Italy: Deeper into crisis

New initiative to build a fighting alternative

On 6 September hundreds of thousands of Italian workers responded to a call by the biggest trade union, CGIL, for a general strike. They demonstrated in more than a hundred towns and cities, protesting against the vicious budget (‘manovra’) pushed through by the government of Silvio Berlusconi under the diktat of the European Union and in response to an escalating crisis in the financial markets. The budget slashes public spending, increases VAT and will destroy some of the most important rights won by workers in previous decades.

Crisis hits

Together with Greece, Italy is being battered by the financial and economic eurozone storm. When the 2008 crisis broke, the Italian economy appeared to be weathering it better than many other countries. There was no banking collapse, and the policy of ‘cassa integrazione’ (temporarily laying off workers on a proportion of their normal wages) meant that unemployment remained below the European average.

Unlike Spain and Ireland, Italy did not appear to go from boom to bust overnight and, for many, 2008 seemed merely a prolongation of the Italian economy’s long-term stagnation. That all changed in July/August of this year when the speculators turned their sights from Greece to Italy and the eurozone seemed to be heading for a Lehman Brothers moment.

The 21 July eurozone summit had agreed another €109 billion package to ‘save’ Greece and the establishment of a permanent stability fund to help other eurozone countries in trouble. But there was no new money on offer and it was clear that the €440 billion fund would be completely inadequate if Italy were to suffer the same fate as Greece and need a bailout.

At €1,900 billion (120% of GDP), Italy’s public debt is 23% of that of the total eurozone – bigger than that of Greece, Ireland and Portugal combined. Italian bond yields (the interest rates that the Italian government would have to pay to finance its debt) shot up to clearly unsustainable levels (above 6%). Desperate to prevent Italy (and Spain) going the same way as Greece – with the threat of default triggering a banking crisis and possibly bringing the whole euro edifice tumbling down – the European Central Bank stepped in and spent billions of euros buying government bonds.

Berlusconi steps up attacks

As usual, there was a price to be paid. In return for the central bank’s action, Berlusconi’s government had to pass a much more draconian budget than it was originally planning. Of course, it is workers and sections of the middle class who will suffer the most. Huge cuts in public spending, especially to local councils, will decimate services. VAT increases will hit the poorest the hardest. Attacks on workplace rights will make it easier for bosses to sack workers.

All of this was meant to placate the markets, with a pledge to balance the budget by 2013. The budget ‘has saved Italy’, said Berlusconi. But, within hours of it being passed, yields on government bonds were at 5.6%, and Moody’s credit agency was considering a downgrade of Italy’s debt rating. Voices in Europe and Italy called loudly for another, even more savage, budget that would wield the axe even further against public spending, privatise more public services and increase the pension age. On Monday, 20 September, Standard and Poor’s reduced Italy’s rating – from A+ to A.

Political crisis is feeding economic crisis and vice versa. There is huge scepticism that a prime minister mired in sex and corruption scandals, and a dysfunctional government wracked with divisions, will implement the measures which the EU, financial markets and the Italian bosses’ organisation, Confindustria, deem necessary to stem the crisis. The budget process itself was a complete farce with the ‘manovra’ changed five times. Berlusconi resisted policies, such as a wealth tax, which would upset his supporters. His coalition partners, the Lega Nord, protested at local authority cuts (as this is where they have their main base) and at possible rises in the pension age.

Parties in crisis

Both governing parties are in crisis. There is rebellion in Berlusconi’s own party, the PdL (Popolo della Libertà), with sections of it aware that he is now totally discredited and openly calling for him to go. (Berlusconi’s ratings have reached a new low of 24% in the third week of September.) But he has made it clear that he is not prepared to stand down of his own volition, even as the scandals mount and newspapers are full of transcripts of nauseous phone calls between him and Giampaolo Tarantini, the man charged with procuring women for his sex parties.

The ranks of the Lega Nord are in uproar because the cuts to local councils are seriously eroding its support. Umberto Bossi is struggling to keep the party together and his leadership is being challenged by Roberto Maroni. Mounting pressures could force the Lega Nord to pull the plug on Berlusconi before 2013 (the end of this government’s term).

For Confindustria, the best outcome would be a national unity government (‘larghe intese’) or a ‘technical’, non-party, administration. Alessandro Profumo, former head of Italy’s biggest bank, Unicredit, is already being groomed as a possible leader of such a government. The hope is that a crisis government of this kind would bring the unions on board in the name of ‘national sacrifice’, perhaps with a limited wealth tax offered in return for more brutal attacks on workers and sections of the middle class.

Workers want a fight

The fantastic response to the 6 September general strike showed how workers are prepared to resist those attacks. Even though the CGIL called the strike immediately after the summer holidays with no time to organise workplace meetings, the number of workers striking and demonstrating was impressive. Significantly, some rank-and-file members of the CISL federation joined the strike even though their leader Raffaele Bonanni had called it ‘demented’.

Many workers voiced a lack of confidence in the CGIL leaders. Once again, they are pursuing their usual tactic of bringing the workers out on strike to vent their anger and frustration before retreating into talks together with right-wing union federations, the government and the bosses. Their ‘strategy’ is now for two separate demonstrations in different sectors and then a national demo at the end of the year.

The opposition Partito Democratico (PD) successfully added a last minute amendment to the budget calling for a review of article 8 of the ‘manovra’ which would make it far easier to sack workers and which even the conciliatory union federations – CISL and UIL- had to condemn. Clearly, this amendment is aimed at taking the steam out of the movement. This will not necessarily be the outcome, however.

The metalworkers’ union, FIOM, will soon begin negotiations on its national contract and could once again be propelled to the forefront of the struggle. If, as looks likely, the crisis deepens and attacks on workers escalate, FIOM could become the focal point for industrial and social resistance as it was in October 2010, but this time on a much broader level.

The slogan of Controcorrente (CWI Italy) – ‘We want a Left (force) like the FIOM : With the workers, Combative and United!’ – gained an important echo on the demonstration on 16 October last year. Now Giorgio Cremaschi, president of FIOM’s central committee, has called a national meeting on 1 October to discuss the question of a political alternative. Controcorrente has been invited to attend. We are proposing that the meeting should agree to establish an independent pole of attraction to the left of the so-called centre-left. The latter includes the PD, the Sinistra Ecologia Libertà of Nicchi Vendola and di Pietro’s Italia dei Valori and is looking to replicate the ‘Olive Tree’ coalition of the failed government of Romano Prodi.

The failure of the Olive Tree paved the way for Berlusconi and the collapse of the PRC (Partito della Rifondazione Comunista). We are also calling for the setting up of local meetings and coordinating bodies. The national meeting is attracting a lot of interest. Against the background of a growing economic, political and social crisis, initiatives of this kind indicate the future potential for the development of a workers’ party which is so badly needed in Italy in this critical period.

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