Salvini’s tactical own goal has revived a political virtuous circle. Europe and the Atlantic partnership are cornerstones
For his second wedding, along with the yellow-red coalition, Giuseppe Conte has included two problematic offspring into the mix: ‘Quota 100’, the pension reform scheme, and the Citizen Income. This is rather expensive and cumbersome baggage that risks weighing heavily on the country’s finances for some time and on its chances of returning to positive growth. It’s the infamous bill presented by the previous government which some have offhandedly termed the ‘Papeete bill“. Salvini’s political hara-kiri, his claim to be granted “full powers”, as if through heterogony of ends, has produced the opposite result of reviving a virtuous political cycle, where reality and the awareness of what is at stake have pride of place, Europe and Italy’s Atlantic alliance are two essential cornerstones, and the country’s role within the Mediterranean is viewed in the long term. All aspects that Salvini’s sovereigntism and his ‘privileged’ relations with Moscow dismissed and almost had us forget, dragging us into a hole we might never have managed to get out of.
As a people’s advocate and guarantor of the previous yellow-green executive, Giuseppe Conte, thanks to Donald Trump’s endorsement, and that of European leaders in Biarritz and the blessing of Italian President Sergio Mattarella, set to work at the end of the summer to present his new majority not so much with a ‘contract’ but more a programme based on a few basic tenets: economic growth, lower taxes on labour, the fight against tax evasion, care for families and the weaker sectors of society, green economy and plastic tax, a constructive relationship with Brussels. Challenging goals that would require a government team in line with these ambitions, which for the most part has been achieved.
Having solved the problem of the deputy prime minister by identifying two delegation leaders within the government team, meaning Dario Franceschini for the PD as Minister for Culture and Luigi Di Maio for the 5SM as Minister for Foreign Affairs, the team was then filled out by assigning the key posts based to some extent on political allegiance but primarily on competence. Roberto Gualtieri, an Economic historian and former president of the Economic and Monetary Commission in the European Parliament, has been assigned the key role of Minister of the Economy. The budget planning document devised by the government and sent to Brussels a few days ago is his own doing, though the ‘unless otherwise agreed’ at the end of the document does leave room for possible corrections by the 5SM and Renzi’s crew. The former are against lowering cash payments thresholds and intent on boosting tax evasion measures by including jail sentences, while protecting their own constituency of small businesses, craftsmen and taxi drivers. The latter aim to completely abolish the ‘quota 100’ early retirement scheme and shunt the savings towards family policies.
In other words, despite a solid majority based on Grillo’s people, the PD and LEU, the government does show a few signs of weakness. The prime minister is constantly “back-footted’ by the actions and statements of the two major shareholders of the executive, Di Maio and Renzi. Zingaretti is trying to act as peacemaker, though he’s aware he can’t rely on the same kind of clout in Parliament as Renzi. “The political differences between the PD and 5SM are vast”, Zingaretti admits, “but I say: let’s not linger over our differences, let’s govern together. Conte is doing a great job, the rest we’ll see as we go along, let’s not write our future. These are two parties who up to very recently were at loggerheads. Now, based on our ideas, we must work to find a working compromise that is useful for Italians”.
For his part, Conte is trying to find a common denominator for requirements that are at odds with each other and to replace Salvini’s ‘flat tax’ slogan with less taxes for the middle classes. “We are working like mad”, the prime minister claims, “there’s a task force already at work on simulations of the income tax reform. We can’t push it through this year but will approve it in 2020, so that everyone pays but pays less. We will reduce the number of tax brackets and lower the tax burden”. According to Conte, “bringing the two tax brackets at 27% and 23% down to 20% is the goal we’ve set ourselves”. On the use of cash, however, Conte reveals that “there’s one political entity that has raised many objections, but I’ve always said that the limit could be lowered from two thousand to one thousand without any great social unrest. But even a two thousand threshold is fine. But this by no means undermines what we have achieved. We had to make a statement. Cash is a cost for the banks. There are studies that estimate the cost as amounting to 10 billion a year, because it involves a vast number of people who safeguard, shift and handle cash. If we work towards digital payments, we not just trying to stem undeclared transactions, and in any case we’re not making it harder to use cash”.
The level of credibility of the Italian government is rising once again: the spread has dropped and, if the trend continues, we could save up to 18 billion in debt servicing charges over the next three years, to be assigned to new investments and policies supporting the weaker sectors of society. In little more than two months, Italy, from being an apparently sovereigntist country, is once again engaging in constructive conversations with Brussels. Of course, we still have problems. Thanks to the citizen’s income and the so called ‘quota 100’ retirement age we have had to promise Europe VAT increases amounting to 51 billion euro; Minister Gualtieri has managed to cover the 23 due in 2020 but not the 18 required for 2021. Brussels will almost certainly call us to account on this: “If clarifications are required, we’ll provide them; that doesn’t bother us” Conte said at the most recent European Council.
But it’s the internal front that is more worrying. Because both the 5SM and Renzi’s faction have announced amendments to the budget. In the background both Di Maio and Renzi are scheming to replace Conte. “Di Maio says ‘don’t worry’ with a touch of the Renzi approach” a poisonous Matteo Salvini has commented, as he accuses this “Dracula” government of adding new taxes. But the prime minister has underlined that there’s no reason to fear a reversal. In the Senate, where Renzi is decisive, according to a 5 star source, if any attempt to upend the recent government took place, not only would the 5 Star group risk breaking up but there would be a dozen or so Forza Italia senators ready to come to Conte’s aid, perhaps by offering their external support. But among Renzi and the 5SM factions there are those who say: “The legislation is solid, the government not so much.”
In short, despite the best intentions, the marriage ‘of interest’ between the 5 Stars and the PD will have to overcome difficult trials of cohabitation. Starting with the regional elections in Umbria.
@pelosigerardo
This article is also published in the November/December issue of eastwest.
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Salvini’s tactical own goal has revived a political virtuous circle. Europe and the Atlantic partnership are cornerstones
