10 March 2013

Wolfgang Münchau: Italy must seek generational change

Following the inconclusive result of the general election last month, the influential voices in the Italian media and society are now calling – not for the first time – for a “technical” government. The task of such a government would be simple: reform the entire political system, introduce new voting rules, and in the spare time that is left implement all the economic reforms and pay back all the debt.

If Italy goes down that route, the probability of a serious accident will be high, because the government would be acting without political legitimacy. I would advocate a different approach. First, Italy should accept the results of the election, rather than trying to overcome it. The most important aspect of the result is not the stalemate, but the generational change it represents. The previous Italian parliament had one of the oldest average ages of all parliaments in the EU – 54 years in the chamber of deputies; the new one has the youngest, at 45 years

The best outcome would be a handover of power to a new generation of leaders, from which Matteo Renzi, the 38-year-old mayor of Florence, is the most likely to emerge as prime minister. In the context of Italian politics, Mr Renzi, a leading politician of the centre-left Partito Democratico, is even more radical than Tony Blair was in the early 1990s, when he reformed a reluctant Labour party in the UK. Mr Renzi rails against what is essentially a corrupt political system with no less force than Mr Grillo – except that he is a member of a real political party and has a real political job.

He seems aware of the political trade-off between economic reforms and austerity, that one cannot pursue both at the same time, at least not in large and complex countries, and that the priority now must be on reforms, not consolidation. As somebody in charge of a large city with a large welfare budget, he is also directly affected by the catastrophic impact of austerity...

The priority of such a government would have to be to end austerity immediately, and simultaneously start on a select number of reforms – including privatisation of state assets, an overhaul of the public sector, a separation between political parties, banks and state-owned institutions, and reforms to liberalise service and product markets.

The new government should probably not waste political capital on a further deregulation of hiring and firing laws – an emotive issue in European politics, with uncertain economic gain but certain and large political costs. I am also not sure that a change in the voting system would bring the desired benefits. Italy had various systems in the past – none perfect.

Other than this, I find it hard to think of benign outcomes. The absolute worst that could happen is for old establishment instincts to prevail, and for Italy to seek refuge in another technical government – “Monti without Monti”, as one of my interlocutors put it in a reference to the outgoing prime minister. We all saw where technocracy ended up last time.

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