The Ides of March of Italian politics

The elections have revolutionized  Italian politics  and rebuffed Eurozone policy.

It is often difficult to interpret the election results when the system is not bipolar and the government is not directly instated by the electoral result. But, while not providing a clear indication of a new government, the result of the Italian elections of March 4 has had an clear meaning that can be summarized in two points.

The first is the defeat of the two major parties: the Democratic party and Forza Italia - the two main protagonists on the Italian political scene of the last quarter of a century. The second is the clear victory of the Five Star Movement  - founded about ten years ago by the comedian Beppe Grillo, who distanced himself from the leadership before the elections, leaving the leadership to the thirty-one year old Luigi Di Maio, former vice-President of the Chamber of Deputities. An astonishing victory of the movement that exceeded the sum total of the votes received by Renzi's PD and Berlusconi's Forza Italia together.

It is also telling that the about 33 percent of the votes gained by the Five Star Movement equals the electoral result obtained in Germany by Angela Merkel, now reelected for the fourth time as Chancellor. If the election result of March 4 does not revolutionize the Italian political landscape, one must ask what else needs to happen.

Now, Luigi De Maio is the legitimate candidate to be appointed by the President of the Republic, Mattarella, to form the new government. Will he succeed? For the moment, we know that Di Maio has expressed a overall preference for the Movement to make an agreement with the Democratic Party; but Matteo Renzi, its resigning secretary, as the last gesture of his appalling leadership, has contemptuously rejected the proposal. This does not mean that, in the course of a long and complex crisis, the position of the PD, with the shuffling of the cards in its management team, could not change.

Alternatively, it has been hypothesised an alliance between Five Star and the League, the rightwing party lead by Matteo Salvini which has been part of the Coalition with Berlusconi’s Forza Italia. This perspective is for the moment a long way off. But it could emerge after a long deadlock,  if eventually based upon  a program collecting the less controversial or more approachable points of the two parties such as: public spending on investments to boost growth, private initiative and employment;  the cancellation of the Jobs Act as the main source of the growing precariousness, and the revision of the pension reform of the past government, along with the institution of a form of citizen’s income for unemployed looking for a job – in all a sort of program that the establishment and media with scorn define  "populist".

An uncertain government
In the end, the country will have a government. Possibly, under the sponsorship of the President of the Republic with the formal aim of making up a new electoral system. In effect, a mere formal reason, since the difficult task should be the job of a parliamentary majority with conflicting interests. So, the real commitment of an emergency government would be, indeed, the management of the relationship with the European Commission in the process of drafting and approving the budget law, that the new government has to send to Brussels this autumn.

A difficult undertaking for any government; and even more for a government lacking a parliamentary majority of its own and marked by the divergences that didn’t allow the underpinning of a coalition government particularly with regard to European relations. A government based on a heterogeneous and emergency majority cannot have a long life, and it is reasonable to guess that there will be a return to the polls  next fall or in the spring of 2019.

In any case, the relationship with the Eurozone authorities, the European Commission and ECB will represent the Gordian knot of the next government. It is not by chance that the most relevant European press has placed at the center of the comments on the surprising Italian electoral outcome the relationship with the eurozone.

The intertwining of two crises
It is a matter of fact that, ten years after the start of the crisis, the eurozone records the lowest growth and one of the highest unemployment among all market economies. It is no coincidence that Germany is the only exception given that, through the adoption of the single currency, they could profit of an undervalued exchange rate against the dollar and other major currencies - a level of exchange that, keeping the DM, would have been incompatible with its stratospheric trade surplus.

It is worth considering the close relationship between the euro crisis and the crisis of the center-left parties.  All the most recent electoral tests have sanctioned the defeat of the social democratic parties, guardians of the neoliberal rules linked to the politics of the euro area.

The most sensational case coming from France, the country that was at the origin of the euro with Mitterand and Delors, which paid for the eurozone crisis with the astonishing disappearance from the political scene of the old Socialist party, reduced to six percent of the vote, five years after the triumphant success of François Hollande in 2012 in the showdown with Nicholas Sarkozy.

It did not go much better in Spain to the Psoe, long at the head of the government in the post-Franco era, reduced, after the last elections, to supporting the minority government of the Popular Party of Mariano Rajoy. And equally meaningful was the last electoral result of the German SPD which, under the leadership of Martin Schulz - ironically, former president of the European Parliament - recorded the worst post-war electoral outcome.Other examples can be given, such as the case of Austria, where the old Social Democratic party, founded at the time of Karl Marx, permanently at the head, or as senior partner of the governing coalitions, gave way to a right-wing coalition with radically eurosceptic positions.

The defeat of PD which lost more than half of the votes received in the 2014 European elections (dropping from 41 to 18 percent ) is, therefore, far from an isolated episode. It has to be placed in the general framework of the ruins of the left of the center governmental parties all over the European Union - with the only remarkable exception being the Labor Party led by Jeremy Corbyn.

In fact, the simultaneous crisis of the left-wing government is not random: it is indeed the price paid to support the neoliberal policies that govern the eurozone in the management of the economy: from the liquidation of the role of the state in the economy to the attack on welfare, as well as the attack on trade unions and collective bargaining. All circumstances that have contributed to swing the vote to the right-wing parties, and that the center-left governments, instead of seeking to understand the causes, have ascribed their harsh defeat to populism.

The eurozone in question
The relationship with the eurozone, although kept in the shade is, indeed, the true current focal point of the political battle, dominated in the mainstream press by the mystical belief in the policy of the eurozone. With regard to Italy, it has been overshadowed by the fact that, as a victim of the perverse couple austerity-structural reforms, it has lived with during the past decade oscillating from recession to stagnation.

 And, without any sense of the grotesque, a stunted growth of 1.5 percent of GDP is deemed a success, even though still being  the lowest in Europe, accompanied by an unemployment rate of 11 percent average, hitting in some Southern regions, 20 percent with a awful youth unemployment rate of around 60 percent.

 An overall picture comparable only to that of Greece but, in many ways, worse, considering that the Mezzogiorno has a population almost double that of Greece. But whatever the new government will be, according to the establishment, Italy will have to respect the misguided technocratic rules set in Brussels. The result of the elections should be deemed as a random accident, with everything moving ahead as if nothing had happened.

 If it is not in this phase the matter of leaving the euro,  however, it is the moment to reject the eurozone "stupid" rules, according to a memorable definition by Romano Prodi, when he was president of the European Commission. Rules among which it is mandatory the commitment to balancing the budget, an arbitrary objective, which hinders any program of economic recovery and of social policy.

It is worth noting that the old rules of Maastricht prescribe a limit of the budget deficit of three percent. Then, with the Fiscal compact,  formally expired in 2017but  kept alive, the commitment to achieve zero-deficit, as the central parameter of the neoliberal euro-policy, was strengthened, without being legitimated by entering into the European treaties.  In any case, a commitment which France and Spain, to cite two major countries of the eurozone, has never complied with.

The difference between a balanced budget and a deficit set around the three percent paradigm is about € 50 billion a year: a difference that can change the direction of economic and social policy, freeing Italy from an up-to-date form of the old “salasso”.

The budget deficit is not a luxury but, in the current circumstances of low growth, high unemployment, and intolerable regional imbalance, it is a binding choice to boost growth and employment. As for the public debt, increased in Italy during the crisis, also by virtue of austerity policies, we know that it can only be reduced if the GDP increases. And this could increase only through a major revival of public investment in the infrastructures, the support for productive activities, and the commitment to cut youth unemployment, starting with the Mezzogiorno.

There is nothing mysterious about the reasons for the economic and social disaster that have brought Italy to its knees.  Now the opportunity arises after the democratic electoral revolt of March 4 to overthrow the bankruptcy strategy adopted by past center-left governments. A task far from easy, but also an opportunity not to be missed.

Antonio Lettieri

Editor of Insight and President of CISS - Center for International Social Studies (Roma). He was National Secretary of CGIL; Member of ILO Governing Body,and Advisor of Labor Minister for European Affairs.(