The Italian Crisis: La resa di Conte

by
Robert Waldmann
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(literally the surrender of Conte but a reference to The Big Gundown).

updated to comply with the Italian criminal code (which forbids vilifying the President of the Republic)

I have to write about Italian politics, because everyone is (and I live in Rome) but you don’t have to read it.

I will try one paragraph of background. In the last election angry Italians gave a very thin majority to two extremist parties the movimento 5 stell and La Lega Nord is a fairly far right party focused on expelling immigrants (I have a permesso di soggiorno so I’m not worried). It started as Northern separatist movement denouncing the central government. It has become nationalist, because racists will racist. The movimento 5 stelle is more exotic. They are very very angry about something but it isn’t clear what. The party was founded by a stand up comic and basically started as a blog (really). The two parties are very different in many ways, but both hate Eurocrats and reject austerity. They presented a program based on a flat tax and universal basic income (give all the money to the rich and the poor). They proposed that the European Central Bank pay for all this by giving Italy 250 billion Euros (this is not a joke, also don’t try this at home kids).

But the key stumbling block preventing implementation of this coherent reasonable program was that the Lega insisted on breaking with the past by nominating Paolo Savona, an 81 year old economist Minister of the Treasury. He has written that Europe should have a plan B which allows countries to stop using the Euro. This heresy was unacceptable Sergio Mattarella the President of the Republic who must nominate that cabinet (which must obtain the confidence of both houses of parliament). It is clear that Mattarella has the constitutional authority to refuse to nominate a minister. This veto power is rarely used and, in previous cases (eg Berlusconi trying to name his amazingly corrupt lawyer minister of justice) a compromise was reached. But the Lega & the 5 Selle are not the compromising types. Importantly, Mattarella does *not* have the authority to call early elections if there is a majority in parliament (which there is). Equally importantly, that just means he has to say he can’t find a majority and there will be early elections.

Mattarella decided to deal with the angry nationalists who must suspect him of undemocratic globalism by asking top IMF economist Carlo Cottarelli to form a caretaker government (you have got to be kidding me — next post (above) will be on Cottarelli, with whom I agree). Basically Italians will be asked to choose between austerity and obedience to unelected bureaucrats in Brussels, or semi-fascists, or the really crazy party. This is not an ideal situation.

The Quirinale (White House but much larger) explains Mattarella decision in a press release translated into English (although their English really reads as Eurenglish the English as a second language privileged by Eurocrats.

The key point is that the Euro is a core institution (like democracy, an independent judiciary and a free press ). Questioning the Euro is unacceptable to the President who is not supposed to meddle with policy, but to stick to protecting the fundamental institutions of the Republic (one of which turns out to be the Stability and Growth Pact).

IIRC the president of Portugal also refused to nominate a government with a majority because, he said, it was anti European Union. It’s almost enough to make me an anti-globalist.

There was, sadly, a long tradition of over-ruling parliamentary majorities which the alternative was to leave the gold standard. Somehow Europe has found its way back to the 20s and 30s. This time it probably won’t end so badly.