Archives for category: Berlusconi

Interrupting the three-year long hiatus as some friends have asked for a quick run-down on the result of the Italian referendum.

How did we get here?

The long story (the context is important, but if you want the short story skip to the parts in bold at the bottom):

  • The end of Silvio: in November 2011, Italians took to the streets to sing the Hallelujah from Hendel’s Messiah to celebrate the fall of the third Berlusconi government. The resignation came on the back of a shrinking parliamentary majority as the Euro debt crisis became acute.
  • The technocratic government (2011-2013): on November 9, the President of the Republic appoints Mario Monti (a former EU Commissioner) as a senator for life, a title reserved for Italians of notable accomplishments, such as Nobel prize winners. In a somewhat undemocratic turn of events, after the fall of the Berlusconi government, Mario Monti (a university professor who had no previous political career) is asked to form a technocratic government to steer the country out of the crisis and enact structural economic reforms. After passing austerity measures and pension reform, Mario Monti announces that he will step down at the end of the legislature in 2013 and seek re-election. His party obtains 10.5% of the vote.
  • The Italian Grosse Coalition (2013-2014): the results of the 2013 elections were remarkable for two reasons. First, they mark the end of left/right politics as the country’s vote was split into three blocks, the Centre-Left (29.5%), the upstart 5 Star Movement (29.1%) and the Centre-Right (25.5%)  with a bunch of small centrists and fringe parties making up the rest. Secondly, in order to stave off a 5SM-led government, Enrico letta from the leftist Democratic Party agrees to a Faustian pact with Berlusconi’s  party, giving birth to a unique Left-Right coalition government, probably for the first time in the history of the Republic.
  • Renzi, the change maker (2014-2016): after winning the primary elections for the leadership of the Democratic Party, Matteo Renzi, the 38 year-old mayor of Florence, Renzi proceeds to reassures Enrico Letta that he has no intention to unseat him from the premiership by launching the hashtag #Enricostaisereno (#EnricoWorryNot). In Feb 2014, roughly 10 months after the beginning of the Letta government,  Matteo Renzi unseats Letta and becomes PM, running on a platform of renewal and bringing vitality to Italy. Optimism is running high in the youngest and most gender-balanced cabinet in the history of the Republic.
    • At the European elections of May 2014 the Democratic Party wins 40.8% of the popular vote, the highest percentage of votes ever won by a leftist party in Italy and the highest absolute number of votes of any European party in the 2014 election.
    • Emboldened by the results of the EU elections, Renzi moves the constitutional reform to the front of the agenda. The complex constitutional reform primarily aims to make the legislative process more agile by  moving away from perfect bicameralism (the Italian lower and upper houses have the same powers and are elected in a similar fashion not like the federal German or US Senate). The reform makes it through Parliament but without the sufficient number of votes to avoid a referendum. PM Renzi has to call for a referendum.
    • As the honeymoon phase tapers over (and the 5SM wins municipal elections in Rome and Turin by a large margin while the Democratic party clings on to Milan), PM Renzi vows that he will resign if the referendum does not pass. Warnings from his allies that politicizing the referendum might have negative consequences are not enough, Renzi doubles down on the threat. Rather than scaring people into voting in favor of the reform, this tactic has the effect of encouraging all the opposition to pile into the no vote. This includes the old guard in the democratic party that had been sidelined rudely by Renzi, some eminent constitutionalists, the 5-star movement, the xenophobic Right, the extreme Left, and Berlusconi (who flip-flopped form his early support).
    • A complex question, coupled with flat-lined economic growth, political scandals tied to influence peddling and a Minister’s family ties to a banking scandal and a brewing banking crisis means that the reform is rejected by 60% of the popular vote, with a turn-out of over 68%. Analysis of the vote split, show that roughly 25% of voters affiliated to Renzi’s Democratic Party joined the no camp, alongside the almost totality of 5SM supporters and over 50% of supporters for Berlusconi’s party. In terms of socio-economic status, the no was popular among young people, poorer geographic constituencies, the Italian South and the outskirts of big cities. La Stampa newspaper shows some of these trends in a very cool infographics for Turin, the city with the best run 5SM administration.

Where are we going next?

Politics

Renzi has vowed publicly to resign immediately. It appears that the President of the Republic (who is the one in charge of naming Italian PMs) is not quite enthused at this prospect, and has asked Renzi to see through to the approval of the budget law scheduled for the coming weeks.

The big constitutional elephant in the room is the fact that the country’s electoral law for the Senate has been deemed unconstitutional by the Constitutional Court and the electoral law for the lower house passed last April is awaiting a ruling from the Constitutional Court in the coming weeks. For fans of constitutional debate in translation, this article explains the nitty-gritty of the situation, but, barring a surprise ruling from the Court, the two electoral laws could lead to different majorities in both chambers (and call for divergent electoral strategies). A particular point of concern is the fact that, in its current form, the law for the lower house assigns a majority premium to the coalition that wins the plurality of votes. This means that the coalition that wins most votes gets 340 seats out of 620. A slight complication is that if no coalition list wins 40% of the votes in the first round, then the 340 seats go to the list that wins a run-off election. As things stand now, in case of a run-off, the 5-Star Movement is posed to win a majority in the lower house.

This leaves the following scenarios:

  • Renzi backpedals on the idea of resigning and instead sees through the end of the term to 2018. This seems unlikely, but as you may have gathered, continuity and coherence is not the biggest strength of the Italian political system. It would also be political harakiri for the Democratic Party, so Renzi is likely to face pressure not to stay, even if he should change his mind.
  • Renzi resigns now and the country goes to elections. This seems a bit extreme, especially given that the country is awaiting the decision of the Constitutional Court on the electoral law. As highlighted above, at the moment, the 5SM is likely to win majority in the lower house and, riding on the post-referendum victory, could scrape by a majority in the Senate or could form a minority government  with Berlusconi’s party or the extreme right. Again, this would be political harakiri for the Left, so it is unlikely to happen.
  • Renzi resigns after passing the budget law. In my opinion this is the most likely option. In this case the following could happen:
    1. Elections after his resignation: again unlikely for the point highlighted above
    2. Care-taker government until end of mandate: A new PM is nominated and a cabinet reshuffle takes place with the mandate to see through the end of the legislature in 2018, revise the electoral law and push through some necessary reforms with cross-party support. It is not clear to me that there is any appetite for cross-party work, in particular given the insistence of the 5-Star movement to go for early election and Berlusconi’s eagerness to stage a comeback into the political limelight (yes, he could come back as the figure head though he is still banned from running for office). But then again, the Left and Berlusconi’s camp spat vitriol at each-other for 20 years only to come together in a grand coalition to avert a 5SM-led government. The Italian Parliament is a jungle full of chameleons.
    3. A care-taker government to reform the electoral law: a government of technocrats or, more likely, led by institutional figures such as the speaker of the Senate or the current Ministry of the Economy is put in charge of reforming the electoral law (and maybe fix our impending banking crisis) and then calls for early elections. The electoral law would probably have to be one that appeals to all sides of the political spectrum. This is likely to take time and will probably offer a possibility to opponents of the 5SM to show the movement up by creating infighting (something that the movement seems to have a strong  capacity for).

It pains me to say that in both of the last two scenarios, Berlusconi’s party (in disarray, with no leadership and with the figure head barred from running) is probably going to be the kingmaker, as they could tilt the balance by siding with the 5SM. Thankfully, history has shown that Berlusconi’s party is something that could be up for sale. My uneducated guess would be that the last option (a care-taker government to change electoral law) is the most likely option. It buys the Democratic Party and Berlusconi’s party time to regroup, as both have been hemorrhaging votes to the 5SM.

Economics

The markets seemed to have had already priced in a no vote ahead of the referendum. Except for some volatility, no major drama took place since the vote in terms of Euro exchange rate or Italian bonds and stocks’ performance. Europe might send strong signals to Italy that it needs to sort out its banking crisis and provide a modicum of political stability so that the investors that have been lined up to bail-in/bail-out/bail-around Monte Paschi di Siena do not run for the woods. And/or it appears that state aid might be ready as a stop gap measure as soon as this weekend, to fill in the 5 billion euro gap and save the world’s oldest bank from dragging down the Italian and European banking system. Perhaps the strong resistance for state bailout from the German side has evaporated in the midst of this crisis?

February 25, 2013

She just turned sixty this winter. She used to earn 900 euros before the crisis, working as a nurse in difficult neighborhoods of a big city. Because of the crisis she now makes 400 euros per month. Yet she pays all of her taxes and welfare contributions. She has been working since she was 17. In the work place she has often been underpaid and underappreciated and once, even sexually harassed. She recently injured herself again and she is self-employed like a lot of Italians, so when she takes a day off she makes no money. She decided her day would be best spent resting at home rather than voting, like 25 percent of Italians today. She is my mother.

He is turning seventy this summer. He has been peaking outside the window trying to decide whether to go vote, waiting for the snow to stop. In the end, he goes out. He has always voted for the Right. He wishes he could vote for a better conservative candidate, but the leader is the only man that seems to be able to hold the Right-wing coalition together. His pension was cut because of austerity. He is angry with Monti’s government, or, as he calls him, the Professor. None voted for him. So he votes for Berlusconi instead, like a quarter of Italians. This man is my father.

He sent his ballot via mail two weeks ago. He votes from abroad, where he is about to graduate from a prestigious American university. He knows there are no jobs for him back home – he has not given up on looking, but he knows. He voted for the Left-wing party. He has always voted for the Left, but never for the larger Democratic Party. He finds their leader utterly uncharismatic and spineless, their agenda bland and largely irrelevant. He voted in the primary election too, even though he knows the party is a concoction of apparatchiks, anachronistic trade unionists and bipolar Catholics who throw a tantrum whenever immigration reform or gay marriage is brought up. His biggest dream one day is to be able to move back home if he wants, or at least to be able to avoid explaining why a sexopath is again Prime Minister to all of his foreign friends. Like twenty-five percent of Italians he voted for the Left. This person is me.

This Christmas he celebrated his new job contract. For the first time in a year, instead of a one-month renewal, his contract got renewed for four months. His family celebrated with a champagne bottle. With a youth unemployment rate above 30 percent, any job that pays slightly above minimum wage is like a status-item. I don’t know whom he voted for. Maybe he did vote for Grillo’s party, a party whose stated aim is to make the political system implode from the inside. All the exit polls underestimated Grillo’s results by a margin of 5 percent. Some people are too ashamed of the party they vote for, because they are voting out of anger. No one seems to know who these people are, but they are 25 percent of us. One of them might be my brother.

We have been sleepwalking as a family, as a nation. Over the past two decades, as we were searching for the reasons of our decline we have blamed the euro, the Muslim terrorists, jobs outsourced to China, earthquakes and global warming. We have searched for our enemy among the American investment bankers, the Brussels bureaucrats, the Vatican hypocrites and the Moroccan baby escorts. But on February 25, 2013 we woke up and realized that our enemy could be found within the walls of our houses and sitting across from us in our offices. Our enemy had been there all along. We were too busy yelling and watching TV and talking past each other. On February 25, 2013 we finally met the enemy. Our enemy is us.

I am still battling with jet-lag and catching up on the sleep that grad school has deprived me of for the past 5 months. It’s good to be home. Good-ish. After dealing with reading depressing news about Italy’s imminent implosion for months, now I get to be immersed in national hysteria 24/7. Awesome!

The other day some CEO from a big supermarket chain was on TV saying how sales in supermarkets have gone down by 6% from last year, marking the worst decline in 50 years (really? I did not know our nonexistent supermarkets collected statistics back in the 1960). In particular, sales of red meat have gone down while sales of eggs and beans have gone up, or so he claimed, suggesting that either Italy is on the cusp of a vegetarian revolution or Italians are buckling up for a very lean Christmas. His voice adds to the chorus line of customers in taped in shops while lamenting the pitiful state of the nation, entrepreneurs whining that the government is not doing enough, our trade unions that are living in some Dickensian parallel industrial universe when our factories are all shutting down by the minute, homeowners impoverished by having to pay 150 euros in yearly property taxes on their first house (the horror!) and on top of all, our beloved politicians from the left and right doing what they do best: crying “Social Butchery” (Italian for “We don’t know what to do or say and would rather not do anything about this”) from the travelling shit show that is the Italian Parliament.

It appears to me that Italians firmly believe that if we are deep in the shit it is either none’s fault or someone else’s fault. Some enlightened citizens have been all too quick to blame the political class for the mess we’re in, as if those got where they are by self-appointment. None seems to have voted for these politicians (although, truth be told, we actually did not pick candidates but had to vote for a list in the last election thanks to our new electoral law, called ‘the pigsty‘ by the same MP that sponsored it). Some other enlightened citizens like to say Berlusconi is the cause of all of this, and while I tend to agree to some extent, I cannot ignore that Mr B. is the toxic by-product of our dis-functional politics (this in and of itself could be the subject of a longer post, some background). I am also not deluded enough to think that if our left-wing politicians could not win an election and keep a government together for more than 15 months when the alternative was a philandering clown marred in sexual and corruption scandals, it must be that they are also not very capable. Everyone seems to agree, however, that the Euro must be the cause of all this, to which I like to point out that if we still had our own currency it would probably be worth less than toilet paper right now. In fact, we had a major speculative crisis in 1992. Let me fish out some news article from those days (11/09/1992):

Global recession apart, Italy has two major problems: a massive public debt (much higher than that allowed by the Maastricht treaty) and uncompetitive labour costs. Source: here

It seems that twenty years have passed and nothing has changed. Our political class supposedly went through some major regeneration (on paper) but still nothing has changed.

I was slightly irked by all of this. It seems that a large portion of the Italian population is engaging in a national competition to stick their head into the sand while also waxing lyrical about how someone else is the cause of their misfortune. If this crisis has done anything is to hold a mirror to our faces and revealed us for what we have become: a nation that is morally and financially bankrupt.

To have a proof that we are morally bankrupt, it is enough to watch this video shot the day after some model citizens torched a whole Roma camp, after a rumor (later revealed to be false) was spread that a local teenager was raped by two Roma men. Pogrom,  Italian style. Condemnation flew in from all sides (minus those scumbags that sit on the right-hand side of our Parliament and their sycophants) and this was archived as an anomalous episode. Until a couple of days later a neo-nazi shot two Senegalese street vendors dead in Florence. Clearly we seem to have found that someone else who is the cause for our problems.

It seems to me that we have become a society where none is ever at fault for things that go wrong, none is ever responsible, none ever wants to pick up the tab for fixing things, because our country is, in the end, not ours: it is some bottomless pit we can keep taking without putting things in. Suffice to say that Italy has the highest tax evasion rate in all of Western Europe, after Greece (YAY for Greece, for not making us look bad!):

Tax fraud is estimated to equal more than 20 percent of Italy’s annual economic output. From more than 41 million tax returns filed in 2010, fewer than 1 percent of Italians reported income greater than $135,000 (Washington Post)

According to the book “Soldi Rubati” taxes have gone up by 12.5 % in the past 30 years. If everyone paid taxes and we could cut payroll taxes, each salaried worker would get 275 euros per month (3300 euros in a year approx). Meanwhile:

There are 200,000 Italians who own luxury cars, but they’re telling the taxman that they have an annual income of between €20,000 and €50,000. One Italian claimed to have an income of €500 a year, but managed to run five Ferraris (source)

So where am I going with this? This debt crisis is not only a problem of economics and fiscal rigor, but a chance to turn ourselves around. We are either at the lowest point but looking up, or we are on an irreversible path towards global irrelevance and moral and financial impoverishment. Italian debt exploded in the 80s partly because of high global interest rates because of the various oil and global economic crises, partly because our political machine kept banking on macroeconomic tricks (currency devaluations etc…) to keep us going and beautify our deficit problems without having to come up with political solutions (for a more in-depth analysis, you can read here).

This crisis can be our way out of this vicious circle. If we got everyone to pay taxes (and apparently they have a game plan to do this) we might have a GDP that is 20% higher.  There is clearly a way out. Now that we are done with the economic austerity, we need moral austerity. The economic and moral case is clear and the solutions are all there, all it takes is responsible politics.

(Bonus track: advert on tax evasion currently running on national TV. Hint if you do not speak Italian: it shows different kind of animal/plant parasites and ends with a social parasite.)

Exclusive to Economic Revolution: Berlusconi-Qaddafi love correspondence

Milan, 15 March 2011

Dear Muammar,

I hope you can forgive me for what I said in public about you the other day. I was upset with this underage hooker that is after my money and I was not thinking things through.

I understand you do not want to talk to me now, but I hope we can be still together. I will never forget the night when you taught me how to bunga bunga in your bedouin tent. I hope we can go back to that, one day.

I understand you are going through a lot these days, but please don’t take your anger out on my rich Italian friends. I have always looked up to you, your extravagant taste, your disrespect for humanity, and the passion with which you humiliate your own people every day. I hope I can be like you one day. You are not only a mentor and a soul-mate, you are the man who keeps me warm during the long, cold Italian winter nights.

It is ok if you want to break up with me. You can keep all the gifts I gave you, yes even the 5 billion euros.

Your devoted friend, always,

Silvio.

It doesn’t seem like Muammar has taken it well. He has sent this video as a reply.

PS: This post is meant to be a satirical expose of the hypocrisy of western politicians vis-a-vis Qaddafi. My respect goes to all the brave Libyan citizens who are fighting a ruthless dictator. You are not forgotten.