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Italy’s next government: four options as voters shun establishment

Italy’s next government: four options as voters shun establishment

The populist tide that swept across Italy on Sunday wiped out the prospects of a grand coalition between Matteo Renzi’s centre-left Democratic party and Silvio Berlusconi’s centre-right Forza Italia party — which had been the most likely expected outcome of the vote. So what is left? Here are four scenarios, starting with the most unsettling one for the European mainstream.

The big winners of the night were the Five Star Movement, the upstart protest party founded in 2009 by comedian Beppe Grillo, and the Northern League, which has been revived and transformed into a far-right nationalist party by its leader Matteo Salvini.

Arithmetically, they could join forces and comfortably secure a parliamentary majority with the support of Brothers of Italy, a smaller rightwing party that descends from postwar neo-fascism.

Their platforms have big areas of overlap. Both support the rollback of pension and labour market reforms, higher deficits to fund fiscal expansion, share a visceral opposition to free trade, want friendly relations with the Kremlin and dislike mandatory vaccinations.

They are on similar wavelengths about the euro. While both toned down their rhetoric on exiting the single currency during the campaign, they believe Italy has been damaged by the euro and needs to succeed in imposing major changes or that it would be best to ditch the project.

But if there is a logic to such an anti-EU alliance, the big question is whether the bases of both parties would rebel at the prospect of a tie-up.

The Northern League has made some gains in the south, but remains predominantly rooted in prosperous northern regions, where there is deep wariness of any big fiscal transfers to the Mezzogiorno.

Five Star has proposed a sweeping income support programme for the poor that has drawn a lot of support in southern regions, and would not want to give that up.

Many Five Star supporters — particularly in the south — also remember the days when Northern League politicians systematically insulted them as backward and lazy. And Five Star’s base tilts to the left, so Mr Salvini’s alignment with Marine Le Pen and US President Donald Trump is anathema to them.

If Five Star decides it cannot stomach a deal with the Northern League, it could turn left and search for allies among the dispirited remnants of Italian social democracy to secure a governing majority.

The first place it would start is Free and Equal, the grouping of leftwing former PD dissidents — including Pier Luigi Bersani, the former party secretary — who barely managed to secure representation in parliament but will control a few dozen seats.

Mr Bersani in particular has often appeared to be sympathetic to such a tie-up if it means keeping the nationalist right out of office.

Five Star’s economic team definitely tilts to the left — with a focus on reducing inequality through social spending that its officials say is very aligned with the views of economists such as Joseph Stiglitz and Thomas Piketty.

But the inescapable truth is that any leftwing majority led by Five Star would have to draw in the PD — or big parts of it — to make the numbers stack up. The main obstacle to that combination was always Matteo Renzi, but after the ruling party’s poor performance in the elections it could plausibly have new leadership that is not quite so radioactive for Five Star.

But PD MPs are still overwhelmingly reformist on economic matters and not prepared to take a leftward turn. Moreover, they have been deeply wounded by a relentless barrage of Five Star attacks over the years and would recoil at sharing power with them.

If none of these options pan out — probably after weeks of talks — Sergio Mattarella, Italy’s president, may have to accept that there is no working political majority. At that point, one solution would be to ask all political parties to agree on a national unity government, for a limited time — to keep the ship steady until a second election down the road.

It would be a “president’s government” as can sometimes happen in moments of political crisis in Italy — with the broadest possible support. Every party would have to sign off on the interim prime minister and the deal could only work if all the major parties signed up to it in the name of saving Italy from a total drift into instability.

That might, in some ways, guarantee the greatest stability for the country. But there are serious challenges with this solution.

One is that Mr Mattarella is instinctively averse to a second election. The other is that the political parties would have to agree on rewriting the country’s electoral laws in order to avoid another stalemate in the next election — and there is no consensus on such a system.

Meanwhile, Five Star and the Northern League would probably become restless very quickly, feeling that they were backed by voters who wanted dramatic change, not just another patch-up.

The Financial Times Limited 2018. All rights reserved.

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