ITALY: In A New Twist of Uncertainty

By Sabina Zaccaro Reprint | | Print |

Sabina Zaccaro

ROME, Jan 30 2008 (IPS) - Following the resignation of prime minister Romano Prodi last week after just 20 months in office, the future of economic and social reforms due to be implemented by his centre-left government appears uncertain.

Prodi confirmed his resignation Jan. 24 after losing a vote of confidence in the Senate by 161 votes to 156, with one abstention. A few days earlier, minister for justice Clemente Mastella – leader of a small Christian Democrat party, the Udeur – withdrew from the nine-party ruling coalition, depriving it of its very slight majority. Mastella was under investigation for corruption.

Prodi’s centre-left union won the 2006 elections by a razor-thin margin, and its future appeared uncertain from the beginning.

After consulting political leaders over the past four days, President Giorgio Napolitano asked centre-left Senate President Franco Marini Wednesday to seek cross-party support for a temporary government to reform voting rules ahead of new elections.

Napolitano said Marini is tasked to “examine the possibility” of reforming electoral law and to form, as prime minister, a government that would supervise the process.

Napolitano is seeking reform of a controversial system of proportional representation introduced by the government of former prime minister Silvio Berlusconi three months before his government lost power. That system gives disproportionate weight to small coalition parties.

A referendum was called for June this year to give voters a chance to amend the law to favour big parties. The referendum will be called off if parliament changes the law in the meantime, or if a new election is called. The centre-right has repeatedly asked for that after Prodi’s fall.

A prolonged political impasse would likely delay economic and social reforms amidst a global slowdown, and with the European Commission (EC) asking Wednesday for “more ambitious” efforts from Italy to reduce its public deficit to avoid breaching EU rules.

Italy has succeeded in bringing its budget deficit “to well below the allowed three percent level in 2007,” but the European Commission has urged it to “build on that result to reach a balanced budget within the programme period and to put its public debt firmly into a descending path.”

The Commission said that Italy should cut the deficit further in 2008 from the 2007 level, and implement pension reforms. Italy, the euro zone’s third largest economy, carries the highest public debt in the 27-nation European Union.

Berlusconi left office with public debt at 4.3 percent of the gross domestic product (GDP). Prodi cut budget deficit last year to below the European Union’s 3 percent of gross domestic product for the first time since 2002. The improvement in public finances by Prodi’s government was achieved partly through tax increase.

In less than two years in government, Prodi also launched a new foreign policy. He withdrew Italian troops from Iraq, took the lead in creating a peace force in Lebanon, and guided the successful U.N. campaign to pass a motion demanding a moratorium on capital punishment.

“Moreover, in these last two years, Italy became part of the U.N. Security Council with only seven votes against,” Sergio Marelli, president of the national NGOs association told IPS.

“It has actively contributed to peace dialogue initiatives for the Middle East, covered all the debts with international institutions – first of all the Global Fund To fight HIV/AIDS, Tuberculosis and Malaria, inherited from Berlusconi’s government – and started a serious reform process of the current law on Italian development cooperation.”

Many Italians had hoped also that five years of stable government would have brought long-awaited reform of the justice, education and health systems.

“There is an alarming distance separating the Italian political world and the economic reality in the country,” says the 2008 report of Eurispes, Italy’s leading institute for political and economic analysis.

“In just five years, between 2001 and 2005, Italian families have reduced their annual savings by around 40 percent,” Eurispes head Gian Maria Fara told IPS. “And a new category is emerging, the working poor, those people whose life standard – though having a fixed employment – is close to that of the unemployed, because they are underpaid.

“In our country salaries are 10 percent lower than in Germany, 20 percent lower than in the UK, and 25 percent less than in France.”

It will be up to the interim government now to keep up progressive policies of the Prodi government, and help regain people’s fading trust in institutions.

“I have always appreciated Marini’s commitment to promote dialogue in parliament between the political sides, and the great poise he showed in carrying out his office,” foreign affairs minister Massimo D’Alema said on national TV Tuesday.

“I know this is not a simple task…but I will act swiftly,” said the newly appointed Marini at a joint late afternoon news conference with Napolitano at the presidential palace in Rome Wednesday.

Marini is now expected to begin talks to assemble a cabinet that will win support in Parliament – a prospect that appears difficult given clear statements by Berlusconi and his allies that they would only accept new elections.