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Italy

What to expect from Italy’s new government

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Far from a rupture, Italy will get more of the same under its new prime minister Paolo Gentiloni. (AFP / Getty)

Consider Italy’s new government renzismo without Renzi.

A week after Matteo Renzi failed, in spectacular measure, in his efforts to win Italian voter approval of his ill-fated referendum on political reform, Italy has a new prime minister after consultations between Renzi, other political leaders and Italian president Sergio Mattarella.

With no more than 15 months (and likely far less) until the next general election, Italy’s new premier Paolo Gentiloni will lead a government that looks much like the one Renzi led until last week — one dominated by the centrist and reformist wing of Italy’s center-left Partito Democratico (PD, Democratic Party).

Given that the Democrats and their centrist allies retain a majority in the lower house of the Italian parliament, the Camera dei deputati (Chamber of Deputies), it was almost certain that Mattarella would appoint someone from the Italian left. It was not certain that Mattarella would turn to a Renzi ally, however, given the longstanding tradition of non-partisan ‘technocratic’ governments in Italian politics. Still, Gentiloni was a colorless Roman aristocrat with an undistinguished political career until his sudden ascent to foreign minister two years ago. He replaced Federica Mogherini, who departed Renzi’s government in 2014 to serve as the EU high representative for foreign affairs and security policy. Today, Mogherini remains a rising star who may yet eclipse even Renzi from her perch as Europe’s top diplomat.

Gentiloni, who hails from Roman nobility, began his career in journalism, switching to politics in the 1990s as an ally of Francesco Rutelli, a former centrist mayor of Rome from 1993 to 2001. Both of them served in the short-lived government of Romano Prodi from 2006 to 2008; Rutelli as deputy prime minister and culture minister, Gentiloni as communications minister. In the center-left primary to determine the party’s candidate in the 2013 Roman mayoral election, Gentiloni finished in third place with just 14% of the vote.

Despite strong marks for his time as foreign minister, no one expects Gentiloni to remain prime minister longer than the next election, no matter who wins.

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RELATED: Renzi’s referendum loss isn’t the end of the world
for Italy or the EU

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Gentiloni, instead, looks more like a caretaker who will lead the government through rough months ahead while Renzi licks his wounds back home in Florence and prepares for the next election.

Perhaps most consequentially for Europe (and global markets), Gentiloni’s cabinet retains Renzi’s finance minister Pier Carlo Padoan, himself seen as a potential successor to Renzi. Other key ministers retained include defence minister Roberta Pinotti and justice minister Andrea Orlando, while Angelino Alfano, previously interior minister, will assume Gentiloni’s new role as foreign minister.

Italian banks on the brink

With his confidante running the government, Matteo Renzi is now free to start crafting his own political comeback from the sidelines. (Facebook)

Gentiloni and Padoan will turn most immediately to efforts to calm markets about Italy’s tottering banks and, in particular, the Banca Monte dei Paschi di Siena (MPS).  Increasingly, it seems likely that the bank, the world’s oldest (dating back to 1492, will require a bailout from the government, potentially angering taxpayers. Potentially, the government might also require a ‘bail-in’ of the bank’s investors, potentially angering Italy’s capital class. Other Italian banks in need of capitalization may come in for the same treatment. Essentially, Italian banks today find themselves in much the same position as American banks in 2009 — undercapitalized and sitting on far too many non-performing loans. While the U.S. bailout in 2008 and 2009 was far from popular, in today’s climate, in a country like Italy, where joblessness and listless (or negative) growth have become endemic, a bailout could be far more toxic.

Renzi may believe that, by leaving such unpopular steps to Gentiloni and Padoan, he can emerge later in 2017 or 2018 for a comeback — not unlike Silvio Berlusconi, himself forced from office twice, despite dominating Italian politics for nearly two decades.

That may be too clever by half. Continue reading What to expect from Italy’s new government →

Italy

Despite Senate vote, Renzi’s reform push stalling in Italy

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renzihalfyear

If Rome wasn’t built in a day, it’s certainly proving that it won’t be reformed in a day, either. Italy Flag Icon

Nearing a half-year in office, the most ‘impressive’ accomplishment of Italy’s new prime minister Matteo Renzi is engineering the relatively anti-democratic putsch of his own party’s prime minister, Enrico Letta in February.

Renzi, the 39-year-old former mayor of Florence, gave Letta just 10 months to enact urgent reforms before he executed his takeover of the Italian government. Six months into his own premiership, Renzi has greater support than Letta ever had to shake up Italy’s ossified government. But Renzi nonetheless has surprisingly little to show for half a year in office, even as the country slipped this summer into, incredibly, a triple-dip recession. 

When he ushered himself into power, Renzi came to the office with a wish list of reforms, all of which he promised would be delivered before the summer: a new election law, labor market reforms, tax reform and changes to Italy’s sclerotic public administration. 

Renzi isn’t much closer to achieving any of those today than he was in the spring. He’s lucky to have won a key vote last week in the upper house of the Italian parliament, the Senato (Senate), to reduce that chamber’s powers, making it essentially an advisory body, giving Italy a unicameral parliamentary system in all but name. Renzi must still win a vote in the lower house, the Camera dei Deputati (Chamber of Deputies), where Renzi’s Partido Democratico (PD, Democratic Party) controls an absolute majority, as well as another final vote in the Senate before the reforms are put before voters in a referendum next year. Continue reading Despite Senate vote, Renzi’s reform push stalling in Italy →

Italy

More thoughts on the final Italian election results and Italy’s electoral law

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For what it’s worth, we have the final results from the weekend’s Italian election from the interior ministry.Italy Flag Icon

As exit polls indicated and early resulted showed, Pier Luigi Bersani’s centrosinistra (center-left) coalition won 29.54% in the race for Italy’s lower house of parliament, the Camera dei Deputati (House of Deputies) to just 29.18% for former prime minister Silvio Berlusconi’s centrodestra (center-right) coalition, 25.55% for Beppe Grillo’s protest  Movimento 5 Stelle (M5S, the Five Star Movement) and just 10.56% for technocratic prime minister Mario Monti’s centrist coalition.

As the winner of the largest vote share, Bersani’s coalition is entitled to a majority of 54% of the seats in the lower house:

Italy Camera 2013

In the upper house, the Senato (Senate), there’s no such ‘seat bonus’ at the national level; instead, the winner in each of Italy’s 20 regions gets a ‘bonus’ in that it wins 55% of the seats in each region, meaning that the centrodestra actually edged out the centrosinistra in total number of senatorial seats, even though Bersani’s coalition won 31.42% and Berlusconi’s coalition won just 30.58%.  That means, of course, if the Senato‘s seats were awarded on the same basis as the Camera‘s seats (they cannot be out of constitutional considerations with respect to Italy’s regions), Bersani would be the clear prime minister today.

Italy Senate 2013

The reason for the center-right’s senatorial victory is pretty clear when you look at the region-by-region winners (as shown the map below, with blue for centrodestra and red for centrosinistra):

Screen Shot 2013-02-26 at 2.49.21 PM

As you can see, not only did Berlusconi nearly sweep the mezzogiorno, the swath of southern Italy that contains Campania and Sicily, (the second- and fourth-largest regions), his coalition won Lombardy, the largest prize in the center-north of the country.  His coalition also came very close to winning Piedmont in the northeast and Lazio in the center as well, and the centrosinistra leads in total votes only because it was able to rack up large margins in its historically reliable heartland in the regions of Tuscany and Emilia-Romagna.

It’s in particular fascinating to take a look at the party-level vote, especially in the lower house elections, because you get a better sense of how the coalition system and the national ‘seat bonus’ system really has skewed the next parliament to favor the centrosinistra (center-left) coalition, despite the fact that Grillo’s Five Star Movement actually outpolled not only Berlusconi’s party, the Popolo della Libertà (PdL, People of Freedom), but also even Bersani’s party, the Partito Democratico (PD, Democratic Party), though it didn’t outpoll the broader center-left and center-right coalitions:

Camera vote 2013

Here, however, is the breakdown of seats by party:

Camera seats 2013

The disparity between vote share and awarded deputies shows how important coalitions have become in Italian elections since Berlusconi’s government changed Italy’s election law in 2005, which transformed the previous system — in operation from the early 1990s — a split vote that awarded most of the seats on a ‘first-past-the-post’ basis and some on a proportional representation basis to the current ‘proportional representation’ system (with a national ‘bonus’ in the lower house and a regional ‘bonus’ in the upper house).* Continue reading More thoughts on the final Italian election results and Italy’s electoral law →