Italy and its fragile new government

Italy has a new government. Giuseppe Conte has been successful at putting together a coalition of dissimilar personalities. It brings together populists, left wingers, centrists and technocrats. All of them have one thing in common: a profound dislike for Matteo Salvini, the extremist. It is obviously a fragile reason to pull together. But it might work. I am one of those who sees some strength in disparity. This government might want to contradict the naysayers.

Italy must reform soon

Giuseppe Conte is back as head of the new Italian government. Not a very easy task that of chairing a coalition between the 5-Star Movement and the PD (Democratic Party, a social-democrat party). They can stay in power for three years, until the end of the current Parliament. They can also fall apart soon. Nobody knows. What we know is that the new government – Conte II – has many divisive issues to deal with. The country is not in a very good shape, to put it diplomatically. It calls for serious reforms. Those reforms require consensus within the coalition, a very wise approach and lots of political courage. In addition, many people think that Matteo Salvini, the League’s leader, is a better option, that he is the one that can transform Italy. He is not, in my opinion, but what matters is the Italian voters’ views. He will be leading the opposition against this new government. In the end, if Italy does not address its problems – and I have serious doubts it will – Salvini might end up back in power again. And bring with him the image of a strong and resolute man. That would be a game changer. Certainly not a good one, in the end, but it would be too late to stop him.

Italy and its political clowns

It would be an exaggeration to say that Italy has become a fragile democracy. The governing coalition might be collapsing tonight or tomorrow, but the State institutions are functioning. The President has the necessary prestige and authority. The judiciary system works. And, in general terms, I think we should recognise that public service is experienced and can be competent, if left alone.

It is the political class that is in deep crisis. It has been like that since Berlusconi´s time, in the 90s. His Forza Italia was a joke, inspired by his own example and megalomania. And it created a lot of additional party clones, as time went on, including the populist 5 Star Movement. It has also opened space to the ultra nationalist movements to flourish. 

In this context, the real challenge is to see the emergence of different type of political leaders. Unfortunately, that seems to be a very remote light, at this stage. 

Renzi´s fall and our worries

Italy has known 63 governments since 1945. That´s a lot of instability during a long period of 70 years. And most likely, the current government, led by Matteo Renzi, will fall after this coming Sunday´s referendum. It´s certainly no good news. Particularly at a time when the Italian banking system and the economy require the support of a strong and stable Cabinet.

In Brussels and in the financial centres of Europe most people believe that there will be no negative impact if Renzi falls and becomes just a caretaker Prime Minister. They have basically in mind the European politics and the markets.

But I think they are a bit short-sighted.

First, there will a very serious impact on the internal politics of Italy. That will give an additional chance to the 5-Star Movement and others, including the racist Lega Nord, to gain additional votes and mess up the domestic politics. Second, the banking system is in a far worst situation than we are prepared to accept. Cabinet needs to have full power to be able to adopt the measures that are required to address the banking crisis. Thirdly, the EU would certainly benefit from a stronger leader in Rome. Renzi has not been able to play an active role in European affairs. If he loses, but stays on, as interim leader, his intervention will be even lighter. If he goes, the new leader will be too busy trying to ground himself in the national politics to have time for Brussels.

For these reasons, one should be worried.