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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

A guide to Italy’s post-Napolitano presidential puzzle

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Renzi NapolitanoPhoto credit to Roberto Monaldo / LaPresse.

Italy’s presidential election functions more like a papal conclave than a direct election or even like a party-line legislative vote like the recent failed attempts to elect a new Greek president.Italy Flag Icon

The long-awaited decision today by Italian president Giorgio Napolitano to resign after nine years in office is not likely to result immediately in snap elections in Italy, as it did recently in Greece. Nevertheless, the resulting attempt to select Napolitano’s successor presents Italian prime minister Matteo Renzi with perhaps the most treacherous political task since taking office last February.

Napolitano’s legacy

Napolitano, at age 89, was anxious to step down after Italy relinquishes its six-month rotating European presidency this week. Elected president in 2006, Napolitano (pictured above, left, with Renzi), a former moderate figure within Italy’s former Communist Party, is Italy’s longest serving president, reelected to an unprecedented second seven-year term in 2013 when the divided Italian political scene couldn’t agree on anyone else after five prior ballots.

Critics refer to Napolitano as ‘Re Giorgio‘ (King George), but there’s little doubt that he was consequential during Italy’s financial markets crisis in late 2011 by nudging Silvio Berlusconi, who first came to power in 1994, out of office — seemingly once and for all. Napolitano’s behind-the-scenes maneuvering may have prevented Italy from the humiliating step of seeking a bailout from European authorities though his detractors argue that he circumvented the democratic process by engineering Berlusconi’s ouster and appointing former European commissioner Mario Monti as prime minister. Monti, who stepped down after 2013 national elections, largely failed to push through major economic reforms that many investors believe Italy needs to become more competitive, and that Renzi now promises to enact.

Napolitano, who will remain a ‘senator for life’ in the upper chamber of the Italian parliament, steps down with generally high regard from most Italians, who believe that he, in particular, has been a stabilizing force throughout the country’s worst postwar economic recession.

An opaque process to select a president

The process to appoint his successor involves an electoral assembly that comprises members of both houses of the Italian parliament, plus 58 additional electors from the country’s 20 regions — a total of 1,009 electors. Within 15 days, the group must hold its first vote, though it may only hold a maximum of two voter per day. For the first three ballots, a presidential candidate must win a two-thirds majority. On the fourth and successive ballots, however, a simple majority of 505 votes is sufficient. Continue reading A guide to Italy’s post-Napolitano presidential puzzle →

Italy

Did Renzi make a mistake in taking power too soon?

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I argue this morning in EurActiv that the mistakes of Italy’s new prime minister Matteo Renzi in the past two weeks alone mean that we should be very skeptical about the chances that he can unlock the puzzle of reforming Italy’s economy and regulatory structure — and especially on a timeline that expects to enact major reforms before voting for the European parliamentary elections:

But for a politician whose brand is based on breaking with Italy’s past, his rise to power represents a very familiar path.  The putsch to oust Letta, executed behind closed doors, is reminiscent of many government reboots of Italy’s past.  Renzi, moreover, hopes to hold power until 2018, giving him four years in office without seeking the mandate of a popular vote.  That’s more ‘politics as usual’ than rupture.  Over the weekend, a planned meeting between Renzi and Beppe Grillo, the leader of the protest Five-Star Movement devolved into a clownish shouting match.  Though the blame rests more with the mercurial Grillo than with Renzi, the Five-Star constituency includes the kind of voters that Renzi must win in order to truly transform Italy’s economy.

I also question whether Renzi’s choices for his new cabinet are entirely wise:

For someone who’s been plotting a move to Palazzo Chigi for two years, Renzi’s cabinet is far from inspiring.  In light of the male-dominated nature of Italian politics and business, it’s promising that Renzi’s 16-member cabinet contains an equal number of men and women.  While the idea was to select a cabinet of young, energetic ministers, the cabinet doesn’t have the feel of an all-star assembly.

Renzi’s finance and economy minister, Pier Carlo Padoan, since 2007 the deputy secretary general of the OECD, has a strong pedigree as an economist, advising Italy’s center-left governments in the late 1990s and early 2000s on the requisite reforms to bring Italy into shape to join the eurozone.  But he falls into the same line of technocratic experts as his immediate predecessors, Fabrizio Saccomanni, Vittorio Grilli and Monti.

Renzi ignominiously dumped Letta’s foreign minister Emma Bonino, a longtime champion of women’s rights abroad and good government at home for the 40-year-old Federica Mogherini, first elected to the Italian parliament in 2008 and who has never held a ministerial post.

Renzi ‘s cabinet also excludes Cécile Kyenge, Letta’s minister for integration.  Letta demonstrated significant courage in appointing Kyenge, Italy’s first black minister.  Though racist slurs against Kyenge often drew negative headlines, her appointment inaugurated an overdue conversation about racism in Italy, especially as it regards integration and immigration, Kyenge’s portfolio.  Dumping Kyenge hardly seems like bold leadership.

Though Angelino Alfano remains interior minister, Renzi stripped Alfano of his title as deputy prime minister, and he cut all but two other members of Alfano’s New Center-Right (NCD) from the cabinet.  Those decisions may haunt Renzi when things get tough in the Italian Senate, where the Democratic Party lacks a majority.