Italy: Prodi government under seige

Six months after it narrowly defeated the right-wing government of Silvio Berlusconi, Romano Prodi’s centre-left coalition in Italy is hanging by a thread.

An air of permanent crisis surrounds the government, with mounting protests on the streets and deep fissures within the coalition itself. With a majority of just one in the Senate it is possible that the Finanziaria – the budget that is currently being discussed in Parliament – will not be passed. If, as expected, the government attaches a vote of confidence to the budget, Prodi’s coalition could fall.

This political crisis is a reflection of a deep crisis in the Italian economy – so deep that the Fitch and Standard and Poor ratings agencies downgraded Italian government debt to the level of Botswana and Tobago. Despite a slight upturn recently, economic growth is still one of the lowest in the EU and productivity is lagging well behind the main European economies. The Italian economy is particularly suffering from competition from cheap textiles from China.

Total government debt is a massive 107% of GDP while the budget deficit was expected to reach 4% of GDP this year. One of the main aims of the Finanziaria is to get this deficit below the 3% EU Maastricht threshold.

The Italian economy is so weak that some commentators have speculated that an Argentinian type debt default could take place or that Italy could even pull out of the euro. While neither of these things are likely in the short-term, the fact that they are even being talked about underlines the dire economic situation that currently exists.

The previous Berlusconi government unleashed vicious attacks on the working class, in particular on pensions and the casualisation of the workforce. But that was not enough for the Italian capitalist class who want workers to pay the full cost of the crisis. The main employers’ federation, Confindustria, looked to Prodi to pick up the neo-liberal baton from Berlusconi and force through a much bigger programme of anti-working class ‘reforms’.

But even though the Finanziaria includes millions of euros worth of cuts in public spending on health, education and local services, the Italian capitalists are still not happy and are shouting for more. Confindustria have criticised the budget for not being “courageous” enough and not including enough spending cuts. Although the European Central Bank have ’approved’ the budget they want to see even more attacks on public spending.

The Prodi government is under siege from all sides. In the last few weeks professional workers and 20,000 pensioners have taken to the streets in protest. 200,000 people on a demonstration in Rome against ‘precarieta’ (casualisation) also vented their anger against the Finanziaria and the government’s anti-working class programme. Transport workers, public-sector workers and even diplomats have threatened strike action.

Faced with 250 million euro in cuts, thousands of university workers will be striking on 17 November. The president of university rectors said he would have to advise students not to take off their coats when they came to classes and to bring in their own drinking water from home because of the effect these cuts would have on the universities. Buildings could close and spending on research, already one of the lowest in the OECD countries, is being slashed.

In an outburst this week Prime Minister Prodi said that the country was going mad. And he is right. Workers and sections of the middle-class are mad about the fact that while the richest 10% own 43% of the wealth and the profits of the top 36 industrial groups have increased by 70% in the last year, they are facing cuts in services, tax increases and attacks on jobs and conditions.

Opinion polls show that the overwhelming majority of the population are opposed to the Finanziaria and confidence in the government has fallen nearly 20 points since July. Yet, despite all this unrest, the main trade union federations and the Prc (Party of Communist Refoundation) who are in the Prodi government have greeted the Finanziaria favourably. Epifani, the leader of the biggest trade union federation Cgil, has said that it is the “only possible” budget. At the demonstration against ‘precarieta’ Prc speakers claimed that it was because of them that the government was presenting a left-wing ‘redistributive’ budget.

Fearing mass opposition the government, for now, stepped away from an immediate direct confrontation. There are one or two crumbs in the budget in the form of tax cuts and allowances for some sections of workers and pensioners, but these will be outweighed by rises in local government taxes and/or cuts in services and increased charges for health and other services. What’s more, the government is preparing for far more brutal attacks on the working class after the Finanziaria. Rutelli, leader of the Marguerita party, one of the main parties in the government coalition, has outlined a vicious neo-liberal agenda for ‘phase two’ which includes increasing the pension age, ‘reform’ of the health service, cuts in public-sector jobs and a long list of privatisations including local transport, energy and other public services.

The CWI in Italy, Lotta per il Socialismo, is campaigning for the unions to call a one-day general strike, uniting public-sector and private-sector workers, ‘precarious’ workers, pensioners and students against the Finanziaria, in defence of pensions, in opposition to privatisation and against casualisation. By not placing themselves at the head of the movement, the unions and the Prc are allowing the protests to remain dissipated and fragmented.

They are also leaving the way open for the right-wing opposition to seize the initiative. Berlusconi’s centre-right alliance has fallen apart in the wake of election defeats, with the centre-right, christian democratic Udc effectively breaking away. But while the trade union leaders are saying that time “is not right” to go out onto the streets, Berlusconi has called for a mass demonstration on 2 December against the Finanziaria and the Prodi government! Berlusconi was elected in 2001 as a result of disappointment with the then ‘centre-left’ government’s neo-liberal attacks and now he wants to do the same again!

During the elections, millions of people voted for the Prc as a radical working-class alternative to the pro-capitalist parties in Italy. 13% of young people under 25 voted for the Prc in last April’s general election. But, by entering and supporting a government that is pursuing a programme of neo-liberal attacks on behalf of the capitalist class, the Prc will be tainted by their anti-working-class approach. In regional elections in Molise last week, the Prc vote went down compared to the general election.

The Prc should break with these policies and give a political lead to the growing wave of protests and strikes. By taking the initiative, by placing themselves at the head of the movement, by exposing and opposing the Prodi government’s real class nature, by campaigning on a socialist programme of public ownership and democratic workers’ control to end the economic crisis which is rooted in the capitalist profit system, they could lay the basis for the building of a mass workers’ party and a workers’ government that could radically transform Italian society in favour of the working class.

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November 2006