When Democracy and Austerity Collide: The 2013 Italian Edition

Although world and market attention no longer seems concerned with the price of Italian debt, the outcome of the upcoming Italian elections on February 24-25 will likely refocus minds. The power of well-known political personalities who have been part of the Italian political scene since the mid-1990s combined with strong public reaction against austerity and scandal have created a combustible and unpredictable electoral environment. Regardless of the outcome, Italy will step away from its recent path of austerity and fiscal responsibility and, depending on coalition formulation, will have a weak, unstable government that will confront a strengthened opposition.

According to the latest polls, the most likely winner of the election will be the Democratic Party (Partito Democratico or PD) led by Pier Luigi Bersani and his allies, the SEL (Sinistra Ecologia Libertà or Left Ecology Freedom), a leftist group led by the former governor of Puglia, Nichi Vendola. Combined, this coalition should receive between 33 and 38 percent of the vote, and as the coalition with the most votes, the Democratic Party and SEL would receive a majority of the seats and gain control of the lower house. However, it is unlikely that Bersani will gain a majority in the Senate where seat distribution is regionally based.

In order for Bersani to control both houses of parliament and ensure a stable government, PD and SEL could join forces with current Prime Minister Mario Monti, the technocrat who recently became leader of a coalition of small centrist parties united under the name Scelta Civica (Civil Choice). As election day nears, Bersani and Monti verbally clash on future labor market reforms policies and SEL has repeatedly rejected Monti’s austerity policies—a seemingly ill-fitted political marriage. However, according to Professor Roberto D’Alimonte, chair of the Italian Political System Department at the University of Florence:

“Mr. Bersani, Mr. Vendola and Mr. Monti will find an agreement in order to create a new government; it’s more difficult to say how long this agreement will last…The program of the new government will likely include new rules on immigration and civil unions according to the proposal dictated from the left, while Mr. Monti will have some room to push for economic reforms which started last year.”

But this conventional wisdom is being sorely tested by the Italian center right coalition PDL (Popolo della Liberta) led by former Prime Minister Silvio Berlusconi. PDL has surged in the polls due to an unprecedented media campaign and now trails PD by only five or six points. Berlusconi clearly feels that political momentum is on his side as he increasingly uses populist promises, including the elimination and a refund of an unpopular real estate tax, to overcome his opponent. As PDL has improved in the polls, Prime Minister Monti also has left open the possibility of choosing to join a PDL coalition rather than with the Democrats but only if Berlusconi steps aside.

Both of these scenarios suggest that Monti will play the role of coalition kingmaker but this is predicated on Monti’s party receiving at least 15 percent of the votes. However, if he ends up winning 10 percent as reported by some polls, his brief flirtation with politics will be deemed a failure. A new potential electoral kingmaker is a party recently formed by Beppe Grillo, a successful showman and comedian during the 1980s and 1990s. Grillo’s Movimento Cinque Stelle (Five Star Movement) platform supports environmental causes but his real appeal is speaking directly to growing Italian disillusion with the rapidly deteriorating state of the economy and Italian politics as usual, particularly the recent bank scandal involving the bailout of Monte dei Paschi di Siena bank. According to Antonio Polito, former senator and now columnist at the Italian Daily newspaper Il Corriere della Sera:

“Italy has experienced 15 years of stagnation, followed by five years of recession…Between 2008 and 2012 the GDP has declined by 7 percent. This economic downturn is the only one in the recent history of the West, not even Japan has had a similar situation. All of this has created a huge unrest among the Italian people, and Grillo is claiming to be the only one who cares about the people and not about his personal interest.”

Through savvy use of social media and grassroots campaigning, Grillo has seen steady growth in the polls since the beginning of the campaign and some analysts anticipate that he might receive as much as 20 percent of the vote. However, unlike Monti, Grillo refuses to enter any coalition government and he will not become a member of parliament. Even if Grillo doesn’t play a decisive role in the election outcome, his Five-Star Movement will use its newly found weight in the parliament to push his antiestablishment political agenda. Grillo’s popularity may be more than just a protest vote but a potentially new and unpredictable political outlet for Italian voters.

The fifth Italian party that does not receive much attention from the international media is Fare Fermare il Declino (Take Action to Stop the Decline), led by the Italian economist, Oscar Giannino. It will be difficult for Giannino to meet the 4 percent national threshold to enter parliament particularly following his resignation amid questions concerning his academic credentials. Despite some polls indicating electoral gain in populous northern Italy, Giannino’s sudden resignation will hurt his party’s popularity as Italians look to elect a leader they can trust.

While it is likely that the Democratic Party will cobble together a fractious coalition with Monti, the center-right opposition coupled with Grillo’s party may be able to thwart their efforts. If this outcome occurs, Italians may find themselves returning to the polls much sooner than they would have liked, recalling that there have been 63 governments in Italy since 1945. Another outcome, difficult as it is to conceptualize, would be a grand coalition composed of the Democratic Party, Berlusconi’s PDL, and Monti. And finally, one cannot completely rule out a surprising, come from behind victory by the center-right, as difficult and unlikely as that would be. Regardless of the outcome, all three scenarios will fundamentally challenge the view emanating from Europe and global markets that the euro zone crisis is over.

Heather A. Conley is senior fellow and director of the Europe Program at the Center for Strategic and International Studies in Washington, D.C. Simone Bemporad is a senior associate with the Europe Program at CSIS.


Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2013 by the Center for Strategic and International Studies. All rights reserved.


 

 

 

Heather A. Conley