Italy: Light At The End Of The Tunnel?

Analysis of the state of Italy in the wake of the European elections and the agenda of Matteo Renzi.

The two last decades has been unstable for one of the important nations of Europe, especially in two areas: politics – with Berlusconi as one of the main protagonist – and economics. To make matters worse, both areas had merged after thefinancial crisis of 2008, by which Italy was among the first European nations to be affected, and reaching as a consequence 123% of GDP in public debt – the second highest in the Eurozone. This last period is the one that has taken its toll on the country, compromising its stability. By earlier 2008, Berlusconi assumed the seat of Prime Minister for a third time; in November of the same year, Italy was declared in recession.

Those two events were the starting point: from 2009 to 2013 Italy saw the downfall of Berlusconi and the conformation of three different coalitions that named three different prime ministers in the “post-Berlusconi era” (Mario Monti, Enrico Letta and Matteo Renzi). Of course, Berlusconi’s party – the People of Freedom Party – and Berlusconi himself played an important role in the political crisis but after his trials and convictions, his power was never the same again. In the same way, the crisis was a central actor in the Italian situation. Austerity policies were applied with different receptions from the politicians and the people. Votes of confidence were given to Berlusconi in 2009 and 2011, but the increasing debt and pressure on the economy led to his downfall. However, in the cases of Mario Monti and Enrico Letta, austerity programmes also led to the dissolution of their premierships. In the case of the former, left-wing and protest parties gained ground in the regional polls, while in the case of the latter protests led to Letta’s resignation.

This year the current prime minister, Matteo Renzi, had to face a hard challenge, posed mainly by the former comedian Beppe Grillo, whose party (Five Star Movement) won a 26.5% share of the vote while Berlusconi’s party (Forza Italia) took 18%. The Democratic Party, the party of the current Prime Minister, got 33% of the vote. What can be deduced from these results and the current political trends? In the first place, Renzi has to face the same challenge that his predecessors faced: economics.  Even more, he is facing the task of leading the recovery of an economy that was among the most hard-hit in Europe. Grillo and his Five Star Movement are also a challenge, at least for the pro-EU side of Italy and the political stability of the country.

Is there then a light at the end of the tunnel for Italy? As a matter of fact, the victory means that Italy it is still a strong pro-EU nation, despite the fact that even Mr Renzi has called for reforms to be made in Brussels while praising the Union itself. The other element that might provide a light within the storm is the economic ideas of Renzi. His “Renzinomics” stands on less austerity and the creation of jobs and growth, via reformation of tax system, the labour market and bureaucracy. Surprisingly, he aims at reforming the senate by reducing its power, and also wants to introduce a new electoral law in which the winning party could be able to avoid the path of conforming coalitions. Instability then would be tackled by these reforms and the economy could receive an important amount of oxygen. That Italy will receive the rotating EU presidency is another cornerstone of his politics – not to say an important boost – where he aims to give Italy an influential voice in the Union.

There are big challenges for the country itself, which now stands at a crossroads: it can take the path of a so desired – and needed stability – or to go back to the unstable path of populism and demagogy.

Image: ‘Consiglio Europeo, conferenza stampa di Renzi’ courtesy of Palazzo Chigi via Flickr, released under Creative Commons.