The so-called “government of change,” in charge of the Council of Ministers since June 1, has been around for 10 months. And they’ve been a busy 10 months: from a drastic closing of Italian ports to migrants, to several polemic laws on security, as well as a hard budgetary negotiation that came close to costing it a sanction for violating the Stability and Growth Pact. The truth is that, just one year later, the third largest economy of the Eurozone is in an even more precarious spot, with the country in a “technical recession” (and a 2019 GDP growth projected at 0.2%), with an increasingly swollen national debt and increasingly evident isolation with European partners. In its report, the Italian chamber of commerce and employers’ federation, Confindustria, put the country’s situation bluntly: “Italy is at a standstill.” The question is: how will they get out of this situation? The answer is not simple.
From the ranks of the center-right, the victorious coalition from the seven most recent regional elections (the last of which took place in the southern region of Basilicata) is demanding immediate convocation of elections: for the time being this is only being done by former prime minister Berlusconi, but it is an open secret that the favorite to win, current deputy prime minister and minister of the interior, is waiting for the definitive defeat of his partner in government (the Five Star Movement) in the European elections set for May 26, in order to then demand the president of the republic, Sergio Mattarella, end the 18th Legislature and call for elections as soon as possible.
This is a real possibility, but it is in juxtaposition with two realities: the first, that even in the most critical moments of the history of the Italian republic (remember the years of Tangentopoli, the corruption scandal, 1992-1994), a legislature has never lasted less than two years; and second, Salvini has a plethora of enemies outside Italy (the Franco-German axis, the European Commission, etc.) who will also ask Mattarella to not allow Salvini to lead the Council of Ministers.
This is because Europe has enough problems as it is with Brexit; it does not want Italy to lead the group of countries wishing to end European integration as we know it. In any case, a tug-of-war is more than sure to occur, although it is true that Salvini is well aware of how president Mattarella, a seasoned politician in high politics (he was both minister and deputy prime minister) with enormous national prestige and the added fact that Italians see him as the brother of a mafia victim (his brother Piersanti was killed by Cosa Nostra in January 1980 while he was leading the regional government of Sicily), will play the game.
In this sense, Mattarella has two potential options. The first is well known: form an “apolitical” government responsible for getting accounts in order and calming investors (remember that the risk premium has been above 230-240 points for 10 months, and at one point it surpassed 310, in a country that already has a national debt 133% of its GDP). To do this he has: Cottarelli, former director of the IMF who was tasked by Mattarella last year with forming a government, but who did not in the end because the Five Star Movement and Lega Nord reached an agreement to form the current “government of change.” The problem with this “apolitical” government is that the two parties holding the majority (Five Star Movement and Lega Nord) would never support him, unlike in November 2011 when Forza Italia and the Democratic Party accepted economist and President of Bocconi University Mario Monti, who became the new prime minister. Recovering this kind of executive is therefore not feasible.
Paradoxically, the other possibility is the downcast former prime minister Matteo Renzi. A little more than two years ago, the still young (44) Tuscan politician was the president of the Council of Ministers and secretary general of the leading center-left formation (the Democratic Party [PD]): he is no longer either, and must be content with acting as a senator from Tuscany. However, at least today, Renzi actually controls more than half of his parliamentary group (comprised of more than 100 members of parliament and over 50 senators) and, in response to the shift left led by the new secretary general, Nicola Zingaretti (governor of the Lazio region), he may split the formation at any time as he represents its center. On a related note, he will likely do this before the European elections. That would allow the center-right coalition to have the parliamentary majority that it currently does not enjoy (it needs 20 senators to control the high house), but here one must also wonder: would Renzi allow his rival Matteo Salvini to become the new prime minister or would he form a coalition on the condition that the new resident of the Palazzo Chigi is, for example, Antonio Tajani, Berlusconi’s right-hand man and current president of European Parliament? This is certainly another mystery difficult to solve.
There is also another possibility that is currently not feasible given the above, but that should be kept in mind: the Five Star Movement may break with Salvini and create a new coalition with PD, an act that would give it a new majority in the Senate. The problem is that in order to do this, the Five Star Movement needs the entire PD parliamentary group and for Zingaretti to forsake the promise he made before being chosen as secretary general to never form a coalition government with the Five Star Movement. Nor should we overlook that he would also have to crush Renzi, which will be very difficult given that the former prime minister has a huge presence in his party and is very charismatic.
Regardless of the formula, change is becoming increasingly urgent. The economy is in free fall; investments frozen; industrialized production reduced in many sectors; national debt increasingly large; and widespread failure to fulfill the deficit target is just around the corner.
Given that he is quite responsible for what is going on in Italy, in addition to Di Maio, the most striking thing in all of this is that the most popular politician with the people is Matteo Salvini himself. He was the one to set his country against the European authorities on the issue of the General State Budget – including insulting European Commission president Juncker. He was also the one to create lack of confidence among foreign investors with his attempt to place a minister against the shared currency at the head of the Ministry of Economy and Finance (Savona, who in the end had to witness the full professor of economics, Giovanni Tria, take the place being prepared for him). With his ultranationalist and populist politics (mind you, with the invaluable assistance of the incredibly incompetent leader of the Five Star Movement Luigi Di Maio), he was also the one to bring the risk premium up to increasingly intolerable levels.
Salvini is also known to be a true chameleon: he began in the young communists and then went on to Umberto Bossi’s Lega Nord of Padania, making him a politician of the right and federalist, and, now, after becoming a populist, he would like to present himself as a statesman who will bring order to the struggling Italian economy. Seeing is believing, but Salvini is the man of the hour in Italy, seen as the strong leader the country needs, when in truth, before becoming deputy prime minister, Salvini only had experience in municipal dealings (he was a member of the city council of Milan in the 90s) and parliament (he has been a member of both European and Italian Parliament). It is clear that this government won’t last much longer: if the country was in a tight spot before they ascended to power, it is in a much more critical situation now. But something must be done. If anyone knows this, it is both the troika and president Mattarella, however, there will most certainly not be any substantial updates for at least another two months.