The 'Europe factor' in Italy's unpredictable election

Sergio Arzeni is the President of International Network for SMEs and Former Director of the OECD Centre for Entrepreneurship, SMEs and Local Development

With only weeks to go until Italy’s March 4 election, it is plain that ‒ thanks to a new electoral law ‒ it is going to be impossible to have a clear winner. None of the three frontrunners, Silvio Berlusconi, Matteo Renzi or the Five Stars Movement’s Luigi Di Maio, can be expected to poll more than 40% of the voting.

Berlusconi, now 81 years old, is back at the centre of the Italian political game, even though an outstanding conviction makes him ineligible to be a prime minister ever again. To underscore his pro-EU stance, he has hinted that Antonio Tajani, the current President of the European Parliament, could be designated as his PM. But Berlusconi’s allies, Matteo Salvini and Giorgia Meloni, who between them command more votes than his own Forza Italia party, are furiously anti-Europe and adamantly oppose membership of its single currency, the euro. They themselves disagree on most other fundamental issues, but agree on promising more spending, particularly for pensions despite the fact that at 16% of GDP, Italy has the highest expenditure for pensions than any other European country except Greece.

The 42-year old former premier Renzi is plummeting in the opinion polls, and is much less popular than Paolo Gentiloni, his successor as PM. Renzi is perceived as arrogant, cynical and unreliable because of the way he humiliated dissenting voices in the governing centre-left Democratic Party, rewarding loyalty over competence, bashing the trade unions while flirting with bankers. He has also been blamed for increasing public debt by about €300 billion and failing to take advantage of the ‘magic moment’ of low oil prices, low interest rates, a weak euro and quantitative easing by the European Central Bank.

Most policy analysts now suggest that if the right-wing coalition fails to reach 40%, Berlusconi will abandon his allies and try to form a new government with Renzi’s PD party, thus keeping the current Premier Gentiloni at the helm.

That outcome would certainly have the EU’s blessing, as it would constitute much the same bulwark against Eurosceptic populism as the Christian Democrats offered against communism in 1948.

For its part, the Five Stars Movement is being depicted as the new communism, with the mainstream media actively campaigning to discredit its leaders on the grounds that they are incompetent and inexperienced. The proof offered of that is that there has been no visible sign of improvement in the management of the city of Rome in the 18 months since their electoral victory there.

Yet even though it is assailed by criticisms from all sides, the polls are still showing Five Stars to be Italy’s leading party, with support for it hovering around 30%, versus 22-23% for Renzi’s PD and 15-16% for Berlusconi’s Forza Italia.

So what is the best explanation for this? In the first place, the success of Five Stars is largely a reflection of the refusal, or incapacity, of the country’s traditional political parties to behave differently than in the past by abolishing the privileges enjoyed by politicians, stamping out corruption and reducing public debt.

Secondly, the 82% of young voters who opposed the constitutional referendum proposed by Renzi a year or so ago are increasingly angered by the way political parties favour older people merely because they outnumber the young in a ratio of two to one.

Italy is now suffering a serious brain drain as something like 150,000 talented young people are leaving the country every year in search of opportunities elsewhere. To younger voters, the 31-year old Luigi Di Maio looks far more reliable than Berlusconi and Renzi, both of whom are seen as having under-performed during their tenure in office.

Thirdly, not a single member of the Five Stars movement has so far been involved in a corruption scandal, whereas plenty of politicians in the other parties have been tainted. Furthermore, the Five Stars leadership is committed to making honesty pay and to promoting entrepreneurship and the growth of small businesses and start-ups, whereas the other parties stand accused of favouring rent-seeking big business corporations and financiers.

These latter allegations not only take aim at Italy’s ‘establishment’ but are also directed against EU policies. The Five Stars Movement has nevertheless softened its hostility to Europe under Di Maio’s leadership: It now accepts the need to remain within the eurozone and has abandoned its earlier Euroscepticism to such a point that it wants to join the most pro- Europe group in the European Parliament, the liberal democrat ALDE, although its bid has been refused by the group’s Belgian president, Guy Verhofstadt. That looks likely to prove a big mistake.