Only fourteen months ago the political coalition of the parties supporting the Italian government lasted. The self-proclaimed anti-systemic parties of the Northern League and the Five Star Movement (M5S) stopped cooperating by supporting the Government of Prime Minister Giuseppe Conte. But last-minute political developments have yielded, and Italy will not have to go to elections until the end of the year avoiding painful misgovernment.
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Mr. Salvini’s frivolous political strategy
In fact, this political coalition between an extreme right-wing nationalist party (Northern League) and a patchwork party of populists, greens and internet-based politicians (Five Stars Movement (M5S)) lasted much longer than expected because of the different mentality of the parties supporting the deported Italian government.
The end of the mandate of the former government of Giuseppe Conti is the famous until yesterday’s Minister of the Interior and Vice-President of this government, Mr. Mateo Salvini. On August 8, Mr. Salvini filed a motion of censure against the government in which he was the main pillar in order to provoke elections using his confessed popularity to win the forthcoming elections and become the new Prime Minister of Italy.
Mr. Salvini’s decisions on elections were not of a short-term nature, but the result proves that they were based on long-lasting planning. For fourteen consecutive months, and in particular from last year’s elections that led to the formation of the previous government, Mr. Salvini, with his anti-systemic discourse on the demands of Brussels for budgetary discipline in combination with his anti-immigration rhetoric, he managed to reduce the electoral rates of his government partner of the Five-Star Movement from 37% to 17% in the May European elections.
In fact, the European elections operated as exit polls for the planning of Mr. Salvini, giving him the impetus to make a motion of censure against the government which he also participated in order to achieve his ambitious plans for the conquest of the Italian Prime Minister position.
But the subsequent unforeseen political developments have thwarted Mr. Salvini’s planning by proving that in politics nothing is certain. This reversal was done with the call made by the Five Stars Movement Secretary to the Secretary of the Democratic Party investigating a possible political alliance to rescue the situation, avoiding the elections.
The result of this ingenious and unexpected political tactic has had tragic-comedic results in the subsequent political behaviour of Mr. Salvini who before the arrival of outgoing Prime Minister Giuseppe Conte at the Presidential palace in order to submit his resignation withdrew the motion of censure against the government while offering Prime Minister’s position to the head of Five Stars Movement trying desperately in this way to save the shattered political alliance.
Photo by Author: Office of Presidency of the Italian Republic,
Source: Il Presidente della Republica Sergio Matarrella con il Prof. Giuseppe Conte
Political marriage of interest in an Italian manner
These two parties, namely the Five-Star Movement (M5S) and the Democratic Party, are comfortably bringing together a Parliamentary majority. There are certainly differences as to how one party sees the other, regarding the policies for dealing with the migration problem and the new annual state budget, but there are many similarities between those that can be bridged.
In addition, the EU is favourably attached to such a political coalition than to the ‘annoying’ Mr. Salvini, who is constantly asking for tax cuts, endangering the implementation of the Italian state budget.
The first informal partnership between the (M5S) and the Democratic Party was in the European Parliament when (M5S) preferred to join the Democratic Party by voting for the new President of the Commission, Mrs. Ursula Gertrud von der Leyen.
The second flesh-and-bone coalition was achieved yesterday with the formal agreement between them for the formation of a government under the most renewed Prime Minister of Mr. Giuseppe Conte.
Surely, the Northern League will be more “dangerous” in its argumentation to the opposition based on anti-immigrant policies, brave tax cuts, refusal to increase the age limit for an employee to retire and using scandal based political arguments.
Its purpose will be to extract as much as possible a percentage of protest votes from the forthcoming elections whenever they are made. But what the Northern League will do is of no importance because Italy must be ruled to vote for the new budget.
A prolonged election period would put in great unreliability the new state budget that will be voted at the end of the year, creating further concerns given that the new global recession is just around the corner.
But the economic decline of the Italian economy persists. After so many electoral competitions which gave many governments, no successful plans have been implemented to halt the lost competitiveness of the Italian economy. The whole of Europe hopes that Prime Minister Giuseppe Conte can succeed in his renewed work.
Italy’s economic situation is critical and is, by extension, critical of the Eurozone as well. The Italian government’s debt exceeds 130% of its GDP, causing chills of icy sweat on the backs of the economic designers of Italy and Brussels respectively.
The resulting new government will be confronted with decisions on cuts of €23 billion to be consistent with the state budget deficit limits set out in the Maastricht Treaty. However, these measures are not even effective enough to put the Italian economy out of the swamp.
The necessary measures to increase the competitiveness of the Italian economy
The Italian central government’s expenditure must be drastically reduced over a three-year horizon and reach the ceiling of 15% of GDP annually with 4% of GDP being the total payroll cost of the Italian state’s civil servants.
A decrease of 13,4% of GDP translates to around €235 billion (the annual central government expenditure (2018) was 28,4% of GDP (€1756981,5, GDP 2018, Source: Eurostat, https://ec.europa.eu/ eurostat/tpm/refreshTableAction.do?tab=table&plugin=1&pcode=tec00001&language=en, 28/08/2019).
This size of funds will then be channelled through the implementation of equivalent fiscal value measures in society by drastically reducing the size of total taxation to increase household incomes along with their demand and consumption. In addition, a large part of these huge resources should be redirected to education, healthcare, agro-farming, R&D and the continuing education of any unemployed.
The tremendous savings in the state budget of the central government should be made through privatisation of state institutions and organizations, extensive use of the outsourcing practice in the public sector and where this is possible to apply, and with layoffs of public servants. In addition, the retirement age should be lengthened, except for heavy and unhealthy occupations.
At the same time, the drastic reduction in taxes charged on business payroll together with a simultaneous reduction in the rate of corporate tax will greatly help businesses to invest their stagnant funds that they expect to be invested in modernising their production.
It is only in this way that the Italian economy will go into sturdy competitiveness by overcoming its problems once and for all. But this fiscal policy has tremendous political costs and no political party or coalition of political parties alone can implement it.
For this reason, the political world of Italy must speak plainly to the Italian people about what should be done, because together they will have to work to implement it without being left “no” Italian citizen alone to his fate.
All other fiscal policies applied for years in the Italian economy resemble aspirins who are trying to heal a heavy-sick patient, thus preserving the chronic economic decline of the Italian economy.
