Italy: A new crisis for European capitalism

Italian President, Sergio Mattarella (Senat RP/Polish Senate, Wikimedia Commons)

What was a severe crisis for Italian capitalism, following the rejection in March’s general election of the establishment parties, has now developed into what can be seen as a time-bomb also threatening the European Union and the euro. The Committee for a Workers’ International (CWI) warned, many times, that the attempt to retain a common currency and an integrated economy on a capitalist basis will break down, at a certain stage. Greece would not be the last to threaten its break-up. What is happening in Italy, along with the exodus of the UK, could see a break-up of the eurozone and/or the European Union in its current form.

Italy, with its massive national debt and stagnant economy, was a prime candidate for a new crisis. Its roots lie in the deep dissatisfaction of the country’s working and poor people after decades of no growth and crippling austerity. The two populist parties who ‘won’ last March, and were due to form a government, were the Five Star Movement (M5S) and the Lega. Their ideas included attacks on immigrants and some expressions of extreme nationalism but they also promised a basic income, lower taxes and increased public spending. They filled the vacuum created by the criminally pro-capitalist policies of Italy’s Left in the past, including the Communist Refoundation Party – the PRC – which has all but collapsed.

Neither of these parties advocated leaving the EU and nor did the Finance minister chosen by the two parties, Paolo Savona. But he was known as a eurosceptic and the representatives of the banks and big companies know that pressures to get out of the straight-jacket of the EU could well push a M5S/Lega government towards a break.

From bad to worse

The decision of Italy’s president to go against the elected parties’ decision and impose a different name for finance minister – Carlo Cotterelli, from within the IMF – made things worse and sent the bourses of Europe tumbling.

The governmental crisis develops by the hour, with Italy’s President using his authoritarian, parliamentary Bonapartist powers to reverse decisions and propose new ones.

Apart from the voters’ justifiable anger at the intervention of the president in trying to find a government safe for capitalism and calls for his impeachment, the president’s actions have fuelled greater support for the parties who won the election! The attacks from the most rabid representatives of German capitalism can only inflame the situation. The German EU budget commissioner, Gunther Oettinger, said the collapsing markets in Italy would show Italian voters the dangers of voting for populists.

It is not just in Italy that markets are indicating fears for the future of the EU and, in effect, of their system, in the face of popular anger. The financier, George Soros, warned that the eurozone faces an existential crisis. As Larry Elliott puts it in the Guardian newspaper (London, 30 May): “For years, financial markets have been wondering where the next global crisis will come from. A break-up of the euro caused by ‘Italeave’ would certainly do the trick.” The headline of his piece is, “Monetary union would have survived the loss of Greece. It would not survive the loss of Italy”.

When Greece was being bullied to continue with eye-watering cuts as a condition of further loans, the CWI argued that there was an alternative. It would mean a break with capitalism and spreading the ideas of a socialist alternative across Southern Europe – Spain, Portugal and, not least, Italy.

We stand for a socialist confederation of Europe, including Germany. Fighting against the policies of German imperialism must include appealing to the powerful working class of that country to break with the reactionary policies of its capitalist governments. This is the approach that socialists in Italy have to take – finding a way to express the anger that workers and young people feel against the system and striving to build a new workers’ party to fight for socialism – in Italy and internationally.

The following is an article from Resistenze Internazionali (CWI in Italy):

In the latest episode of the never-ending post election political drama in Italy, the President of the Republic, Mattarella, torpedoed the ‘yellow-green’ coalition government that was about to be formed by the Lega and the Five Star Movement (M5S). Just five days after being nominated as Prime Minister-in-waiting, law professor, Giuseppe Conte, handed in his notice and will now sink back into political obscurity.

These events have unleashed a serious political, constitutional, economic and financial crisis that is already having European and international consequences. At the top, it is a political power struggle which reflects divisions between the different wings of the capitalist class. While sections of small and medium sized businesses in the North of the country have found a political voice in the right-wing populist Lega, big business and more export-oriented companies have seen their latest, most recent, political representation in the form of the Democratic Party (PD) and Forza Italia electorally annihilated. In this situation, Mattarella has become their only hope.

The trigger for Conte’s resignation was Mattarella’s refusal to endorse the economist Paolo Savona who the Lega and the M5S had proposed as Minister of the Economy. Although not entirely unprecedented, the use of the Presidential veto in such a situation is rare, reflecting the deep political crisis the Italian bourgeoisie is facing. Mattarella could not have been clearer about his motivation. Savona’s nomination, he declared, was alarming Italian and foreign investors because of his position on the euro. 

Paolo Savona is hardly a revolutionary. Although the 81 year old  economist has described the euro as an historical mistake and stressed the importance of having a ‘Plan B’, he has not advocated Italy’s withdrawal, and an EU exit did not form part of the Lega/M5S contract for government. In fact, Savona has had a long career as a representative of the establishment, as a government minister, in the banking sector and with Confindustria, the employers’ federation. Yet, under pressure from EU officials, EU government leaders, the financial markets and the rating’s agencies, Mattarella, and behind him the PD and sections of the Italian capitalist class, was prepared to take such a drastic step in the hope of calming the turmoil in the markets and giving the appearance of ‘business as usual’.

Mattarella’s replacement for Conte is Carlo Cottarelli, an ex-IMF official and adviser on government spending ‘reviews’ (cuts) known as ‘Mr Scissorhands’ because of his enthusiastic promotion of cuts and austerity and balanced budgets. These are policies which are the exact opposite of the personal tax cuts and increased welfare benefits the M5S/Lega government were promising. But far from calming the markets, his nomination has led to a further fall in the Borsa, the Italian stock exchange, and a rise in the spreads on government debt to the highest level since the end of 2013. It will be almost impossible for Cottarelli to win a vote of confidence in parliament, resulting in a new election being called, perhaps in the autumn, with Cottarelli leading a virtual government until parliament is dissolved, or even a snap election in July.

What next?

Rather than rein-in the populists, Mattarella’s ‘Presidential coup’ will have played into their hands, strengthening the deep anti-establishment mood which exploded in the 4th March elections in protest at years of economic crisis and corruption. Both the Lega and the M5S have called protest demonstrations for 2 June (Republic Day). According to the Instituto Cattaneo, if the M5S and the Lega were to run together in the next election (not at all certain) they would win around 70% of the seats in parliament. Either way, they are likely to be the biggest winners. The Lega, in particular, has rapidly increased its support (mainly at the expense of Berlusconi’s party, Forza Italia) with one opinion poll giving it 27%, just a couple of points behind the M5S. At the same time, discontent has been rising within the M5S and a challenge to Di Maio’s leadership cannot be ruled out from those who feel that they have been robbed of power and that Di Maio has sold the party to Salvini, leader of the Lega.

“Italy is not a colony,” declared Salvini. “Germans can’t tell us what to do,” he added. This gives an idea of the kind of election campaign that is likely to be waged: ‘Who controls Italy – the people, or the elite, the powers that be, the financial markets and the EU’. While Europe barely registered during the March elections, it is likely to take centre stage, next time. In this situation the Left cannot be seen to identify with either side of the political power struggle. The recently created (and still small and heterogeneous) left coalition, Potere al Popolo, will need to fight to channel a section of the anti-establishment mood in a clear anti-capitalist direction, away from the right-wing nationalist, sovereignist approach which will be dominant during the election campaign. This will not be an easy task, but it is absolutely urgent and is what Resistenze Internazionali will be campaigning for.


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May 2018