The Italian Situation in Eleven Questions (and Answers)

Yesterday I had the opportunity to have an exchange of emails with one of Italy’s leading financial journalists.  This is part of a longer conversation we have been having over the past few years about the state of European financial markets and the role of Italy within them.  The difference this time is that he published the exchange in gli Stati Generali, which is a project created to allow journalists to share stories or rely on formats that might not otherwise find their way into traditional media outlets.  Knowing the journalist, the Italian version of our exchange is much more articulate than the English-language original I am reproducing here.  The questions are in bold; my responses are in regular text.

  1. The situation of Italy after the general elections of March 4th, 2018 remains unclear, even now. As an observer of Italy from an American perspective, what’s your take on what happened?

I think the best guess is that we are seeing a revolt against the elites.  A large number of Democratic Party (PD) voters stayed home in protest against the incessant infighting.  There were some interesting shifts in support from the PD to the Five Star Movement (M5S) as well.  Forza Italia voters went over to the Lega.  And a few new voters came in to bolster both the Lega and M5S.  The volatility was not as high as in 2013, but it was still significant.  And so now we have to see whether a new group of elites can come together to rule the country.  If they fail, I suspect the voters will turn on them as well.


  1. After the constitutional referendum held in December 2016, the Italian Democratic Party (PD) lost a large number of votes. Moreover, Matteo Renzi, the former Italian Prime Minister, failed properly to recognize the huge shift in public sentiment against him. Do you think that the PD is over?

I don’t think we are going to see an eclipse of the center-left in Italy like we have in countries like Poland or Hungary; we shouldn’t expect a collapse like we have seen in the Netherlands either.  But there is no doubt that the center-left is struggling.  The problem is not just with the PD; the free-and-equal group (LEU) did poorly as well.  Whether and how quickly those parts of the center-left recover will depend a lot on how well the M5S moves into that ideological niche and establishes itself as a competent representative of normal people.  No doubt that is an aspiration for some M5S politicians – the new president of the Chamber of Deputies, Roberto Fico, first and foremost.  That said, it will be tough for the M5S to construct a coherent ideological identity and easier for the PD to pull itself together.  I wouldn’t be surprised if we saw something of a comeback for the PD already in the elections for the European Parliament next year.


  1. A lot of pundits from the PD area are thinking that the problem of the party is that the party itself was far away from the gut-level concerns of the people. They argue the from a center-left party, the PD became a sort of party of the elites. Is this true, in your opinion?

It really depends upon what you mean by a ‘party of the elites’.  If you mean that the PD was pushing an agenda to reinforce and reward elite control over Italian society, I don’t really think that is the problem.  If you mean that the PD was more concerned with infighting over control of the party than with explaining a coherent economic and social program, then you are closer to the mark.  The two-part advertisement that the PD ran toward the end of the campaign called ‘Pensa-ci’ was compelling as a program.  The problem was that it was overshadowed by the endless divisions between the old- and new-guard and between the pro- and anti-Renzi factions.  There was already open talk about who would take over once the PD lost long before the first vote was cast.  No one is going to listen to the content of the party’s program in that context – it is just incredible.  The party needs to pull itself together if it is not going to have another disastrous electoral contest.


  1. What does the re-branded Five Star Movement represent now, not the incendiary one, but Luigi Di Maio’s M5S? Is it possible a reliable government to emerge from this brand new M5S?

The challenge for the M5S is three-fold.  First, they have to try to stick to a coherent message.  Di Maio flip-flopped a lot before the elections; now he needs to work on being consistent.  Second, they need to bind everyone into that message and stop with the internal witch-hunts.  The more that party turns on its own activists, the more nervous it makes everyone else.  Third, they need to build a record of competence.  They did not cover themselves in glory at the communal level; running the country is going to be even harder.  I am not saying they will fail.  All I am saying is that they face a steep learning curve both collectively and as individuals.


  1. What about Northern League (LN)? Are the Italians really so anti-immigrants or anti-EU? What happened with LN, in your opinion?

Matteo Salvini seems to have made some progress in re-branding his Northern League into a national party (now called simply Lega).  He has also made some progress asserting leadership over the center-right.  But his votes still come from the North and it is clear that a younger Berlusconi would never put up with this kind of challenge.  Moreover, Salvini’s message is a constraint on his appeal.  He calls himself center-right, but he is nowhere close to the center.  That is the real answer to your question.  Italians are worried about immigration because it is rational to worry that the country cannot handle another surge like it faced in 2016 without difficulty.  But Italians are not so anti-immigrant or anti-EU as Salvini’s program would imply.


  1. Right-wing populism and Euroscepticism have been a distinctive feature of European national elections in 2017 (see, for example, the worryingly good performances of the French National Front and Alternative for Germany). But if Italy is not alone in this predicament, it is the only country where an “alliance of populists” could actually form a government. Why do you think Italy is special, in this respect?

Italy is different because for decades Italian elites have fostered a relationship with Europe as an ‘external constraint’ that pushes a reluctant elite to make necessary reforms.  There was a logic to this relationship for Italy in the 1980s and 1990s.  You can see that particularly as Italy made huge adjustments to qualify for membership in the euro.  But the whole ‘external constraint’ relationship wears thin over time.  It is not that Italians don’t like Europe; Italians are just tired of being told what they have to do.  This is something that Renzi realized and that Salvini is trying to tap.  But Salvini goes too far.  He thinks changing the relationship with Europe should be one of the next government’s top-four agenda items.  Most Italians would disagree.  They would like Europe to stop telling them what to do but even more they would like for Italy’s political elites to show that they have a serious plan for the betterment of the country.  In that sense, Italian Euroskepticism is very different from that found in the UK, the Czech Republic, Poland, or Germany.  The Italians don’t want to undo Europe; they just want to fit in better than they have in the past or do right now.


  1. Is there any similarity between what happened with the election of Donald Trump in the United States and what happened in Italy with the anti-establishment parties?

The only similarities are (a) the revolt against existing elites as described in response to your first question and (b) the challenges that any populist movement faces as sketched in response to your fourth question.  The difference is that Trump actually wants to curry favor with America’s traditional elites – both in the Republican party and, more important, among billionaire industrialists – far more than anyone in the M5S would ever dream of doing.  Trump and his team have also failed in trying to establish either coherence or competence.  Let’s hope that the M5S and the Lega prove to be more able than their distant American cousins.


  1. Another interesting development that we are witnessing at the moment concerns the international diplomatic relationships between Europe, the US, and Russia, after claims of elections rigging and the Skripal Affair. A significant share of Italian public opinion seems to have a positive view of Vladimir Putin, and both M5S and Lega have in the past advocated the removal of European Union (EU) sanctions against Russia. Why do you think this is the case? Can the recent electoral outcome turn Italy into a geopolitical thorn in the side of the EU?

Vladimir Putin symbolizes a rejection of traditional ‘Western’ elites and so it is unsurprising that he is welcomed by such odd bedfellows as Donald Trump, Jeremy Corbyn, Marine Le Pen, Matteo Salvini, Viktor Orban, and Luigi Di Maio.  The fact that Salvini and Di Maio must be involved in whatever next government emerges in Italy is sure to create problems for European foreign policy.  But in the greater scheme of things, I worry more about what is happening in Austria, Hungary and Poland; I also worry about Brexit, both because of Corbyn’s strange foreign policy preferences and because it is clear already that Putin is eager to exploit Britain’s weakness.  Italy may be a thorn in the side of the EU, but it is a relatively minor irritation in that more problematic context.


  1. The other front on which we are seeing new development is that of international trade, with the recent announcement of steel and aluminium tariffs by the US. In light of the electoral result, how do you see the position of Italy within a system of multilateral trade relations that risks becoming increasingly confrontational?

The good news is that Italy doesn’t really have a trade policy; Europe does.  So far, the EU is guiding that trade policy as well as can be expected.  There is no obvious playbook for responding to a United States that appears determined to tear up the world economic system it created.  I don’t expect any Italian government to make forging a European response much harder than it already is.


  1. Looking forward, what will be the role of Italy in this multi-polar Europe?

I hope Italy will have a prominent role and that other European countries will accord it the respect it deserves.  I worry that Italy will play no role and that other countries will revert to old habits of telling Italians what to do for their own good.  This is not a comment on M5S and Lega; it is an observation about public opinion.  Right now, Italians are tired of being told what to do by Europe, but they are not eager to leave the European Union.  If other European countries ignore or disrespect Italy and if EU institutions continue to lecture to successive Italian governments, that popular attitude could evolve from a general malaise to something much more acute like frustration or indignation.  That would not be a welcome evolution.  Italy is going through a challenging enough period at the moment.  This is not a good time for other Europeans to do things to Italy that will make the situation even worse.


  1. Last but not least: there’s a sentence that sometimes comes back, especially in European institutions. It says “Italy is a wonderful place, probably the most beautiful place in the whole globe, but it’s impossible to reform.” Is it true? Why any change of mindset seems so difficult?

Italy is not impossible to reform; Italy just works better when the reforms are piecemeal and when people have the time to take ownership of the agenda.  If you compare Italy now to what it was in the 1950s, you will see a dramatic difference.  And if you compare the unrest today to that experienced in Italy in the late 1960s and 1970s you will see a big difference as well.  Italy has changed a lot and it was a very painful process.  Now change is slower but also less disruptive.  That is a good thing.  We should all want Italy to evolve; we should not want Italian society to have to go through the kind of turmoil that it experienced in the latter half of the 20th Century.