We sat down (virtually) with Nicoletta Pirozzi, Head of Programme on the European Union and Institutional Relations Manager at the “Istituto Affari Internazionali”. The reasons for the departure of Mario Draghi and the question of what comes next in Italy and in the EU were at the core of our discussion.
Q1. Can you explain how the current Italian political crisis came about and what its future developments are likely to be?
This crisis came from a number of elements that came together. As you know, we were in a situation where the government led by Mario Draghi was quite stable in terms of public support but it basically relied on a very composite majority which included all the main political parties in Italy except for Georgia Meloni’s “Brothers of Italy”. Draghi had to manage a very diverse majority, which ranged from the “5 stars” movement to Salvini’s “Lega” and Berlusconi’s “Forza Italia”. This coalition was complicated since the beginning.
However, given the credibility of Mario Draghi and the support of the President of the Republic, Sergio Mattarella, as well as the pressure also coming from Europe relating to the need to implement a number of reforms, there were a few months of relative stability, which is quite exceptional in Italy – since Italy is a country with the greatest number of prime ministers and governments in the last 30 years in Europe.
This coalition began to fragilise already at the beginning of this year when the presential election came about. There was a rather hectic political turmoil and eventually a decision was made to ask Mattarella to stay for a second term. This is exceptional in itself as it had happened only once before and does not match the spirit of the constitution. It showed that there were already tensions in the coalition government.
Then the start of the war in Ukraine led to political tensions between political forces, where several of them had alleged, or proven, political and financial ties to Russia. The opposition came from the “5 stars” movement where a scission between those following the current foreign minister, Luigi di Maio, and the other one following the former Prime minister Giuseppe Conte.
The latter decided to oppose this government in relation to the policy adopted towards the Ukrainian crisis especially in terms of sending weapons and increasing defence spending in Italy. Added up to disagreements on social policy, it lead them to refuse to vote one of Draghi’s government’s crucial initiatives meant to support the poorest people and help mitigate the impact of the international crisis on Italian economy.
However, Giuseppe Conte was only the initiator of the crisis. Immediately after that, Matteo Salvini’s “Lega” and Silvio Berlusconi’s “Forza Italia” decided not to vote the confidence vote in the government, which meant Draghi was forced to resign as his government had no political majority anymore.
Of course, this crisis also stemmed from the perspective of holding general elections by Spring next year. In this context, the main parties of the coalition felt they needed to restore their own political momentum. The “Lega”, for example, feared the competition of “Fratteli d’Italia”, while the “5 stars” movement is struggling to deal with infightings and to rekindle with its base.
In this context, Sergio Matteralla called for new elections with two conditions attached. First of all, to hold them as soon as possible so as to be able to prepare the budget law which should be sent to the European Commission before mid-October . Secondly, to do everything possible to implement as much as possible from the Italian National Recovery and Resilience Plan (NRRP), whose follow up is currently the main concern in Italy.
The current situation is unstable and unforeseeable. The government is still working. It is supposed to be only a care-taker but there is an understanding that new important laws could be voted upon anyway to ensure that Italy can get further funds from the European Union as planned. The electoral campaign starts in the middle of the summer and will last only a few weeks. This situation is mostly in favour of the so-called centre-right coalition (“Forza Italia”, “Lega” and “Fratelli d’Italia”) which is favoured by the polls. An agreement was reached on the principle of who should take the premiership in case of a victory of the coalition: he or she should be chosen within the party which gathered the biggest number of votes, a solution which at this point favours Georgia Meloni. However, the coalition remains divided on a number of issues, including foreign policy and its approach towards Russia. Berlusconi’s “Forza Italia” and Salvini’s “Lega” have indeed been more equivocal in their interaction with Putin and their reaction to the war in Ukraine than Meloni’s “Fratelli d’Italia”, as she has been trying to adopt an international posture rather centered on the western, transatlantic relationship over the last few years and therefore took a tougher stance against Russia since the start of the war.
On the centre-left there is an attempt to build a coalition lead by the “Partito Democratico” that would be strong enough to oppose the so-called “centre-right” coalition, but it is encountering difficulties. These difficulties are only reinforced by the fact that the elections will take place under the current electoral law, mixing a vastly proportional system and a “first-past-the-post” system, which could not be changed in time.
Q2. Would you consider the current political crisis to be a renewed demonstration of the flaws in the Italian institutional and electoral systems? Are those likely to change in the future?
I would say that this crisis is primarily connected to the flaws of the Italian party system. However, the institutional set-up saved us a number of times and is most likely to do so again in the future.
As far as the party system is concerned, we started to see the first problems already back in the 1980s and 90s. Of course, the experience of “Forza Italia” with Silvio Berlusconi was the first time we had a populist party and it already started to change the political landscape. The current situation is born from the creation of the “5 stars” movement, which started to fragilise the already unstable equilibrium between centre-right and centre-left and constituted the most recent, greatest challenge to the party system. It was a dynamic visible all over Europe, but particularly dangerous in Italy.
In 2018 we had this experience of a government formed by two populist movements, “Lega” and the “5 stars” movement, which marginalised Italy and made the political party system even more fragile. At the moment we are in a hybrid situation. On the one side there is an attempt at restoring the centre-right/centre-left dynamic within the political system with the slow disappearance of the “5 stars” movement from the polls, although the far-right is still pretty strong. The fact that the centre-right and the centre-left have also changed in the meantime only makes things more complex, reflecting similar evolutions in other European countries.
Institutionally, Italy is still holding, notably because of the role played by the President of the Republic. Even though he does not hold much power in this non-presidential system, he plays an important role in the creation of a government and in the attribution of key positions such as the ministry of Economy and the ministry of Foreign Affairs. It is true that there is an imbalance as we’ve witnessed the growing role of the executive and the marginalisation of the Parliament, but overall the system is strong enough to make the country work even in a not-so-unlikely possibility to have an extreme-right/populist government in the near future.
The electoral law which currently operates in Italy does not work extremely well, and there were discussions to change it, but these have been halted by the political crisis. Now, and although there are political forces calling for deep changes to the electoral system, it is unlikely to take place in a significant manner anytime soon.
Q3. To what extent was Mario Draghi able to reform the Italian economy during his term? Do you feel there is now a risk in the implementation of the national recovery and resilience (NRR) plan?
The first part of the implementation of the Recovery Plan went rather smoothly, and Italy managed to meet all the agreed deadlines by the end of last year. The first instalment of funding (a first 21 bn EUR tranche in addition to the 24,9 bn EUR advance) was then processed by the European Commission. However, there is now a number of initiatives to be taken in order to receive the second instalment from the European Commission, amounting to 21 bn EUR , and this political crisis can be a strong obstacle. That is particularly true in regard to two key reforms which need to be passed to meet the requirements of the European Commission; the reform of the competition law, and the reform of the judicial system, both being very controversial files. At the end of the year, Italy should be receiving a further 19 bn EUR, worth about 1 pc of GDP.
The big opponents of both reforms are the centre-right parties: the “Forza Italia” and “Lega” parties were against the reform of the justice system, while the “Lega” and “Fratelli d’Italia” parties were against the reform tabled to the competition law with the Bolkenstein directive and transport law being the key points of tensions. The article on the liberalisation of the transport sector will probably be at least radically changed in order to be passed, and the future of the reform of the justice system is still unknown.
When we look at the near future, it is difficult to be optimistic even considering the calls from the Presidency to keep up with the reform calendar and secure European funding and the fact that both of these laws have tight deadlines, meaning they should be voted upon the coming weeks or months. Similarly, the budget law needs to be sent to the European Commission before mid-October, which seems difficult to meet given the election calendar and the need to form a new government before preparing the law itself.
On the other hand, the very principle of conditionality enshrined in the plan, the incentive to get money from the European Commission every semester and the conditionality of the new ECB bond buying programme act as powerful levers for a new majority to abide by the recovery framework, even though whoever enters the Palazzo Chigi will not have the credentials that Mario Draghi enjoys.
Q4. What could be the legacy of Mario Draghi’s relatively short tenure as Prime minister as far as the EU policy debate and EU global standing are concerned?
Mario Draghi started to implement the first reforms of the Italian Recovery and Resilience plan (public administration, public procurement, parts of the judicial reforms) which led to the disbursement of the first tranches of EU money (24,9 bn EUR in advance and 21 bn EUR in the first instalment). He was also very active on the European scene, pushing for an overhaul of the Stability and Growth Pact, promoting qualified majority on tax and foreign policies, signing the Treaty of the Quirinale between with France and agreeing the Initiative for an “Italian-German action plan”.
These steps were closely linked to the political capital he could bring to the table, which cannot be easily replicated by any new incumbent in the Palazzo Chigi.
In the context of the war in Ukraine, Mario Draghi also did a very good job in reaffirming Italy’s two main foreign policy structuring lines: the support to the transatlantic relationship and a strong support for European integration. These were very rarely denied or criticised by Italian political forces, except in 2018 and the “yellow-green” government. It is true that some political forces were closer to Russia and to Putin (the “5 stars” movement and the Lega) as we have seen during the pandemic and the Ukrainian war, but he managed to tame them. As he is now leaving, the united European line vis à vis Russia will be fragilised.
As to the ability of Mario Draghi to have Italian political parties and public opinions shift back to a pre-2018 mood towards Europe more specifically, I am a bit more pessimistic. During the most recent period, the government was helped by the conditionality of the recovery plan, and that is why some reforms and initiatives were accepted by all political forces and citizens alike. There was a clear link between being a serious European partner and the reception of funding, and the polls are still very much in favour of EU membership. As a consequence, there is no party which is openly campaigning against the EU or the Euro, for an” Italexit”. Even the “Fratelli d’Italia” officially has a pro-European line. However, the position of many populist parties is strongly favouring national capitals and intergovernmental dynamics rather than further European integration and sometimes their political programmes are reminiscent of such an approach to European affairs.
