Italy: Government crisis could stifle recovery

Rome, Brussels If there is one thing Italy cannot afford at the moment, it is a crippling power vacuum: a nine percent economic slump, national debt rises to one and a half times economic output, companies are unproductive, health and education systems are underfinanced. But Italy’s ex-prime minister Matteo Renzi has now pushed his country into this power vacuum when he left the ruling coalition with his small party Italia Viva.

Prime Minister Giuseppe Conte tries to avoid new elections, speaks to possible new supporters who could secure him a majority in the Italian parliament. Renzi and his two ministers terminated the alliance with the Social Democrats and the Five Star Movement on Wednesday evening because they could not agree on the amount and use of the European aid money, which Italy’s economy urgently needs. The payment of the same aid could now be delayed considerably.

There is now also a big question mark behind the next national Corona aid package for companies particularly affected by the pandemic. The companies that were already hard hit would suffer. The companies had hoped for a quick upswing after the sharp slump last year. That could now be strangled by political squabbles. Even the specter of new elections is already haunted, which could bring the country a broad right-wing majority – with the League of ex-Interior Minister Matteo Salvini as leader.

“The clock is ticking for Italy,” says Markus Ferber, economic policy spokesman for the EPP group in the European Parliament. The later Rome submits a satisfactory development plan to Brussels, the longer it will take for the funds to arrive in Italy – “those responsible in the Italian government should be aware of this”.

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There is great concern in the EU about the break in the coalition. “Especially in the pandemic it is important that Italy has a government capable of acting,” says the CSU politician.

Debts grow by 22 million euros – per hour

The political crisis hits Italy in an economically extremely fragile phase. The country has still not recovered from the euro crisis in more than ten years. According to estimates by the International Monetary Fund (IMF), Italy’s economic strength will not have reached the pre-crisis level of 2008 even in 2025.

The national debt has stubbornly stuck to around 135 percent of economic output in recent years. None of the governments has managed to get down from the huge mountain of debt, which is now over 2.5 trillion euros.

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Then came the pandemic. Debt grows and grows – currently by 22 million euros per hour. As a result of the corona crisis, it will rise to more than 160 percent of gross domestic product, the IMF estimates. Italy would soon be playing in a league with countries like Eritrea and Lebanon. In Europe only the Greeks exceed this debt level.

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The eighth largest economy in the world was hit particularly hard by Corona. More than 80,000 people have died from or with the virus. In relation to the number of inhabitants, only Belgium has an even higher death rate worldwide. The military vehicles that transported coffins en masse through Lombardy in the spring are etched into the country’s memory forever.

The lockdown that Premier Conte imposed for more than two months in March was one of the toughest in Europe – including a production freeze for most companies. The manufacturing industry has recovered to some extent and is optimistic about the coming months.

Tourism, which normally contributes a good 14 percent to the gross domestic product with its suppliers, almost came to a standstill last year. The industry association Federturismo is assuming a decline in sales of 80 percent compared to the previous year for hotels alone.

Due to the political quarrels, the payment of what is now the fifth Corona aid package for industries particularly suffering from the pandemic could be delayed. The government wants to adopt a supplementary budget for this, around 24 billion more than previously are planned, including for the procurement of further vaccines. However, experts assume that a resigned government would no longer be able to propose such a large sum to parliament.

The great hope rests on further vaccines

Italy’s economy contracted sharply last year. The latest estimates assume a minus of almost nine percent. For this year, the economists from the statistical institute Istat expect a plus of four percent. However, the unemployment rate is also expected to rise, from 9.4 to eleven percent.

One of the reasons for this: In April, the cancellation ban imposed by the government at the beginning of the pandemic expires. After all, private consumption makes optimistic: While the Italians initially put their money aside during the crisis and drove the savings rate of private households to 19 percent at times, they have been spending more again since September. The stricter corona regulations in winter mainly affect retailers again.

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The corona vaccinations started at least give hope that the pandemic will end soon. Italy wants all its citizens to be immunized by autumn. This calculation will only work if the vaccine candidates from Astra-Zeneca and Johnson & Johnson are also approved in the summer. There are many uncertainties, to which the political one is now added.

“The current economic situation in Italy is characterized by the pandemic and uncertainty about the future”, says Jörg Buck, head of the German-Italian Chamber of Commerce in Milan. “What our companies need now is a strategy for the reconstruction plan and its implementation so that Italy and its European partners, especially Germany, can return to growth.”

Italy urgently needs the money from Brussels to tackle decades-old problems: the health system is just as underfunded as education. Business productivity is far too low. The administration works too inefficiently and too analog. Italy ranks at the bottom of the Digital Economy and Society Index, only ahead of Romania, Greece and Bulgaria. Digital signatures are hardly possible, there is a lot of paperwork at the offices.

The judiciary works too slowly, and many processes simply become statute-barred. At the same time, youth unemployment is almost 30 percent.

Renzi flashed a glimmer of hope

“Without national plans, which reforms are to be financed with 200 billion EU funds in Italy, and appropriate controls, no money can flow,” warns Andreas Schieder, head of the Austrian Social Democrats delegation in the European Parliament.

It is worrying for the entire Union if a country like Italy cannot benefit from the gigantic aid program – “and so falls behind in the reconstruction”. The inadequate productivity rates could not be remedied by European monetary and fiscal policy alone, warns the FDP MEP Moritz Körner.

Renzi let through at least one glimmer of hope, despite all the dissent: As soon as the government’s reconstruction plan is voted on, his party Italia Viva would vote in favor. It will soon become clear whether Prime Minister Conte can really still trust his old partner: the use of EU aid will be debated in parliament on Monday.

Italy has proven over decades that it has always been able to spend EU money despite regular government crises, says MEP Körner. But even if Parliament were to wave through the spending list, there is fear in Italy that Brussels will not be able to pay off in the middle of a vacuum.

More: Italy must avoid new elections at all costs – one comment

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Italy’s Prime Minister Conte must avoid new elections

Italian Premier Giuseppe Conte

If the non-party Conte wants to prevent new elections, he must quickly find new supporters in parliament. Italia Viva provides 25 of the 630 parliamentarians in the lower house and 18 of the 315 senators.

(Photo: Reuters)

Rom Matteo Renzi has to endure a lot of malice on Twitter. Under the hashtag #Renzivergogna (in German: Renzi Schande), the 46-year-old is shown either as a riot in the US Capitol or as a baby with building blocks – which are not from Lego, but from “L’ego” – Italian for “the ego “.

The former prime minister has dominated Italian politics for weeks: with threats, ultimatums and personal attacks on his successor Giuseppe Conte. It is still a mystery what the leader of the dwarf party Italia Viva actually wants. What is clear is only what he does not want: to continue to support the current government. On Wednesday evening, Renzi dropped his political bomb – and withdrew his two ministers from the cabinet after the dispute over EU aid. In the middle of the health crisis, which has already caused almost 80,000 corona deaths, Renzi is now giving the country a political one.

The current situation is difficult to convey to the Italian people. According to a survey by the polling institute Ipsos, 46 percent of citizens do not understand the government crisis. 73 percent of those surveyed believe that Renzi is only pursuing his personal interests – or those of his party. Just 13 percent think that the ex-prime minister is acting in the interests of the country.

The senator from Florence was right in his criticism of the content: Italy’s first draft for the EU reconstruction fund was not very ambitious, included too many old projects, and had no clear focus on investments. The new version that the cabinet decided after Renzi’s Christmas threats is definitely the better one. Renzi could have booked that as a success. But he bit into the European Stability Mechanism (ESM), the billions of which he wanted to tap for the health system. It was clear from the start that the co-governing five-star movement would not move away from its no to the ESM.

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Right block at 46 percent

Prime Minister Conte now has to find a new majority in both chambers of parliament. Even if there are MPs there who do not belong to any parliamentary group, some opposition politicians are likely to be needed for an “alliance of those responsible”. Alternatively, there is already speculation about a non-partisan government of experts, which President Sergio Mattarella could convene.

If none of these scenarios work, the country would face new elections. The opposition is already scratching its feet. According to a survey on Monday, which the TV broadcaster “La7” commissioned, the right-wing populist Lega around former Interior Minister Matteo Salvini would be the strongest force in parliament with 23 percent. Even the right-wing national Fratelli d’Italia would get 17 percent more votes than the five-star rating. In addition, there would be around six percent of Silvio Berlusconi’s conservative Forza Italia. With a total of 46 percent, the way is not far to a right-wing majority.

That would not be good news for Europe and the world. Under Conte, the country has shown itself to be a reliable partner. The non-party lawyer appeared as a persistent negotiator vis-à-vis Brussels, especially in the dispute over the Corona development fund. Nevertheless, he was always pro-European, emphasizing several times that Europe owed the historic opportunity to be able to redesign the country with the many billions.

In the right-wing bloc, on the other hand, there are EU skeptics like Salvini, who has already proclaimed the “Italexit” based on the British model and railed against migrants, plus a party leader in Fratelli leader Giorgia Meloni who has never officially distanced herself from fascism. The ray of hope in this trio would then actually be an 84-year-old political warrior whose party demands more political competencies for Europe and works with the CDU in the EU Parliament: Silvio Berlusconi.

More: Matteo Renzi’s party withdraws from the government. Why the center-left coalition broke up.

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Dispute over EU corona funds in Italy: an acid test for the government

Italy’s coalition was a stopgap solution from the start. The quarrel about the money from the Recovery Fund could lead to a permanent break.

Distribution struggles in Rome Photo: Vincenzo Livieri / ZUMA Wire / dpa

ROM taz | Is Italy’s Prime Minister Giuseppe Conte and his coalition facing the end – or is he making a fresh start? The answer could already be given at the cabinet meeting on Tuesday. It will be supplied by the small party Italia Viva (IV) of the former Prime Minister Matteo Renzi, which has threatened to break the coalition for more than a month if Conte does not meet it on numerous points.

Renzi had started his campaign against Conte in early December. The main subject of the dispute was the Recovery Fund, the reconstruction plan for which Italy is to receive 209 billion euros from the EU budget. Renzi was bothered by the content of the plan as well as by Conte’s ideas of how the government should manage the use of resources. Renzi is demanding a significant increase in funds earmarked for health care, schools and infrastructure. At the same time, he vetoed Conte’s plan to entrust management to a six-person committee of experts; this would largely slow down the cabinet and coalition, he complained. Renzi also threatens day after day that the two ministers of his party will resign if there is no agreement.

The center-left government, which has been in office since September, is facing its greatest ordeal since it was formed in September 2019. At that time, the head of the right-wing populist League, Matteo Salvini, had the first Conte government burst, which the League side with the anti-establishment -Kraft Movimento5Stelle (M5S – 5-Star Movement) saw. Salvini wanted new elections to be quick and then to become head of government himself.

But to his surprise, the two arch enemies, the M5S and the moderately left Partito Democratico (PD), agreed on a new coalition, which also included the small, radical left list Liberi e Uguali (LeU – Free and Equals). Especially Matteo Renzi, then still in the PD, had favored this new alliance, which was born as a purely negative coalition against the Lega.

But as soon as the new government was in place, Renzi split the PD and founded his own small association, Italia Viva, which, however, remained in the ruling coalition with four partners. The fact that the government has been holding on since then was not least due to the fact that it was quickly confronted with the corona emergency – and that the two big partners M5S and PD largely pulled together in taking measures against the pandemic and its social consequences. Above all, Conte experienced a significant increase in popularity during the pandemic.

As in summer 2019, it is again a Matteo, now Renzi instead of Salvini, who is sawing on Conte’s chair

Renzi, on the other hand, is faced with the fact that his party does not come out of the polls low of 2 to 3 percent. His answer is now that he wants to give Italia Viva more profile in the alliance, if necessary with an all-out coalition conflict.

Therefore, Conte suspects that Renzi is less concerned with the content than with replacing the Prime Minister. And as in the summer of 2019, it is again a Matteo, this time Renzi instead of Salvini, who is sawing Conte’s chair. A possible solution is a resignation of Conte and then immediately the formation of a successor government with the same partners and the same head of government, but a completely renewed cabinet. But Conte does not trust this solution, since he suspects that Renzi could then pull the demand for a change at the top of the government out of his hat. If a last-minute agreement is not reached, there is a risk of new elections, which could mean the political end for Renzi’s party.

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the Italian Constitution violated for a year – Libero Quotidiano

Giovanni Sallusti

And finally journalists, intellectuals, experts in everything and commentators on nothing woke up one day in January 2021: democracy is in crisis. It is in check, at the mercy of mortal danger, even over. And it is, say these specialists in posthumous analysis, because across the Atlantic a handful of para-Trumpian Boeotians, numbered in the infamous Alternative Right (in which it is a bit hard to solve all the 73 million Americans who voted Republican, but transeat ) raided the Capitol, with an “unprepared” police (the same thunder that when the US police arrest and shoot accuse them of Nazism). Agents who have rather managed the situation moderately, preventing the tragic toll of 4 deaths from worsening, including Ashli ​​Babbit, a veteran of the air force, killed by a gunshot. But this is a military woman and Trump supporter, no one will kneel for her, neither the stars of the stars and stripes basketball nor the starlets of Italian journalism, as happened for poor George Floyd. In any case, our own single media certifies the US apocalypse in chorus. “Usa, a coup day”, Repubblica screams all over the page. For Avvenire it is a “siege of democracy” (a picaresque siege thwarted even before the bishops’ newspaper went to print). The National Daily evokes the unthinkable, fascism in America: “The march on Washington”. But Massimo Giannini touches the climax, who for a day feels Leone (Sergio) and headlines La Stampa: “Once upon a time there was America”. And down collective whining, from editorials to television talks, about democracy struck in the heart, the darkest hour of the Founding Fathers, the temple of violated freedom, the end of the American model. They are tears of satisfaction, in reality: it is the announcement that the media and cultural mainstream could not wait to give, being for the most part viscerally anti-American (so much so that it supported the USSR in the First Cold War and praises China today , in the second).

The little question – There is only one dry, flat, merely chronicle question to turn to these gentlemen: sorry, but what country do you live in? And the answer (we give it, because their job consists exactly in the daily removal of evidence) would sound like this: in a country where a government not elected by anyone has suspended fundamental constitutional freedoms for a year now. If in America national polarization has now become a fire, so much so as to split citizenship on the outcome of a vote, here we have acted upstream. Not only do you not vote in spite of the continuous political crises, given that the ballot box is now conceived as an annoying apostrophe between a ploy and another of the Democratic Party to stay in government a priori. But the majority / opposition dialectic froze (which in the States, vice versa, has exploded, and a plural chaos is always better than a monolithic order), the activity of Parliament has been suspended (reduced to a decorative tinsel of the Dpcm baked by a Prime Minister who in his life has not obtained the consent of even a condominium assembly), the state of emergency continues to be compulsively prolonged (unique in Europe, including Orban-like sovereign barbarians). And what were those who today are beating their breasts for limping democracy overseas, while here, in their home, the legs of the aforementioned democracy were sawed one by one? Not only were they silent, but they cheered. Indeed, more realistic than the king (killing) in a clutch bag, they were anxious to invoke more closures, more prohibitions, more state of exception. It is no coincidence that today they rush to celebrate the funeral of the American liberal democratic model. Let it never come back into fashion, even in our country.

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What Italy’s left-wing coalition is arguing about in the pandemic

Dhe pandemic year 2020 started badly for Italy and it didn’t get any better towards the end. In February, the coronavirus from China hit Italy as the first country in Europe. In mid-March, the “Bergamo trucks” with the coffins of the Covid victims became a symbol of the devastation that was soon to be observed in other countries. The left-wing coalition in Rome under Prime Minister Giuseppe Conte imposed the longest and strictest lockdown in Europe from the beginning of March to the end of May.

Matthias Rüb

Political correspondent for Italy, the Vatican, Albania and Malta, based in Rome.

When, after a quiet summer and autumn, the second wave of infections rolled in at the beginning of November, Rome again imposed a nationwide lockdown, this time with gradations according to regional infection rates. Over Christmas and the turn of the year the whole country was declared a “red zone” again. The review on New Year’s Eve fell on a country that was once again haunted: in the second wave of infections, even more people died than in the first. More than 74,000 Covid victims were there by the end of the year, more than in any other country in Europe. As in spring, the deaths in the second wave of infections were on average over eighty years old. Once again, Italy failed in its task of protecting the most vulnerable from the virus.

The country is paying an immense price for what, according to the WHO, is “inspiring” measures taken by Rome against the pandemic. The Italian economy is likely to have shrunk by around ten percent in 2020, which is also a sad peak in Europe. The government’s announced aid measures will drive the state debt burden to up to 160 percent of annual economic output. The solidarity demonstrated in the spring – with collective singing from balconies, with national flags everywhere, with the motto “Tutto andrà bene” (Everything will be fine) – has evaporated into the usual trench warfare of social groups. And the cockfights within the fragile left-wing coalition are as fierce as they were before the pandemic.

At the moment, the main focus is on the use of around 209 billion euros that Italy is to receive from the EU’s so-called reconstruction fund. At his press conference at the turn of the year, Conte verbally demanded that the country should “not let this historic opportunity slip by” and that the government “should not gamble away the credibility it has built up”. But it is precisely this accusation that the former head of government Matteo Renzi, who belongs to the left-wing coalition with his small party “Italia Viva”, founded in September 2019 as a split from the Social Democrats.

The former major social democratic reformer Renzi is notoriously unruly because he does not seem to have got over his own fall from December 2016 to this day. But his arguments are sound, even if Renzi with his offensive at the turn of the year apparently wants to squeeze out more influence for himself and his party in the joint coalition with the Social Democrats and the left-wing populist five-star movement. Renzi accuses Conte of disempowering the cabinet, in which Renzi’s party has two of 24 ministerial posts, as well as parliament, with more and more expert bodies and task forces that are supposed to decide on the use of EU funds.

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Italy’s government criticizes German vaccine purchase

Mhe Italian Prime Minister Giuseppe Conte fueled anti-German polemics over the purchase of vaccines in a single sentence. So far, they had mainly generated right-wing media and politicians, with biting reports about the purchase of 30 million vaccine doses from Biontech and its partner Pfizer by the German government. “Berlin is cheating on the EU, giving a damn about the pact and buying 30 million doses of vaccine for Germans,” wrote the right-wing newspaper La Verità.

Tobias Piller

Economic correspondent for Italy and Greece based in Rome.

The paper “Libero” is located in the same spectrum, with the headline on Tuesday: “Berlin lays us in”, and also depicts a photo montage with the entrance to the Auschwitz concentration camp and the title “The vaccine makes free” mounted in the gate. Under this photomontage there was an article about vaccinators, but the illustration also corresponded with the opposite page about the alleged German meanness.

The polemic, which had been heated for days in the right-wing camp, finally inspired Rome’s local newspaper “Messaggero” to launch a warlike entry into the comment on the first page: “Angela Merkel grabs an additional 30 million vaccine doses with a blitzkrieg”.

European agreements violated?

The Italian critics accuse Germany’s government of violating the agreements that the vaccines against the coronavirus are to be acquired jointly through the European Union. Because the initiative for the joint purchase came from Germany, France, the Netherlands and then also Italy, the Germans are also assumed to be hypocritical.

The Italian Prime Minister endorsed these interpretations at his official press conference at the end of the year. He didn’t need any polemical tones for this. The law professor Giuseppe Conte knows how to sharpen acrid criticism with sober words. When asked about Germany’s behavior, the Prime Minister said it was a joint decision to join forces on the supply of vaccines at EU level. Italy is already receiving hundreds of millions of vaccine doses through the EU and will make surplus vaccines available to poorer countries. Italy did not order anything on its own. “Italy did not do that because Article 7 of the treaty prohibits direct supplies. Point”.

From the German point of view, the Italian Prime Minister knowingly told a half-truth. On Wednesday morning, apparently before the press conference, his health minister Roberto Speranza called his German ministerial colleague Jens Spahn (CDU) and confronted him. Spahn explained his position shortly afterwards before the federal press conference, after a question from the Italian news agency Ansa.

Spahn: Purchasing negotiations concluded

The agreement in the EU, according to Spahn, referred to a round of purchasing negotiations that had long been concluded. After that, everyone is free to place additional orders. Only the deliveries for the EU, with the vaccines distributed proportionally to all member countries, should not be affected by this. The legal texts translated into Italian by the European Union clearly use the Italian term for a procurement procedure (“appalto”) and not for a purchasing group.

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