates, too, have pledged to pursue more growth-oriented policies, even though it remains unclear exactly what either candidate could actually accomplish in an era of austerity throughout much of Europe.

That doesn’t mean there aren’t ideological differences between the two.

Bersani, with greater ties to Italy’s largest union, the Confederazione Generale Italiana del Lavoro (CGIL, General Confederation of Labour), comes from a stronger social democratic tradition than Renzi, who has styled himself as a modernizer not unlike former UK prime minister Tony Blair.  Bersani, the son of a mechanic, served as regional president of the leftist region of Emilia-Romagna in central Italy in the 1990s and as minister of economic development under former prime minister Romano Prodi from 2006 to 2008, where he tried to liberalize the Italian labor market.

Renzi, however, has refused to consider a potential governing coalition with the Unione di Centro (UdC, Union of the Centre), a small centrist group led by Pier Ferdinando Casini.  The UdC essentially represents the remnants of the long-dominant Italian Christian Democrats and, while Casini and the UdC would likely find overlapping interests on economic policy, the UdC, with its ties to the Vatican, remains socially conservative (e.g., it opposes same-sex marriage).  Bersani, although he is seen as slightly more leftist than Renzi, has nonetheless remained open to a coalition with Casini’s centrists.

Ultimately, it’s hard for me to believe that Renzi will actually win on December 2.  The ‘primary’ itself seems skewed in Bersani’s favor — he’s already the leader of the PD, has the support of much of the ‘old guard’ of the Italian left (such as former prime minister and foreign minister Massimo D’Alema), and accordingly, he has access to the left’s strongest party machinery, not to mention the benefit of his CGIL ties.  He now apparently has Vendola’s support from the SEL as well.

Furthermore, in a country that shows perhaps more respect for its elders than anywhere else in Europe, it seems unlikely that Italy will anoint as a potential prime minister someone so incredibly young.  The contest is especially meaningful because the PD looks set to win the upcoming elections (although the contest remains exceptionally fluid and unpredictable, even by the sometime operatic standards of Italian politics).

Continue reading Bersani leads as Italian ‘centrosinistra’ primary heads to Sunday runoff →

Lithuania

Lithuania’s president throws post-election coalition talks into disarray

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Lithuanian’s highly respected president, Dalia Grybauskaitė, has upended what everyone thought would be a broad leftist coalition following the second and final round of Lithuanian parliamentary elections on Sunday.

Following a victory by the social democratic Lietuvos socialdemokratų partija (LSDP, Social Democratic Party of Lithuania), which won 38 seats after the first round on October 14 and October 28, it seemed likely that the Social Democrats would form the next government, a coalition headed by Social Democratic leader and former finance minister Algirdas Butkevičius.

It had always been expected that Butkevičius would lead a broad center-left coalition with the support of the more populist Darbo Partija (DP, Labour Party), led by Russian-born Viktor Uspaskich, which won 19.95% of the first-round vote on October 14 to just 18.46% for the Social Democrats and 14.90% for outgoing prime minister Andrius Kubilius’s center-right Tėvynės sąjunga – Lietuvos krikščionys demokratai (TS-LKD, Homeland Union — Lithuanian Christian Democrats).

That October 14 vote determined the 70 seats allocated to Lithuania’s parliament, the Seimas, by proportional representation.  The remaining 71 seats were determined by single-member district votes, many of which were determined in the runoff votes held last Sunday, after which the Social Democrats emerged as the largest force, followed closely by Homeland Union with 33 seats and Labour with 29.

Indeed, the Social Democrats, Labour and a third party — Tvarka ir teisingumas (TT, Order and Justice) — had agreed an electoral pact to form a government.  Together, the three parties would command an absolute majority of 79 seats.  So the outcome seemed more or less a fait accompli.

Until Monday, when Grybauskaitė intervened, arguing that Labour is, essentially, unfit for government, and pledging not to nominate a prime minister who will govern with Labour support:

…Grybauskaite said she refused to back a coalition which included Labor, which stands accused of buying votes during the two rounds of voting.

“A party which is suspected of gross violations in the election, which is suspected of false accounting and non-transparent activities cannot participate in the government’s formation,” the president told reporters.

She said police were investigating 27 election irregularities, 18 of which concerned alleged vote buying, with the Labor Party accused of involvement in most of them.

Grybauskaitė, a political independent, is a highly-respected former European Commission for Financial Programming and the Budget from 2004 to 2009.  In the May 2009 presidential election, she became Lithuania’s first head of state by winning a whopping 69.1% victory, with her closest rival Butkevičius at 11.8% support.

On Wednesday, however, the three parties invited a fourth party, the Lietuvos lenkų rinkimų akcija (AWPL, Electoral Action of Poles in Lithuania; Akcja Wyborcza Polaków na Litwie in Polish), a Christian democratic party devoted to ethnic Polish issues, into their coalition talks, which would give it 87 seats — more than the 85-vote majority it would need to override a presidential veto.  So it’s unclear that Butkevičius and his electoral allies are willing to back down, potentially setting up a constitutional showdown with Grybauskaitė, who is Lithuania’s most popular public figure by far. Continue reading Lithuania’s president throws post-election coalition talks into disarray →

Lithuania

Lithuanian Social Democrats in place to run next government

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So we have the results of Lithuania’s full two rounds of elections: the Lietuvos socialdemokratų partija (LSDP, Social Democratic Party of Lithuania) have won the greatest number of seats in the Seimas, Lithuania’s parliament, following a runoff election yesterday.

Although 70 seats are determined by proportional representation on the basis of the first-round vote on October 14, the LSDP won a disproportionately high number of the 71 seats in the Seimas that are determined in single-member districts.

In the first round of the election, the more populist Darbo Partija (DP, Labour Party), led by Russian-born Viktor Uspaskich, won 19.96% of the vote, while the Social Democrats won just 18.45% and the governing Tėvynės sąjunga – Lietuvos krikščionys demokratai (TS-LKD, Homeland Union — Lithuanian Christian Democrats) of outgoing prime minister Andrius Kubilius won 14.93%.

For lots of reasons, this scared the rest of Europe.  Uspaskich, under investigation a few years ago for corruption, actually hid out in Russia, so a Uspaskich-headed government would be a nightmare for Europe, given that Lithuania’s already not just a European Union member, but a member of the North Atlantic Treaty Organization.

But by the end of the second round, the Social Democrats took 23 of the 71 single-district seats — Homeland Union won just 20, and Labour won just 12 — much like in past Lithuanian elections, Labour had a stronger result from the proportional results than from the direct-election results.

The result, which will give the Social Democrats the largest bloc of seats in the Seimas, makes it all but certain that the leader of the Social Democrats, Algirdas Butkevičius (pictured above, bottom), a former finance minister, will become Lithuania’s next prime minister.  Furthermore, although he’s signed an electoral pact with Uspaskich’s Labour Party and Tvarka ir teisingumas (TT, Order and Justice), a shape-shifting  populist party led by former president Rolandas Paksas, who was impeached for corruption in 2004, the result will give Butkevičius a boost vis-a-vis even his coalition partners.

So Europe, which was wary of a Uspaskich-dominated government (even if Labour ultimately won more seats than the Social Democrats, will be a little more relaxed following Sunday’s runoff vote — although it was always thought that Butkevičius would nonetheless become prime minister, his position will be much stronger than Uspaskich’s, or any of the more nefarious characters of Lithuanian politics, with the Social Democrats having won the clearest plurality of parliamentary seats.

Kubilius, who had a difficult hand to play after the past four years in government, duly trimmed the Lithuanian budget after the financial crisis of 2008-09 saw Lithuania’s GDP plummet by 15%.  Indeed, the Lithuanian election result, in both rounds, was much better for Kubilius’s Homeland Union than polls had suggested, indicating that Kubilius received more credit than expected from a Lithuanian electorate that’s nonetheless weary of austerity, economic stagnation and unemployment.

Although Butkevičius won’t likely be able to effect a 180-degree change in Lithuanian policy, he has championed the introduction of a progressive income tax and minimum salaries.  Furthermore, although he’s been less enthusiastic (along with much of eastern Europe) about his country’s accession into the eurozone, European leaders seem much likelier to be happy with a pro-European center-left prime minister like Butkevičius than either Uspaskich or Paksas.

So ultimately, on a day when Ukraine seemed to fall further backwards on democracy and the rule of law, Lithuania seems to have marked another peaceful transfer of government within the broad tradition of European political norms.

Italy, Sicily

Today’s Sicilian elections showcase potential party strength before 2013 Italian election

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Today, one of Italy’s most iconic regions — Sicily — goes to the polls to elect the 90 members of its regional legislature and, indirectly, a new regional president.

For all the beauty of its landscape, the majesty of its architecture and the divinity of its food and wine, Sicily, the home of the well known Cosa Nostra, the Sicilian organized crime group that has become synonymous with the word mafia, is not the world’s model showcase for good governance.

Sunday’s elections come six month early after the resignation on July 31 of regional president Raffaele Lombardo, who was elected overwhelmingly in 2008, but stepped down under a cloud of corruption — depressingly familiar charges of complicity with the Sicilian mafia.  The election also comes as a bit of a dress rehearsal for Italy’s expected upcoming general election (along with early elections expected soon in Lombardy as well) — just a couple days after former prime minister Silvio Berlusconi’s conviction in a Milan court for tax fraud.

Rosario Crocetta (pictured above, top), the leading leftist candidate for president and the mafia-fighting former mayor of Gela (Sicily’s sixth-largest city) would be Sicily’s first openly-gay regional president and has campaign marks the best chance of the center-left in a generation to govern Sicily.  But polling nearly as well as the broad center-right and the center-left is the new anti-austerity protest party, the Movimento 5 Stelle (M5S, Five Star Movement) of blogger and comedian Beppe Grillo — he made a splash by swimming across the Strait of Messina from the Italian peninsula to Sicily at the beginning of the campaign (pictured above, bottom).

In one way or another, each of the five main parties competing in today’s election in Sicily will be able to pull lessons from the result in advance of national elections that, although just six months away, remain incredibly fluid.

Italy’s technocratic prime minister Mario Monti, who was appointed in November 2011 to push through budget, tax and labor reforms in the midst of an Italian sovereign debt crisis, remains popular, but has said he won’t run in his own right for election (although could remain available to head a future technocratic government).

Berlusconi had pledged as recently as last Wednesday that he would not run for prime minister as the leader of his own center-right Popolo della Libertà (PdL, People of Freedom), though the unpredictable former prime minister has already said he plans on staying in politics to some degree.  Yesterday, in a Nixonesque, hourlong rant, the enraged, newly-convicted Berlusconi hinted he might even try to bring down Monti’s government to bring forward a snap election even sooner, lashing out at Monti, German chancellor Angela Merkel, former French president Nicolas Sarkozy, and a ‘judge-ocracy’ that he says is ruling Italy.  With plenty of money and control over Italy’s private media, he’ll be able to influence politics as long as he wants.  Currently, the PdL secretary is Angelino Alfano, a 41-year-old former justice minister who is from Sicily and rising star who’s thought to be the leading contender to lead the PdL into the next general election.

Meanwhile, the center-left Partito Democratico (PD, Democratic Party) expects to choose its candidate for prime minister in November.

With 5 million people, Sicily features just around 8.5% of Italy’s total population.  Despite a national GDP per capita of around $31,000, Sicily’s is something like $19,000, vying for Italy’s poorest region with a handful of other southern provinces — it’s nearly half the GDP per capita of the richest province, Lombardy (around $39,000).

In the prior regional elections in 2008, Lombardo led a center-right coalition that included the PdL, the Unione di Centro (UdC, Union of the Center), remains of what used to be the once-formidable Christian Democratic party and his own regionalist Movimento per le Autonomie (MpA, Movement for Autonomies) and together won 65.4% of the vote and 61 of the 90 seats in Sicily’s regional parliament.  A PD-led leftist coalition, headed by Anna Finocchiaro, won just 29 seats at 30.4% of the vote.  The vast majority of the seats (80) will be chosen by proportional representation, with a 5% threshold for winning seats; an additional 10 members are elected with a block-voting system.

In today’s regional elections, though, there are five coalitions/parties, each fielding its own candidate for regional president — polls are hard to come by, but it’s a bit of a free-for-all.

Near the top of the polls is the PdL coalition, headed by Sebastiano ‘Nello’ Musumeci.  Musumeci, a member of the European Parliament, is himself a member of a small autonomist right-wing party in Sicily, Alleanza Siciliana (Sicilian Alliance), having his roots in the now-defunct National Alliance, a stridently right-wing party which had neofascist roots.  Although he’s not actually a member of the PdL, a broad win for Musumeci would bolster the PdL nonetheless and, in particular, boost Alfano’s chances of leading the PdL into the next elections — despite record-low polling for the PdL nationally, Alfano would be attempting to become Italy’s first Sicilian prime minister since Mario Scelba led the Italian government from 1954 to 1955.

Also at the top of the tolls is Crocetta’s PD-led coalition (also supported by the UdC).  Crocetta’s election would be historic in at least two ways.   Continue reading Today’s Sicilian elections showcase potential party strength before 2013 Italian election →

Greece

Greek government, troika reach agreement on Greek bailout

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It seems all but done — Greece’s government and the ‘troika’ of the International Monetary Fund, the European Central Bank and the European Commission have reached an agreement on the latest disbursement of funds that Greece needs to finance government operations, in exchange for a series of budget cuts and labor market reforms. 

In an additional twist, there are quasi-official reports from both Germany and Greece that the bailout program will be extended from the end of 2014 to the end of 2016, which will give Greece until at least 2016 to whittle down its budget deficit to the 3% required under EU rules, though it seems unlikely that Greece’s budget will be anywhere near to closing in on that target by even 2016.

The details are essentially as described over the past four months — €13.5 billion in budget cuts over the next two years, €9 billion of which will take effect in 2013.  The bottom line for Greek finances is that a Greek exit from the eurozone, which seemed virtually inevitable through much of 2012, has now been delayed, and delayed for a significant amount of time (Citi, for example, lowered its odds of a ‘Grexit’ to 60%, and predict it could still happen, but only in the first half of 2014).

That’s a significant victory for Greece’s prime minister, in office for barely four months, Antonis Samaris (pictured above, right, with Euro Group president and Luxembourg prime minister Jean–Claude Juncker), and it will now give him some breathing space to turn to Greece’s economic depression.

For me, there are three notable political aspects to the deal worth noting:  Continue reading Greek government, troika reach agreement on Greek bailout →

Basque Country, Galicia, Spain

Spanish conservatives take Galicia; Basque nationalists win Euskadi

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Sunday’s regional elections in Galicia and Euskadi (i.e., the Basque Country) have given just about everyone in Spanish politics something to be happy about.

In Galicia, the ruling center-right Partido Popular de Galicia (PPdeG, People’s Party of Galicia) of Galician president  Alberto Núñez Feijóo (pictured above, top right), the local branch of Spanish prime minister Mariano Rajoy’s Partido Popular (PP, People’s Party), extended its majority in the 75-member Parlamento de Galicia from 38 to 41 after winning 45.72% of the vote.

In Euskadi, the Partido Nacionalista Vasco (PNV, EAJ, the Basque Nationalist Party or, in Basque, the Euzko Alderdi Jeltzalea) emerged with the largest number of seats in the Eusko Legebiltzarra (Basque parliament), with 27 seats on 34.64% of the vote.  Like Galicia, Euskadi’s unicameral parliament has 75 members.

As such, the PNV fended off a strong challenge from a more radical leftist and more firmly pro-independence coalition of Basque nationalists — the contest was widely seen as a fight between the more centrist PNV and the coalition of the ezker abertzalea (‘patriotic left’) formed this year, the Euskal Herria Bildu (EHB).

 The PNV, however, is now likely to form a government and its leader, Íñigo Urkullu (pictured above, bottom), is very likely to become lehendakari (president) of Euskadi.  Urkullu is the former PNV leader in Biscay, a stronghold for the party, and he became party leader in 2008.  The likely return of the PNV to government will put it back in power after only its first stint in opposition in the past 30 years.

So what do Sunday’s regional elections means more widely for Spain?

The result will give some comfort to Rajoy (pictured above, top left), who hails from Galicia, a center-right heartland within Spain.  Rajoy once served in Galicia’s parliament, and Rajoy and his party will be delighted to see Feijóo’s local Galician allies extend their majority.  After extending the center-right majority in Galicia and winning a plurality, if not an absolute majority, of seats in the March 2012 regional elections in the center-left stronghold of Andalucía, Spain’s most populous region (despite remaining in the opposition), Rajoy can take respite that his party retains some support throughout the country, which is suffering its fourth year of consecutive economic malaise and unemployment that’s perhaps the highest in Europe at just over 25%.

But the result will also embolden nationalist movements throughout Spain, especially Catalunya, where the separatist movement has taken an increasingly popular turn in the past couple of months.  Catalan president Artur Mas called snap elections early last month, and Mas is engaged in a high-profile political fight over regionalism with Rajoy — Catalunya votes on November 25.  Urkullu, who called for calm following the election, has been vague about his plans for the region, and he has not said whether he intends to seek full independence for Euskadi or merely greater regional autonomy.  But he is seen as the more moderate of the two Basque nationalist party leaders in a region where the armed separatist group, the ETA (Euskadi Ta Askatasuna), signed a ceasefire just one year ago.

The result will also provide some small amount of delight for the radical left, which can point to gains in both regions.

Continue reading Spanish conservatives take Galicia; Basque nationalists win Euskadi →

Basque Country, Catalunya, Galicia, Spain

Six ways in which Sunday’s Galician and Basque elections will affect the Rajoy government

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Just over 10% of Spain’s population will vote in regional elections this weekend in two key regions, Galicia and Euskadi (the Basque Country), but the elections will play a role in shaping the national politics that affect the remaining 90% of Spain at what’s an especially precarious time for the government of center-right prime minister Mariano Rajoy (pictured above with Galician president Alberto Núñez Feijóo).

Although Rajoy’s Partido Popular (PP, People’s Party) only recently came to power in November 2011, after the eight-year government of prime minister José Luis Rodríguez Zapatero and the center-left Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party), Rajoy has faced an unenviably difficult climate.  Spain’s economy is contracting this year after two years of tepid growth under 1%, which followed a contraction in 2008-09.  Unemployment is now just over 25%, among the highest in the eurozone.

Despite the tough economic conditions, Zapatero’s government, and now Rajoy’s government, have been relentless in slashing the Spanish budget.  Although Spain ran a fairly tight fiscal policy throughout the 2000s, the drop in tax revenue has resulted in an exploding budget deficit, which Rajoy hopes to reduce to just 6.3% of GDP this year (and 4.5% next year and 3% in 2014), in order to prevent yields on Spanish debt from rising to dangerous levels.

In less than a year, Rajoy has passed at least four different budget cut packages, including a raise in the Spanish income tax rate, a 3% hike in the Spanish value-added tax from 18% to 21%, the elimination of tax breaks for home owners and spending cuts for education and health care.  Furthermore, each of Spain’s regions are responsible for cutting their own budgets to just 1.5% of GDP.

Although Rajoy campaigned on a promise not to seek any bailouts from the European Union, like Greece has done, everyone in the EU believes it’s only a matter of time before Rajoy requests one — the European Central Bank has already provided emergency funding to prop up Bankia and other beleaguered Spanish banks in June.  Unlike with Greece, however, the most likely path for a Spanish bailout would be through a temporary credit line through the European Stability Mechanism, triggering the purchase of Spanish debt by the European Central Bank.

So on Sunday, when election results roll in from Galicia and Euskadi, here are six items to consider about how the results could affect the Rajoy government and Spain’s national politics: Continue reading Six ways in which Sunday’s Galician and Basque elections will affect the Rajoy government →

Basque Country, Spain

Which nationalist party will triumph in Sunday’s Basque Country elections?

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In addition to Galicia, Euskadi (i.e., the Basque Country) will hold regional elections on Sunday — and the chief question is which of the two major nationalist groups will win the largest plurality of the vote. 

As with Galicia, polls in Euskadi have been relative stable since elections were called last month, and the top two parties have been the longstanding nationalist Partido Nacionalista Vasco (the Basque Nationalist Party or the EAJ-PNV — in Basque, the Euzko Alderdi Jeltzalea), and the largest and most organized leftist Basque nationalist coalition to contest regional elections, a group of ezker abertzalea, or “patriotic left,” joined together as Euskal Herria Bildu (EHB).

The latest polls show that the Basque Nationalists would win 33.3% of the vote, amounting to between 24 and 26 seats in the  75-member Eusko Legebiltzarra (the Basque parliament) while the abertzale would win 24.5% and around 20 seats, although some polls have shown an even closer race between the two.

As such, it is expected that either the two nationalist groups will form the next governing coalition in Euskadi or, alternatively, the largest party in the Basque parliament will form a minority government, relying on external support from other parties.

The emergence of a unified abertzale is the most fundamental shift in the election from past elections, and the election will follow one day after the one-year anniversary of the ceasefire signed by the ETA (Euskadi Ta Askatasuna), ending the armed leftist/nationalist struggle against the Spanish government.  For many years, radical leftist nationalist parties were actually banned from participation in Spanish elections because of actual or potential ties to the ETA — the largest party in the coalition, Sortu, which formed in 2011, was allowed to participate in elections by Spain’s Constitutional Court only in June 2012.

The current leader of the Basque Nationalists, Íñigo Urkullu (pictured above, top), certainly seems the favorite to become lehendakari (president) of Euskadi.  The former party leader in Biscay, the traditional stronghold of the Basque Nationalists, Urkullu became party leader in 2008, and has served sporadically in the Basque parliament since the 1980s.

The leader of the abertzale coalition is Laura Mintegi (pictured above, bottom), a relative newcomer to Basque politics.  Mintegi has been a professor at the University of the Basque Country for the past three decades, and is also a Basque novelist.  Mintegi is a native of Navarre, the region neighboring Euskadi with a predominantly Basque-speaking north and a Spanish-speaking south — the union of Navarre, or at least northern Navarre with an independent Euskadi has long been the goal of the  abertzale. 

Given the tense background to the various nationalist movement, what’s been most striking throughout the campaign is that both leaders have emphasized a relatively calm approach to greater Basque autonomy and/or independence, especially in contrast to the populist and nearly bombastic nationalism that Catalan president Artur Mas has suddenly adopted.  In line with the traditional moderation of the Basque Nationalists, Urkullu has not called for Basque independence, but rather for ways to renegotiate a new regional deal with Madrid, and he has spoken in vague ways about the failures of Spanish federalism.  Both opposition parties have tried to draw out Urkullu for his post-election plans; although the Basque Nationalists (and the abertzale) seem keen on harnessing the energy of pro-independent Basques who are heartened by the sovereignty movement in Catalunya, Urkullu has been more subdued than coy about potential Basque independence.

For her part, Mintegi is clearly pro-independence, but she and her allies have taken pains to distance their approach from Mas’s — Mintegi has emphasized that any referendum on independence would require widespread Basque political and social consensus and would have to comply with existing legal conventions:

Continue reading Which nationalist party will triumph in Sunday’s Basque Country elections? →

Galicia, Spain

Economy and budget woes, not regional independence, mark Galicia’s election campaigns

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Galicia, this Sunday, joins Euskadi (i.e., the Basque Country) in holding regional elections, each of which will have national significance for the center-right government of prime minister Mariano Rajoy.

But unlike in Euskadi and especially in the upcoming November elections in Catalunya, the election in Galicia isn’t about the increasingly polarized fight over regional autonomy and independence, but about the budget priorities of the national and Galician government at a time of prolonged economic duress.

In Galicia, Rajoy’s home region, polls have consistently shown that the center-right government of Galician president Alberto Núñez Feijóo (pictured above) will win by law the largest share of the vote, although it will need to win an absolute majority of the 75 seats in the Parlamento de Galicia in order to continue governing Galicia — the difference between 37 seats and 38 seats could mean the difference between government and opposition.

Since Feijóo announced the early elections last month, polling has shown remarkably stable support for Feijóo’s party, the Partido Popular de Galicia (PPdeG, the People’s Party of Galicia), the Galician branch of Rajoy’s own Partido Popular (PP, People’s Party).

But if the PPdeG wins less than 38 seats on Sunday, the three opposition parties could unite to form a leftist coalition.

For example, the center-left Partido dos Socialistas de Galicia (PSdeG-PSOE, Socialist Party of Galicia), the Galician version of the Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party) and the nationalist Bloque Nacionalista Galego (BNG, the Galician Nationalist Bloc), a nationalist Galician party, which also tilts to the left, formed a narrow one-seat governing coalition from 2005 to 2009.  That coalition was Galicia’s first center-left government since the normalization of democratic politics in Spain in the early 1980s.

In addition, the Esquerda Unida-Izquierda Unida (EU-IU, the United Left), the regional variation of the stridently leftist Izquierda Unida (IU, United Left), essentially the remnants of Spain’s communist party, looks set to win its first seats ever in Galicia, reflecting a nationwide resurgence for the radical left in the wake of four years of economic depression, unemployment and increasingly stringent budget cuts from governments of both the center-left and center-right.

As such, the Galician election is the first major electoral test for Rajoy’s government, which is already unpopular in its first year after passing increasingly severe austerity measures.  If Feijóo loses the election, it will an incredible embarrassment, given that it’s Rajoy’s home base (he once served in the Galician parliament) and Galicia has long been a traditional center-right stronghold in Spain.

In some ways, the Galician election is for Rajoy and the PP what the earlier March 2012 regional elections in the left-leaning Andalucía region of southern Spain were for the PSOE.  In that election, the PP marked its best performance yet — winning three more seats than the PSOE.  Although the PSOE continues to govern in coalition with the Andalucian version of the United Left, and the PP did not win an absolute majority of seats, as some had predicted, it marked a low point for the PSOE in what should be its traditional stronghold. Continue reading Economy and budget woes, not regional independence, mark Galicia’s election campaigns →

Lithuania

Lithuania election results

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We have the first-round preliminary election results from Lithuania, and it confirms what was previously reported, and roughly what polls had shown in the lead-up to the parliamentary elections: the two major leftist/populist opposition parties have won the most seats, likely ending the four-year government of center-right prime minister Andrius Kubilius, who ushered in an era of budget austerity following the financial crisis of 2008-09 that saw Lithuania’s GDP plummet by 15%.

The populist Darbo Partija (DP, Labour Party), led by Russian-born Viktor Uspaskich, won 19.96% of the vote yesterday, and the more traditionally center-left Lietuvos socialdemokratų partija (LSDP, Social Democratic Party of Lithuania) won 18.45%.

Kubilius’s own party, the Tėvynės sąjunga – Lietuvos krikščionys demokratai (TS-LKD, Homeland Union — Lithuanian Christian Democrats) won 14.93%, a bit higher than polls had predicted in advance of the vote.

Sunday’s vote was the first of a two-round process: 70 seats in Lithuania’s unicameral parliament, the Seimas, were alloted by proportional representation.  An addition 71 seats will be determined by single-member individual districts, many of which will be determined in a runoff vote, to be held October 28.  On the basis of Sunday’s vote, Labour will have won 17 seats, the Social Democrats 16 seats and Homeland Union 12 seats.

The Social Democrats and Labour are expected to win sufficient seats between yesterday and the individual district runoffs to form a government with another smaller party, Tvarka ir teisingumas (TT, Order and Justice).  In the 2004 and 2008 elections, the Social Democrats have typically done as well or better in the individual districts than in the proportional vote; Labour, however, has typically done either as well or worse.  So it’s still quite possible that the Social Democrats will emerge with a greater number of seats than Labour, notwithstanding Labour’s narrow victory on Sunday.

Regardless of whether Labour or the Social Democrats technically win more seats, it is expected that the leader of the Social Democrats, Algirdas Butkevičius, a former finance minister, will serve as the new prime minister.  In 2004, when Labour emerged as the largest party in the Seimas (then also under Uspaskich’s leadership), it allowed a Social Democrat to be prime minister.  Since then, Uspaskich has been embroiled in a corruption scandal over his party’s finances, and Uspaskich himself spent parts of 2006 and 2007 apparently in hiding in Russia.

So it’s a safe bet that the international community (especially the United States, the rest of the European Union and the bondholders who are pricing Lithuanian debt) would prefer a Butkevičius-led government, not a Uspaskich-led one — and Lithuania’s new governing coalition seems sure to recognize that.  The success of Uspaskich’s party alone, and his influence on the next Lithuanian government, will itself be enough to delay a potential Lithuanian accession into the eurozone as well as cause some alarm with regard to a potentially more pro-Russia foreign policy from the Lithuanian government.  A government led by Uspaskich could potentially bring Lithuania back into economic crisis and put it at odds with the rest of Europe. Continue reading Lithuania election results →

Lithuania

Meet the new power threesome of Lithuania: Algirdas Butkevičius, Viktor Uspaskich and Rolandas Paksas

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Lithuanians are voting today to select new members of the Seimas, the country’s 141-seat unicameral legislature.

After four years of budget-crushing austerity and slow economic recovery under Andrius Kubilius, the longtime leader of Lithuania’s center-right Tėvynės sąjunga – Lietuvos krikščionys demokratai (TS-LKD, Homeland Union — Lithuanian Christian Democrats) appears headed for defeat.

Under the two-round parallel voting system, voters choose 70 seats by proportional representation (all of which will be determined today) and 71 seats directly in individual districts (many of which will proceed to a second round on October 28).  After today, though, we should have a good idea of who will win the largest number of seats.

Throughout much of the campaign, the longtime center-left Lietuvos socialdemokratų partija (LSDP, Social Democratic Party of Lithuania) looked set to emerge as the largest party.  But the most recent poll shows that it’s essentially tied with the more populist Darbo Partija (DP, Labour Party).

An October 10 poll showed the Social Democrats with 16.9% of the vote to just 15.8% for Labour.  Both parties have joined an electoral pact, along with a third party, Tvarka ir teisingumas (TT, Order and Justice), which garnered 8.2% in the poll.  Homeland Union won just 7.6%.  The socially and free-market liberal Liberalų Sąjūdis (LRLS, Liberal Movement) won 5.8% — the only other party to garner over 5%, the threshold for a party to enter the Seimas on the proportional representation vote.

It seems certain that the two most important individuals to drive Lithuanian policy over the next four years (the Seimas has a fixed term) will be the leader of the Social Democrats, Algirdas Butkevičius (pictured above, right), who will likely become prime minister, and the leader of the Labour Party, Viktor Uspaskich (pictured above, left).  The third party in the electoral pact, Order and Justice, is essentially a personality-driven vehicle for its leader, Rolandas Paksas (pictured above, center), and it has veered both left and right.

Butkevičius and his allies have promised to relax some of the budget austerity that has brought Lithuania’s deficit down from nearly 10% of GDP to near the European Union cap of 3%.  That has caused some concern among bondholders and EU leaders, who have largely applauded Kubilius’s government and rewarded Lithuania with relatively low bond rates.  After a nearly disastrous 2008-09, when Lithuania’s economy collapsed by nearly 15%, GDP growth has now largely returned to Lithuania — 6% growth in 2011.  Although the Baltics have largely been held up as showcase examples for budget austerity (despite the protestations of Paul Krugman), unemployment remains staggeringly high at nearly 13%, and both Butkevičius and Uspaskich have said their chief priority will be creating jobs.

Although Lithuania is not hampered by the terms of any EU-based or International Monetary Fund loans, its government has been nudging the country toward adopting the euro, which necessitates getting Lithuania’s budget deficit within 3% of GDP, among other financial benchmarks.

Butkevičius, throughout the campaign, has called for the introduction of a progressive income tax and minimum salaries, and he’s also questioned the rapid accession of Lithuania into the eurozone.  But it’s difficult to know where the bluster ends and real policy changes would begin.  Butkevičius, a former finance minister in the Social Democrat-led government from 2004 to 2008, has already started to back away from some of his more populist stances.

Throughout Europe this year, we’ve seen anti-austerity candidates win elections on the strength of ‘pro-growth’ policies, only to realize in office that financial constraints restrict their maneuverability.  We’ve seen this in Greece, in France (where president François Hollande’s popularity is already sinking) and in the Netherlands (where the anti-austerity Labour Party looks set to join a coalition with budget-cutting prime minister Mark Rutte).

It’s doubtful that tiny Lithuania would be the exception — so a Butkevičius-led government would probably run into many of the same constraining dynamics.

But in addition to the populist rhetoric, there’s more cause for worry — from the two individuals that Butkevičius will likely join in his coalition. Continue reading Meet the new power threesome of Lithuania: Algirdas Butkevičius, Viktor Uspaskich and Rolandas Paksas →

Lithuania

Lithuanian left closes in on victory in advance of Oct. 14 parliamentary elections

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It’s a great autumn for post-Soviet elections — not less than a month after a less-than-fair Belarusian election and after an upset in parliamentary elections in Georgia, and with Ukrainian elections set for the end of the month, another former Soviet republic is set to go to the polls in just two weeks — Lithuania, the largest and most populous of the three Baltic states.

In nearly every election since 1992, Lithuanians have see-sawed every four years between more right-wing and left-wing parties.  So after a more left-wing coalition governed from 2004 to 2008, Andrius Kubilius (pictured above with, heh, Santa Claus), who previously served as prime minister from 1999 to 2000, returned as prime minister as the leader of Tėvynės sąjunga – Lietuvos krikščionys demokratai (TS-LKD, Homeland Union — Lithuanian Christian Democrats).

And now, as the first round of this month’s elections approach on October 14, both of Lithuania’s two largest left-wing parties look set to return to power, with promises to end the current government’s austerity measures in order to focus on unemployment.

Lithuania’s Seimas, (in full, the Lietuvos Respublikos Seimas, or the Lithuanian National Parliament) is the Baltic nation’s 141-member unicameral legislature.  Members are elected for a set four-year term — 71 of the seats are elected in individual districts, whereas the remaining 70 seats are elected under proportional representation.  The threshold is 5% of the national vote for a single party and 7% for a multi-party coalition running together on the same slate.  The strict proportional representation members will be elected on October 14, while voting in individual districts will take place on October 14 and October 28 (in the event of a runoff between the top two candidates — in order to avoid a runoff, a candidate must win (i) an absolute majority with a turnout of over 40% or (ii) an absolute majority representing at least 20% of the registered voters in the constituency).

Even under the relatively high proportional representation standards for election to the Seimas, Lithuania has a fairly high number of parties, but two parties in particular seem to dominate Lithuanian politics: Homeland Union and the Lietuvos socialdemokratų partija (LSDP, Social Democratic Party of Lithuania).  The Social Democrats were the largest party in the coalition that emerged after the 2004 election, and look set to return in that role. Continue reading Lithuanian left closes in on victory in advance of Oct. 14 parliamentary elections →