Matteo Renzi is determined to change Italy: “I will not give up. Like it or not, we are going to get these reforms done.”

Ecco il testo originale in inglese del mio articolo pubblicato dal settimanale tedesco il 31 luglio

ROME – Last Thursday, July 24th, I spent an hour with Prime Minister Matteo Renzi at Palazzo Chigi, and we did a television interview that was mainly about the economy, and about the struggle to reform and modernise Italy.

It was the first time I had sat down with Renzi in more than six months, the previous time having been last November, before he became Prime Minister, when he was still Mayor of Florence and not yet even the winner of his center-left party’s primary vote as Party Secretary of the Democratic Party (Pd).

I found the youthful premier in good form, and determined to give an electric shock to the country’s cobwebbed institutions and creaking economy. I found Renzi angry with the obstructionist tactics his opponents are using to try and stop reforms, and yet I found him cool and convinced that he will beat them back and get the reforms approved in the next few weeks.

“We have to act now and get a whole series of reforms done in Italy, including the reform of the Senate, a new election law, a new Jobs Act, the reform of our public administration, the reform of our judiciary system and the reform of our tax system,” Renzi told me with a sober look on his face.

“I am not giving up. Like it or not we are going to deliver these reforms,” said Renzi at one point in our conversation.

It turns out that last Thursday was a good day to see Renzi because the Italian Parliament was in the middle of a new political battle, a clash between reformers led by Renzi on the one hand and the conservative anti-reform Old Guard, a kind of Italian equivalent of Die Linke, composed of older extreme left abegordneter and some former Pci apparatchik who are still inside Renzi’s Pd party. This fight was about the reform of the Senate, where the plan is to have a Senate of mainly Italian regional (Laender) councillors who are not elected directly by the public. It is pretty close to the German-style Senate model, with the prominent role of the Laender.

Renzi is trying to push through this plus a complex set of reforms to simply and accelerate the efficiency of the state. He has the bureaucracy against him and the Far Left. And the followers of Beppe Grillo, the comedian.

Renzi is also trying to get a new election law approved, since the Supreme Court has ruled that Italy does not have a credible election law. After these reforms Renzi intends to proceed with the reform of the labour market, potentially in my view with similar kinds of reforms to those that were included in the Hartz reforms back in 2003-2005 in Germany. This will be controversial.

Renzi also wants
to reform the bureaucracy and the tax system, and to make public spending cuts that will allow permanent reductions in income and company taxation levels. And, he also wants to reform Italy’s opaque and often malfunctioning judiciary system.

Those are a lot of reforms. Renzi is an ambious guy.

The problem is that the old nomenklatura of Renzi’s center-left party, the Pd, includes an older generation politicians and old-fashioned extreme left politicians who are like trade unionists. They are continuously trying to block the reforms. Other former Communists, in the Sel party, are also against the Renzi reforms.

This Old Guard minority of Renzi’s party does not want to see real change. They speak with the old 1970s rhetoric of Italian members of the Pci, the old Communist Part. But today they are the authentic conservatives, they are the ones who want to preserve the status quo and defend all acquired rights. They, and the old fashioned trade union leader Susanna Camusso, leader of Cgil, these are today in Italy the real obstacles to reform.

In some ways what is happening in Italy is a distant echo of what happened when Margaret Thatcher took on the head of the Coal Miner’s Union in Britain, a long time ago. The extreme Left and the trade unions are upset, unnerved and grasping for historical relevancy. But missing the point. Renzi is trying to implement the right reforms for his country but these reforms are often unpopular. Gerhard Schroeder and Tony Blair pushed through free market reforms and economic modernisation steps that were considered very controversial, especially on the traditional Left. But their long term benefits, in my opinion, can be seen in the levels of arbeitslosichkeit that we can compare between those countries that have reformed their labour market, welfare system and tax system, like Germany and Britain, and those that have not, like Italy.

This is certainly a strange summer in Rome. While the country’s weather is strange, so is its politics.

In order to push through the most important constitutional reforms, and the election law, and because he cannot count on all members of his own party, Renzi needs the support of Silvio Berlusconi, who last January pledged to support these specific reforms from the opposition benches.

It is therefore likely to be thanks to Berlusconi’s party’s votes that Renzi will get parliamentary approval to some of these reforms, because the extreme Left inside his own party could use a secret vote to try and defeat the reforms now being discussed.

Then there is also the prominent factor of Beppe Grillo, the comedian, and his large following of the 5-Star Movement. Matteo Renzi has tried to make deals with them, but there are internal leadership problems and Grillo is not the key to reforms right now.

Berlusconi himself, following his acquittal in the long-running and so-called “Bunga bunga” case, has somewhat reaffirmed his relevance on the political scene in Italy by pledging his party’s votes to the pro-reform consensus that Renzi is leading.

When I asked Renzi last Thursday how he proposed to deal with the constant and forceful opposition to reforms, he shrugged. “Like it or not we will deliver these reforms,” he said.

When we discussed the economy he was frank. Growth in Italy’s GDP in 2014 will be close to zero, and certainly below the 0,8% forecast that was made some months ago. Reaching even 0,8% “will be very difficult” admitted Renzi.

The IMF is estimating 0,3% growth for Italy, which means stagnation, and this comes at a time of a Europe-wide deflation risk. Renzi says the key to creating employment at a time like this is to unlock some 43 billion euros of spending that has already been calculated as part of Italy’s accounts, and to unleash this money for infrastructure projects starting in the autumn. He says these expenditures will not violate any of the various European pacts and strictures because the funds are already accounted for, just unspent.

He is counting on this and public spending on school infrastructure as well to assist in short term job creation. But he recognises the challenge. “Jobs is our Number One priority,” says the premier, but he also admits that “the statistics will not begin to improve until 2015”.

It is tough being a reform-minded premier
when your economy remains in stagnation and the debt is high. I asked Renzi about the debt and he excluded any radical solution or restructuring. The debt is a huge problem, he confirmed, but he also noted that the combined public and private wealth in Italy is about 8 trillion euros (8 thousand billion euros), or about four times the size of Italy’s debt. “Not all countries can say they have that kind of ratio,” he noted.

Renzi, after five months in office, seems every bit as convinced of his mission as he was when I saw him a few months before. He has gained political strength from his ability to win a victory at the European election last May, of nearly 41%. The problem now for the pro-reformers is that the forces of Darkness lurking in the undergrowth of Rome’s political jungle are strong, and the anti-reformers and anti-progressives are conducting a guerrilla war against Renzi.

I think Renzi will eventually win this battle on the Senate reform, and then he will have to do the same thing over again four or five times over a two year period if he wants to really change Italy. It could be a rocky road. He has the right ideas, but getting it all done is a dramatic challenge.

In Rome, the Battle Royale to modernise Italy is about to begin.


Alan Friedman is the author of Ammazziamo il Gattopardo, the best seller that has shaken Italian politics this past Spring.