Italy’s electoral stalemate and the impact on the European project

, by Osmi Anannya

Italy's electoral stalemate and the impact on the European project

General elections took place in Italy from 24-25 February to decide on the 630 members of the Chamber of Deputies and the 315 elective members of the Senate of the Republic for the 17th Parliament of the Italian Republic. The election results revealed that no party has gained the required clear majority of 158 seats to be declared an outright winner in the Senate, giving way to a hung parliament.

Led by Pier Luigi Bersani, the centre-left coalition Democratic Party (Partico Democratico), grown out of an alliance with several regional parties, can however be declared as the most victorious party in both the Chamber and the Senate, having gained 29.5 percent (340 seats) of the Chamber votes and 31.6 percent (113 seats) of the Senate votes. The Italian President, Giorgio Napolitano, formally asked Bersani to form a new government, following the election results.

Closely behind was the alliance of Italy’s main centre-right political party, People of Freedom (Il Popolo della Libertà), and the regional federalist party, Northern League (Lega Nord), led by former Prime Minister, Silvio Berlusconi, winning 29.2 percent (124 seats) of the Chamber votes and 30.7 percent (116 seats) of the Senate votes. Berlusconi is Italy’s longest serving post-war Prime Minister, first coming to power in 1994; the alliance was in a coalition government from 2008 to 2011.

In a surprising turn of events, the new anti-establishment citizens’ movement, the Five Star Movement (MoVimento 5 Stelle), led by the activist, comedian and blogger, Beppe Grillo, came ahead of the centrist coalition, led by the former Prime Minister Mario Monti, winning 25.5 percent (108 seats) of the Chamber votes and 23.7 percent (54 seats) of the Senate votes. The five stars in the movement stand for public water, sustainable transport, development, connectivity and environmentalism. Mario Monti’s coalition, meanwhile, fared miserably in the elections, securing 10.56 percent (45 seats) of the Chamber votes and 9.13 percent (18 seats) of the Senate votes.

The European sovereign debt crisis saw Prime Minister Silvio Berlusconi resigning in November 2011 after losing a governing majority in parliament. Soon after, the parliament passed a package of austerity measures aiming to reduce the economic recession. Mario Monti was initially seen as a favourable alternative candidate to Berlusconi, who would preside over a much more united government that would put to practice necessary political reforms and strict austerity measures. Following Berlusconi’s resignation, President Napolitano invited Monti to form a new government and this new government was technocratic, composed entirely of unelected professionals, and supported by all parties, except for Lega Nord, in a vote of confidence in the Chamber and Senate.

As the Prime Minister, Mario Monti brought in austerity measures filled with tax hikes, pension reforms and stronger initiatives to battle tax evasion, to stir up market confidence and better the economy. His government also introduced a range of reforms for Italy’s labour market, from curtailing minimum tariffs and restructuring licensing systems for particular professions such as those of taxi drivers, to reforming Article 18 of the 1970 Workers Statute. Article 18 makes it mandatory for companies employing 15 or more workers to rehire any employee fired unfairly, rather than compensate them for their troubles.

The parliament passed the rather controversial reform in austerity times, now making it easier for companies to lay-off employees but Monti’s government insists that the main purpose of the reform was to increase the number of permanent workers. Although the labour market reform proposals improved confidence in Italy, winning support from the German Chancellor, Angela Merkel, to the former French President, Nicolas Sarkozy, they were met with public protests and opposition from labour unions at home.

After a brief pause from politics, Silvio Berlusconi announced his desire to run for Prime Minster for a fourth time, leading Il Popolo della Libertà to withdraw endorsement for Monti’s cabinet. Monti then proceeded to announce his resignation from the post following submission of the annual budget to parliament by Christmas, stating that it was impossible for the government to continue functioning in this manner. Initially, Mario Monti declined to pursue another term as Prime Minister, but later on changed his decision to contest the election as the leader of a centrist coalition. His party fared miserably in the elections, perhaps because of his government’s unpopular and controversial reforms; despite the strict austerity measures that were put in place during Monti’s Prime Ministerial term, Italy’s debt, unemployment and tax rates continued to increase.

Berlusiconi’s last term in government was marked by an increased inability to deal with the country’s debt crisis. The austerity package includes plans to be rolled out with time, from raising the retirement age of women from 60 in 2014 to 65 in 2026, to freezing public sector salaries until 2014. His cabinet was rather supportive of American foreign policy, despite the growing divide between the US and the EU. In addition, he also reached out and formed a greater alliance with Turkey, acting as one of the strongest supporters of the nation becoming a member of the EU. Berlusconi, furthermore, also insisted on closer ties between the Russian Federation and the EU.

The 2013 general election campaigns saw both Berlusconi and Beppe Grillo united in their opposition to Germany’s influence in European policy, the eurozone, Monti’s economic plans and the possibility of Monti serving another term in office. While Berlusconi promised tax cuts if elected once more, Bersani, on the other hand, had stated that he would press ahead with Monti’s labour market reforms, but do more for growth and jobs as well. Owing to a good performance in Senate seats by Berlusconi and his allies, it will be difficult for a Bersani-led government to ignore their presence in parliament.

In terms of the impact on the European project, a leading pro-Berlusconi coalition government would perhaps see both better relations between the EU and the Russian Federation and more cooperation on foreign policy between EU member states and the US. In addition, the really slow progress being made on the granting of EU membership status to fellow European countries, such as Turkey, could also be speeded up.

As the Minister of Economic Development in the Prodi II government (2006-2008), Pier Luigi Bersani introduced labour market reforms aimed at liberalising certain professions, television broadcasting, public services in the country and the energy market, as well as simplifying procedures for new start-ups. Bersani was unable to form a new coalition government with the grassroots Five-Star Movement, and after Romano Prodi did not garner enough votes to be elected as the President of Italy, Bersani announced on 19th of April that he would be stepping down as leader of the Democratic Party.

Beppe Grillo’s movement has largely been influenced by Mario Monti’s widely unpopular harsh austerity measures and a disdain for longstanding party politics. The success of the movement in the national elections coupled up with voter turnout, standing at less than 75%, the lowest since the formation of the Republic after World War II, showcases widespread public discontent with all the major political parties in the country.

After four rounds of voting and no successor in sight, President Napolitano agreed to continue his term as President in a bid to secure a new government, as his term was set to expire next month. His decision to continue his tenure was wise because of the dependency of the election results on market expectations. The sooner a President is elected, markets can forecast that this as an indication of all the main parties having found common ground to manage the electoral crisis, giving way to a new set of elections to be delayed rather than held sometime in the near future, which would have possibly resulted due to the repeatedly inconclusive rounds of voting.

Last week saw President Napolitano name Enrico Letta, of the Democratic Party, to form a coalition government and drive Italy out of the worst economic recession since World War II. Letta won his first round of confidence votes in parliament after choosing to steer clear of Monti’s rather unpopular EU-favouring policies, promising instead to press for change to the EU’s agenda on austerity and focusing on both economic growth and employment. The lower house confidence motion in his proposed cabinet passed on Monday night with 453 votes in favour and 153 against, backed by the Democratic Party, Berlusconi’s People of Freedom and Monti’s Civic Choice. He still needs to win a second round of vote on Tuesday to fully become the Prime Minister. Although Letta’s cabinet will not include Berlusconi as Minister, it does include members from his party and a record seven women, as well as Italy’s first black minister.

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