Italy: Stop-gap government appointed

No party in Italy has solution for long-term problems of workers and youth

The Italian President, Sergio Mattarella, has acted quickly to try and stem any instability that might have erupted following ex-prime minister Matteo Renzi’s crushing defeat in the constitutional referendum on 4th December. Paolo Gentiloni, the former foreign secretary, has been named as Renzi’s replacement. His proposed government is, in the words of the Italian newspaper Il Fatto Quotidiano, a “photocopy” of the previous coalition between the Democratic Party (DP) and a part of the centre-right with just a slight game of musical chairs. Gentiloni, the third unelected prime minister in 3 years, will be presiding over a government with a limited shelf life and a probable fragile majority.

This is a stop-gap government to avoid immediate elections and the economic and political uncertainty that these could cause for the Italian ruling class. It could be faced immediately with the problem of how to rescue Monte Paschi di Siena (MPS), Italy’s third biggest and oldest bank, which is hovering on the verge of a collapse which, if it were to happen, could trigger a wider banking crisis with consequences not only for Italy but for the entire EU. Even if Brussels and Rome are able to cobble together a short-term solution for MPS which avoids hitting small investors hard, the underlying problems of the Italian banking sector remain with total non-performing loans amounting to 330bn euros (20% of GDP).

Twenty year stagnation

This banking crisis is completely interwoven with the problems of the wider Italian economy which has been stagnating for the last 20 years with productivity at the level of Haiti and Zimbabwe. 29% of the population are at risk of poverty. In the South the figure is 46%. GDP per head is lower than in 1997 and, according to the IMF, the economy will not reach its pre-2008 crisis level until 2025.  

It is these stark figures which, together with endemic political corruption at all levels of government and affecting all the traditional parties, explain the almost 60% ‘No’ vote in the referendum. While some people undoubtedly voted on the constitutional issues involved (abolishing the elected Senate and replacing it with an unelected body of regional politicians with little power over legislation, centralising powers over decisions regarding infrastructure and energy currently made at the regional level) many seized the opportunity to vent their anger and frustration against Renzi who had promised so much but delivered so little. Young people, facing a level of unemployment of around 40% and a bleak future, voted 81% ‘No’.

A general election has to take place by 2018 but could occur some time in 2017. First, however, the electoral law, which was only changed in July this year for the lower house, will have to be changed again. This is justified on the basis that there are now two different systems for electing the Senate and the lower house. In reality, the ruling class are desperate to ditch the current law, known as the Italicum, because it gives extra bonus seats to the biggest party.  Originally envisaged as a way of creating a stable PD government, it now runs the risk of resulting in a majority government of comedian Beppe Grillo’s populist 5 Star Movement, which is neck and neck in the polls with the PD.

Five Star Movement

The 5 Star Movement has had its own share of problems – defections, expulsions, local scandals and, most importantly, the inability of Raggi, the 5 Star mayor of Rome, to form a stable cabinet let alone solve the problems of decrepit local services. But it is still an important electoral protest vehicle for channelling social discontent on both the left and the right. Changing the electoral law may not be a straightforward process and a future 5 Star government cannot be ruled out. This would be an unreliable and unstable government for the ruling class and would have no policies for solving any of the deep problems experienced by working class, young people and sections of the impoverished middle class.

In fact, both the capitalist and the working class in Italy are facing a serious crisis of political representation. It is not clear, however, how this will be played out over the next period. In this uncertain and unstable situation parties can explode into existence and disappear just as quickly.

The level of industrial and social struggles is still at an historically low level. The metal workers’ union FIOM, until recently the last bastion against government and bosses’ attacks, has been hit badly by job losses in manufacturing (25% of industrial production lost since 2008). Together with the other main unions in the sector, FIOM has just signed an agreement with the employers which crosses red lines on wages and national agreements which would have previously been resisted.

Where strikes have taken place they have been mainly localised and amongst precarious and previously unorganised workers such as immigrant workers in the logistics sector and food delivery workers (Foodora) in the gig economy. But these are portents of important future struggles amongst new layers of workers.

Short-term measures may be hastily cobbled together to give the illusion of stability and temporarily ward off political and economic meltdown. Nevertheless, the underlying economic and social problems are so acute in Italy that a crisis with repercussions for the whole of the EU cannot be avoided indefinitely.

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December 2016