While it may not be apparent, 2018 is going to be an important year for Italy. In March, general elections are to be held.
Nobody knows who might win but the leaders of the political pack are the upstart Five Star Movement and, would you believe it, a hotchpotch far to moderate right wing alliance lead by Silvio Berlusconi. Yes, old bunga bunga Berlusconi is back, yet again, but he can’t actually be elected. Still, that’s not stopping him and, to his credit, Italy’s right, aside from the Five Star Movement, is the most united political force in Italy. Well, sort of united, seeing as the leader of the Lega Nord party, Matteo Salivi, is not overly happy that Berlusconi is back on the scene. But the old media mogul still carries so much weight that there’s very little Salvini can do to fight him off.
Despite Silvio Berlusconi’s not so hot track record with regard to his numerous attempts to govern Italy, there’s a chance that Italians may give him yet another chance to mess the nation up. On the other hand, Italians may opt for the Five Star Movement who have not run Italy up to now. That Italians may decide to give the movement a chance wouldn’t be much of a surprise in view of the mess left by Italy’s old guard political parties. It has to be said that the faith Italians place in their political masters is not particularly high, and that may be an understatement.
Could the Five Star Movement win? Maybe not, but it’s taking steps to increase its chances. Formerly shy of any form of political alliances, the party is to allow, subject to vetting, those who are not members of the party to stand as a form of surrogate. Thus independent candidates who say they will join forces with the Five Star Movement will seek election. If enough are elected, then a Five Star Movement government plus independent candidates coalition may end up running Italy. It’s a novel strategy but whether it will work remains to be seen. Should it not, then there’s always Italy’s left, or would be if it weren’t as good as dead in the water.
Remember former Italian centre left PM Matteo Renzi, the guy who ousted Enrico Letta? Well, there are indications that Renzi has been caught up in the cronyism surrounding attempts to keep the now the failed Etruria bank afloat. Then there’s the question of his credibility which the Etruria bank affair has not helped. On top that were Renzi’s grand promises, such as the one about sorting out Italy in 100 days (which then became 1,000 days), which came to nothing.
As well as not doing much for Italy, Renzi’s just about destroyed Italy’s left which has fractured into a million pieces. A slight exaggeration possibly, but there are now so many spin off parties on Italy’s left that it’s very hard to keep up with who is who and in which new party. Such is the mess that it’s rather unlikely that Renzi’s PD party will obtain enough votes to form a government.
2018 – A Test for Italy’s Flawed Electoral Law
Come to think of it, it’s hard to see any political faction gaining enough votes to even manage to form a government. Italy, you see, has blessed itself with an electoral law which makes it extremely hard for any one party, movement or alliance to gain enough votes to be able to form a government.
2018 and the End of QE
On top of all this, is the thorny issue of Italy’s huge national debt, the effects of which have been kept at bay by the European Central Bank’s generous quantitive easing. Only the benefits of QE for Italy may well come to an end during the tenure of whatever government Italy ends up with in March. Unless someone is very careful, Italy’s going to find it very hard to service the enormous interest payments on it’s national debt mountain.
Italy should have used the QE ‘cushion’ to sort itself out. It didn’t. Unsurprisingly perhaps, those vying for electoral victory haven’t mentioned the QE issue, at least as far as this Italy watcher is aware. Italy’s press has been rather quiet on the subject too.
The only indication that someone somewhere is aware of this issue are comments from Italy’s caretaker PM Gentiloni who’s been trying to convince everyone: read the EU, that Italy’s economy is on the road to recovery.
This is true in part – exports are doing well – but the truth is that unemployment in Italy is still frighteningly high especially amongst the nation’s young and those who do have work are finding that long term employment contracts leading to jobs for life are a thing of the past. Hence one of the reasons why both the Five Star Movement and, now, Silvio Berlusconi, are pushing for a universal basic income. The question is though, with Italy’s horribly high national debt, can the nation fund a UBI scheme? At least with this free cash Italians will be able to spend and that may help keep the economy ticking over. The ending of QE may mean that even with all the will in the, Italy may not be able to afford a UBI scheme. We shall see.
Oh yes, 2018 is going to be a very interesting year for Italy.