Biodun Iginla, BBC News

Biodun Iginla, BBC News
Showing posts with label Sergio Mattarella. Show all posts
Showing posts with label Sergio Mattarella. Show all posts

Thursday, August 8, 2019

ANALYSIS: What comes next after Italy's ruling coalition breaks down?

August 9, 2019  02H37  GMT/ZULU
ROME - The leader of Italy’s ruling League party, Deputy Prime Minister Matteo Salvini, has declared that the governing coalition has broken down after months of internal bickering and that the only way forward is to hold fresh elections.
FILE PHOTO: Italy's Minister of Labor and Industry Luigi Di Maio, Prime Minister Giuseppe Conte and Interior Minister Matteo Salvini leave at the end of a news conference after a cabinet meeting at Chigi Palace in Rome, Italy, October 20 2018. REUTERS/Remo Casilli
He said parliament could be convened next week to take the required procedural steps. The League’s coalition partner, the anti-establishment 5-Star Movement, accused Salvini of “taking the country for a ride” and said it was ready for elections.

IS THE GOVERNMENT OVER?

Not yet. Prime Minister Giuseppe Conte will have to go before parliament and call for a vote of confidence in his government. If he loses the make-or-break vote, then he has to resign. If he does not, he can carry on. Alternatively, he could resign without waiting for a confidence vote.

IS ITALY GOING TO EARLY ELECTIONS?

Early elections are likely but not certain. Only the head of state, President Sergio Mattarella, has the power to dissolve parliament. He will call a snap vote only if it proves impossible to form a new government. By convention, Mattarella has to consult with the presidents of the lower house, the Chamber of Deputies, and the Senate as well as with all the main parliamentary party leaders before dissolving parliament.

CAN A NEW GOVERNMENT EMERGE WITHOUT ELECTIONS?

Yes, but it will be difficult to find a new coalition. One possibility could be a combination of the anti-establishment 5-Star party and the opposition Democratic Party (PD). Together they could muster a one-seat majority but would likely need help from smaller parliamentary groups or life senators to ensure stability. But several MPs from both 5-Star and PD have opposed the idea in the past. These include former PD leader Matteo Renzi who still wields strong influence over his party.

WHEN WOULD FRESH ELECTIONS BE HELD?

It depends on when the parliament is convened for a vote of confidence and how long it takes to explore other coalition options. Mattarella has made it clear that he wants a government in place to approve the 2020 budget in the autumn, which means elections must be held by October or wait until next year.
If elections are not held by October and no alternative coalition is formed by the autumn, the president could try to install a stopgap administration of technocrats, though this would still need to secure the confidence of parliament.
Italy has never held elections in autumn since World War II. It has had several “technocrat” governments in the last 25 years.
ADVERTISEMENT

WHAT WOULD BE THE LIKELY OUTCOME OF A NEW VOTE?

Since last year’s national elections, when 5-Star won the biggest share of the vote, the League has doubled in popularity according to opinion polls. It now commands 34-39% of the vote, according to the polls, suggesting it would easily be the largest party. Should it miss out on an absolute majority of seats, Salvini could call on its former centre-right allies of Forza Italia and Fratelli d’Italia to form a new government.
Posted by at No comments:
Labels: , , , , , , ,

Thursday, May 31, 2018

Analysis: Italy needs to be handled with care

Panic, but not yet
by Elodie Bagnol and Biodun Iginla, News Analysts, The Economist Intelligence Unit, Rome

It can find a way out of its immediate crisis. But Italy’s long-term outlook is more worrying

DURING the worst days of the euro-zone debt crisis, the fear was that bond-market turmoil in places such as Greece and Spain would spread to Italy. The biggest debtor in Europe would be too big to bail out, so Grexit might lead to Italexit and the break-up of the euro. Now the attention is focused directly on Italy itself.
In March half of Italian voters plumped for two populist parties that until recently favoured leaving the euro: the maverick Five Star Movement, which triumphed in the poorer south; and the xenophobic Northern League, which scored well in the richer north. Neither had fought the election campaign on a promise to leave the euro (the opposite, in fact). And as the two tried to form an all-populist cabinet, investors hoped that the sobering prospect of power, together with EU deficit rules and the behind-the-scenes influence of the Italian president, would allow Italy to keep muddling along.

Latest stories

See more
Such hopes took a nasty jolt on May 27th. The populists named as finance minister Paolo Savona, an economist who does indeed think that Italy should quit the euro. President Sergio Mattarella vetoed Mr Savona (see article). The populists threatened for a moment to impeach him and even hinted at a march on Rome—an allusion to Benito Mussolini’s blackshirts in 1922. Amid talk of a political, constitutional and economic crisis, bond yields spiked and global stockmarkets shuddered (see article).
In the short term such fears are overblown. Italy is less vulnerable to panicky investors than many realise. Its economy, let alone its democracy, is nowhere near collapse. But deep-rooted weaknesses are worsening and becoming harder to fix. To avoid an eventual explosion, Italy needs careful handling and a change in mindset—of its and Europe’s politicians alike. The worry is that neither seems likely.
Panic, but not yet
Whatever the outcome of closed-door scheming in Rome this week, Italy is likely to get its first all-populist government—if not now, then soon, after another election. That could lead to spendthrift policies. The populists’ plans include a flat tax that would lower revenues and a universal basic income that would raise expenditure; both parties want to wind back previous pension reforms. This could cost as much as 6% of GDP annually—largesse that Italy cannot afford with its public debt at 132% of GDP, the highest in the world after Japan and Greece.
Yet Italy is not Greece. In 2017 the government ran a budget surplus before interest payments of 1.7% of GDP. The average maturity of its debt is about seven years. Given that much of its borrowing is from its own residents, and that the current account is in surplus, Italy is not particularly vulnerable to a run on its bonds by foreign investors. The ECB is still buying its bonds under the quantitative-easing programme, albeit at a reduced rate. Short of a large and prolonged risk premium on its bonds, Italy’s debts are serviceable.
Italy’s real problem is the debilitating combination of chronically low growth and high public debt. Low growth means living standards are stagnant and Italy cannot work off its debt easily; high debt means it cannot use fiscal stimulus to boost the economy, especially if there is another downturn. Even with the global upswing of recent years, Italy remains one of Europe’s worst-performing economies.
Though populists rail against austerity, years of budgetary restraint give them a bit of room to introduce their policies. But doing so at any scale requires them to shift the burden of taxes and expenditure, not add to it. Italy already spends more on cash transfers, 20% of GDP, than any other rich country. If it wants to introduce a universal basic income, it needs to cut pensions, not increase them. Its tax wedge, the gap between what employers pay and what employees take home, is one of the highest in the OECD. This contributes to joblessness. Just 69% of Italian 25- to 54-year-olds are in work, compared with 74% in Spain and 81% in France. Cutting taxes on income and labour, though, will require Italy to raise them elsewhere, ideally on property and consumption.
Quitaly
A bigger problem is that the populists have little idea how to deal with the myriad causes of Italy’s stagnant productivity: a rigid, dual labour market; uncompetitive product markets; the proliferation of family-owned firms that do not grow; a banking system hobbled by bad loans; an underperforming education system; and, more recently, a brain-drain. London is now a sizeable Italian city.
Fixing all this requires years of difficult structural reforms, now all the more difficult after successive governments have wasted the time and opportunity provided by the global recovery and the ECB’s ultra-low interest rates.
The same is true of the euro zone as a whole. Its “banking union” is incomplete; its capital markets are underdeveloped. And all ideas for a substantial budget to help countries in the straitjacket of the euro adjust to shocks have been rejected. Creditor countries, led by Germany, have said that they will not accept greater risk-sharing without greater risk-reduction. Italian populists’ call to do away with budgetary restraint only deepens Germany’s belief that Italy cannot be trusted.
A founder of the EU, Italy was long one of the most Europhile members; it is now among the most Eurosceptic. But the populists know that most Italians, even those who voted for them, do not want to see their savings slashed and their jobs destroyed by leaving the single currency. That is why they have toned down their anti-euro rhetoric. But they do not understand that living in a single currency requires a flexible economy. Similarly, Germany has yet to accept that, if it is to thrive, the euro zone must have more risk-sharing.
Inadequate reform and incompatible visions of the euro’s future are a poisonous and unsustainable combination. If the turmoil in Italy and the markets’ fright have served as a reminder of such dangers, and spur reform both in Rome and Brussels, then some good may come of the mess. The risk is that it will make any reform harder, if not impossible.
Posted by at No comments:
Labels: , , , , , , , , ,

Sunday, May 27, 2018

Italy plunges into political crisis after govt talks collapse


by Elodie Bagnol and Biodun Iginla, France24, Rome


    © AFP / by Terry DALEY | Prime minister candidate Giuseppe Conte, picked by the Five Star Movement and the League, stepped aside, making a temporary technical government seemingly inevitable

    ROME  - 
    Italy could be forced to hold new elections after Giuseppe Conte gave up his bid to form a government following the collapse of talks with the president over including a eurosceptic economy minister in his cabinet.
    Conte, 53, a lawyer and political novice, picked for prime minister by the anti-establishment Five Star Movement and far-right League seeking to create a coalition government, was given the green light to form his cabinet on Wednesday, but he still had to present a list of ministers that the head of state would agreed to before his government could seek approval in parliament.
    "I have given up my mandate to form the government of change," said Conte to reporters after leaving failed talks with President Sergio Mattarella.
    Conte's decision to step aside leaves Italy in a political crisis nearly three months after March's inconclusive general election.
    Following the collapsed talks, Mattarella has summoned Carlo Cottarelli, former director of the International Monetary Fund's fiscal affairs department, for talks on Monday, with a temporary technical government now looking inevitable as Italy faces the strong possibility of new elections in the autumn.
    Cottarelli, 64, worked at the International Monetary Fund from 2008 to 2013 and became known as "Mr Scissors" for making cuts to public spending in Italy.
    - Savona choice sinks deal -
    Mattarella confirmed that the nomination by the Five Star Movement and the League of Paolo Savona for economy minister saw the end of Conte's brief mandate.
    In his latest book, "Like a Nightmare and a Dream", 81-year-old Savona calls the euro a "German cage" and says that Italy needs a plan to leave the single currency "if necessary".
    "I accepted every proposed minister apart from the minister of the economy," Mattarella told reporters.
    A former judge of Italy's constitutional court, Mattarella has refused to bow to what he saw as "diktats" from the two parties which he considered contrary to the country's interests.
    He had watched for weeks as Five Star and the League set about trying to strike an alliance that would give Italy's hung parliament a majority.
    The president said that he has done "everything possible" to aid the formation of a government, but that an openly eurosceptic economy minister ran against the parties' joint programme promise to simply "change Europe for the better from an Italian point of view".
    "I asked for the (economy) ministry an authoritative person from the parliamentary majority who is consistent with the government programme... who isn't seen as a supporter of a line that could probably, or even inevitably, provoke Italy's exit from the euro," he added.
    Mattarella said Conte refused to support "any other solution" and then, faced with the president's refusal to approve the choice of Savona, gave up his mandate to be prime minister.
    The leaders of Five Star and the League, Luigi Di Maio and Matteo Salvini, were infuriated by Mattarella's refusal to accept Savona, a respected financier and economist.
    "Why don't we just say that in this country it's pointless that we vote, as the ratings agencies, financial lobbies decide the governments," a livid Di Maio said in a video on Facebook.
    "When the people give more than 51 percent of consensus to political forces that want to represent the interests of the Italian people, they find a way to block everything. It's unacceptable."
    Salvini, who was Savona's biggest advocate and a fellow eurosceptic, said on Sunday that Italy wasn't a "colony", and that "we won't have Germany tell us what to do".
    He told supporters: "Either we can work to give a future to this country and to our children, or else, in a democracy, if we are still in a democracy, there is only one thing to do: give the floor to the Italians."

    Posted by at No comments:
    Labels: , , , , , , , , ,
    Subscribe to: Posts (Atom)