Italy's Vote Against Austerity

Those pesky European voters have done it again. Last spring the Greek electorate, choked by recession and austerity, nearly gave the reins of government to a hard-left, anti-reform coalition.  Now it’s Italy’s turn to throw the plans of the Eurozone high command into disarray. As results of the two-day parliamentary election began streaming in on Monday, Brussels, Berlin, and Frankfurt (seat of the European Central Bank)—not to mention the global markets—looked on in horror. The centre-left coalition led by Pier-Luigi Bersani and his Democratic Party (made up of reformed Communists and other modernized leftists) could not put together a majority in the Senate, even if it went into alliance with the centrists backing the outgoing prime minister, Mario Monti. The right-wing coalition led by Silvio Berlusconi had come within a whisker of outright victory. Most shockingly, M5S (the “Five Star Movement”), an anti-establishment and anti-euro party founded on the Internet and led by enraged comedian Beppe Grillo, had received more votes than any other single party.

It’s hard to talk about the day after in Italy without using words like “ungovernability,” “gridlock,” or even “chaos.”  The country’s two parliamentary bodies—the Lower House and the Senate—have an equal say in the legislative process. The way the electoral law works, the slimmest of wins in the popular vote gives the coalition of parties that achieves it—in this case, the centre-left coalition led by Bersani’s Democratic Party, who won by a mere 0.3 percent over Berlusconi—a majority of seats in the Lower House.

But in the 315-seat Senate, the bonus for the winning party is allotted region by region. There, Berlusconi’s PdL-led coalition came in first with 116 members, to 113 for Bersani’s coalition. Grillo’s insurgents are at 54 seats and Monti’s sober centrists, with under 10 percent of the vote, are at a miserable 18, more than 20 short of what they would need to control a majority in alliance with the centre-left. Many pundits are already talking of new elections in May, after parliament elects the successor of Giorgio Napolitano, the 87-year old president of the Republic. And German officials are already warning the Italians to avoid such an outcome. (Witness the statement of Philipp Missfelder, a high-ranking member of parliament for Angela Merkel’s CDU, who told La Reppublica newspaper on Tuesday that “Italy is not Greece” and that “the Eurozone cannot afford a Greek-style scenario in Italy with fresh elections.”)

There are several things to note about the results of the Italian elections. The two most remarkable are the dogged resilience of Berlusconi and the meteoric rise of Grillo. Berlusconi, a shameless and indefatigable campaigner, despite his 76 years, came from 20 points behind to within 124,000 votes of actually winning the election. It was a dramatic re-run of the 2006 race, when he had again been written off as politically dead and had come to within 0.1 percent of beating Romano Prodi, whose fragile government coalition then lasted only two years before Il Cavaliere returned to power.

But this time it was an even more improbable comeback. After all, this was the man who had been forced to resign ignominiously in November 2011, after a third failed term as prime minister, because international markets had lost all faith in his stewardship and Italy was on the threshold of a Greek-style debt crisis. Since then, and until he decided to withdraw his support from the Monti government in December, he had mostly attracted media attention for his never ending (though rarely troubling) legal troubles. He is currently the accused party in two trials, one for using the services of an underage prostitute, the other for abusing the powers of his office. And let’s not forget that last October he was actually convicted of tax fraud and sentenced to four years in prison as well as a five-year ban from politics (he is appealing).

But the rise of Beppe Grillo and the M5S, which received over 25 percent of the vote, is even more astounding. Grillo, a 64-year old comedian with a keen eye for the plumbing of business and political scandals, build his movement in just three years around his extremely popular blog. He had taken to the internet after being excluded for years from state and private (i.e., Berlusconi-owned) television, where his brand of politically biting satire was not welcome. Making the most of Italians’ frustration with the lies, self-dealing, and legal impunity of the country’s political elites, Grillo is now the kingmaker of Italian politics. He himself was not elected, because of a conviction for manslaughter in 1980, but the Lower House and the Senate are filled with dozens of his disciples—political novices all. It remains to be seen how they will react to the power moves and pressures of their much more experienced colleagues. For now, however, Grillo has ruled out participation in any governing coalition.

Despite their obvious, yawning differences, what was common to Berlusconi and Grillo’s electoral campaigns was a hostility to the euro and its consequences. The billionaire former prime minister attacked the austerity measures imposed by the big loser of the election, Mario Monti, and painted him, personally, as a stooge of the German chancellor, Angela Merkel. Grillo has spoken out in favor of a referendum on euro membership. This in the midst of the longest recession the Italian economy has faced since World War II, which followed a decade of near-zero growth.

That is Italy’s real problem, more so that its public finances. With a public debt at 120 percent of GDP, it is hard to argue that fiscal retrenchment was not necessary. But pushing it too far, too fast, as the Berlin-Brussels-Frankfurt lobby has demanded of Italy and others, has meant that structural reforms that would have given new prospects to the country’s economy have been unable to produce results. The conflation of austerity with reform, as Wolfgang Münchau noted this week in the Financial Times, has also led to the loss of popular support for necessary structural changes, because the public associates reform with cuts in wages and pensions and tax hikes.

As they hunker down in rejuvenated agony to watch the coming machinations in Italy, Europe’s top decision-makers can bemoan the insanity of voting again for a man like Berlusconi, or of supporting a comedian with no real political program, and some pretty questionable views (like his doubts about the mandatory vaccination of children). But they must also face up to a truth the avoidance of which has prevented the effective tackling of the euro crisis: that austerity is not reform, that excessive austerity undermines reform and that the stubborn insistence on it is leaving the European South, and especially its young, unemployed and hopeless about the future. Not exactly a winning strategy.

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