Why Europe will be closely watching Italy’s election


Fans of wild and nasty election campaigns will enjoy the spectacle of Italians going to the polls on March 4. The wide-open election could see the comeback of Silvio Berlusconi, the former prime minister whose outlandish mix of politics and “bunga bunga” partying almost landed him in prison. The other outcome is the election of the populist, anti-establishment Five Star Movement (M5S), led by firebrand comedian Beppe Grillo. This week, with voters in mind, each party has been fine-tuning its position on Italy’s place in the European Union and whether to use the euro. Mr. Grillo is dialling down his euro skepticism and Mr. Berlusconi is embracing the EU, the opposite of their previous stances. Entertainment value aside, all European eyes are on the Italian election, the continent’s biggie for 2018.

Why does the Italian election matter?

It matters to Italians because they need a government that can push the country out of its economic doldrums. Italy, a perennial underperformer, is burdened by a crushing debt load – equivalent to 130 per cent of gross domestic product, the second-highest in Europe after Greece – and a stubbornly high unemployment rate. It was 11 per cent in early January, well above the euro-zone average of 8.7 per cent. But the saddest figure is the youth-unemployment rate of almost 33 per cent. Young, educated Italians are forced to flee in droves to Germany, Britain, Canada and other low-unemployment countries to find work, a national brain drain that is severely damaging competitiveness.

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And the election matters to outsiders because Italy, a Group of Seven country, is the euro zone’s third-largest economy (Italian GDP is about 25 per cent greater than Canada’s). When it bogs down, so does the euro zone. Endless poor performance also triggers the rise of parties that blame the euro or the migrant crisis for Italy’s economic woes. After Brexit, the last thing Germany and France want to see is another big member state falling out of love with the EU.

Why is Italy voting on March 4?

You could blame the migration crisis. The mandate of the current government, elected in 2013, was set to expire by the summer. One credible theory making the rounds is that Prime Minister Paolo Gentiloni of the ruling centre-left Democratic Party (PD) wanted to hold the election before the start of the migrant crossings from Libya in the spring. When the boats come, so do the horror stories of drownings – and the xenophobic rants about the country being in danger of becoming a playground for terrorists (even though Italy, unlike much of the rest of Europe, has had no significant terror attacks in recent years). The headlines then play into the hands of the right-wing, anti-immigrant parties, dominated by the Northern League. Led by the charismatic Matteo Salvini, the party is popular enough to make or break any right-of-centre coalition.

Will the election produce a clear winner that can put Italy’s house in order?

Probably not. An inconclusive outcome is a strong possibility. European elections seem to be losing their significance, in the sense that they’re becoming indecisive as the tired, mainstream centre-right and centre-left parties lose their allure. Look at Germany: Four months after the election, Chancellor Angela Merkel is still bogged down in coalition talks. Last June’s British election saw Prime Minister Theresa May’s Conservatives lose their majority; they had to form a coalition with a tiny Northern Ireland party to stay afloat. Spain’s 2016 election produced a minority government. Italy’s PD government, which was led by Matteo Renzi until late 2016, when he resigned after losing a referendum on constitutional changes, has seen its popularity fall by about 15 points since its 2015 peak of 40 per cent.

The Italian election may be no different – all the more since the political spectrum is divided almost equally among the parties of the centre-right (led by Mr. Berlusconi’s Forza Italia party), the centre-left (led by the PD) and M5S, which, like Emmanuel Macron’s En Marche movement in France, is neither left nor right. While M5S is leading the opinion polls with between 26 per cent and 29 per cent support, the peculiarities of hideously complicated Italian election law mean it would have to take about 40 per cent of the vote to win a majority. But since its birth in 2009, M5S has refused to enter coalition talks – Mr. Grillo dismisses all rival parties as corrupt and incompetent. To form a government, he would have to change his stand and recruit one or more of the smaller parties on the left or right. That scenario is not out of the question.

Other possible scenarios include a German-style “grand coalition” that would join the centre-right and the centre-left – maybe under a neutral or technocrat prime minister – and a national unity government led largely by technocrats, as Italy had during the 2011-13 crisis years, when Mr. Berlusconi was effectively ousted and replaced by economist Mario Monti, who had never held elected office.

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Of course, an indecisive outcome will leave Italy in limbo, starved of the reforms required for sustainable growth.

Could either Mr. Berlusconi or Mr. Grillo become prime minister?

No, not even if either party were to form a government. Mr. Berlusconi, 81, was expelled from parliament in 2013 after his conviction for tax fraud (his conviction for paying a minor for sex was overturned). Mr. Grillo was convicted of manslaughter in 1981, after a road accident that killed three passengers, and has excluded himself from parliament.

If Mr. Berlusconi cannot enter parliament, why is he still considered a player?

He is a power because he leads the third-largest party, Forza Italia, which is polling at about 16 per cent, and could emerge as the kingmaker in any coalition-building effort. His media empire still controls Italy’s main private broadcasters, giving him enormous propaganda power, and he has always been a charming campaigner. The old seducer remains especially popular with senior citizens, despite the 70-plus trials he has faced for everything from bribery to Mafia collusion.

Will Italy become more or less euro skeptic after the election?

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Likely more. The PD is the only major Italian party firmly in the pro-EU camp. M5S wanted to hold a referendum on the use of the euro, but this week seemed to back down on that pledge (Mr. Grillo won’t say how he would vote if a referendum were held). Mr. Berlusconi wavers between pro-EU and anti-EU stances, though he now insists he’s in favour of the bloc. He might change his tune, however, if his party joins forces with the Northern League, which is polling almost as high as Forza Italia and occupies the anti-EU, anti-immigrant end of the political spectrum. Italy is highly unlikely to leave the EU or shed the euro, but it appears its support for further European integration is set to wane, barring the outright – and unlikely – victory of the PD.

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