Italy at the crossroads—again

Fabrizio Tassinari (FT): In one of your landmark articles on Italy you write about the "clientelistic implosion" that led to the end of the so-called "first Republic," the post-war landscape of political parties that ruled the country until the early 1990s, ushering the so-called Second Republic dominated by Silvio Berlusconi. Can you briefly walk us through your argument and, so to speak, update it?

Stefano Guzzini (SG): I never bought the argument that Italy went into a Second Republic. Against the common wisdom at the time, the article was titled “The Long Night of the First Republic”. With hindsight, I still see no strong light at the end of the tunnel, I am afraid. Hence, what we see now may be best described as the prolongation of that continuing night. At least so far.

My argument then was done in the context of quite remarkable changes in the Italian social and political landscape. In the early 1990s, the familiar postwar Italian political landscape laid in ruins. The Christian Democratic Party (DC) which had been in power ever since the New Republic in
1946 had lost its grip on the central government and was basically wiped out as a major political force (splintering and merging with others) in the general elections of March 1994. Several of its coalition partners were hit worse. The Liberal Party (PLI) dissolved itself into a loose network. The Social Democratic Party (PSDI) went bankrupt. The Socialists (PSI) split and were reduced to (electoral) insignificance. The Communists had to look for a new name and also split. Large sections of the economic and political elite had been arrested in the judiciary campaign “Mani Pulite” (Clean Hands) that tackled “Tangentopoli” (Bribesville), or the systematic enmeshment of public and private interests assured through systematic kick-back payments and occult finances. Finally, violence between organized crime and representatives of the state had escalated with the killing of the two main anti-mafia prosecutors (Falcone and then Borsellino) and the capture of the presumed top mafia boss of Cosa Nostra (Riina) who had escaped arrest despite residing in Italy for decades.

The prevalent explanation was that this was all due to the end of the Cold War. The underlying cause of the remarkable parallel between the international and domestic change lies in the reproduction of the East-West conflict in domestic politics. After the Second World War, while Germany was territorially divided, Italy became a politically divided country. The legitimacy of both poles was inextricably linked with external dynamics. The PCI's closeness to the Eastern bloc was perceived as a threat to Western defence, even after 1977, when the PCI officially declared its distance from the Soviet Union (lo strappo, the rift) and supported Italy's membership of both the EEC and NATO. By invoking anticommunism, and by avoiding the emergence of any party outside the PCI that might threaten the communists' monopoly of opposition, the DC effectively managed to maintain a permanent deadlock of the political system. The PCI was never allowed to assume the role of alternative government and became increasingly co-opted into the policy making of DC-run governments. After 1989/91, with the necessity of anticommunism gone, people could ditch the DC and its system, or so the argument ran.

I did not see it that way. Of course, the end of the Cold War had an effect on the political system, but people were not really ready to ditch the former type of rule, as it was represented by the DC. The 1994 vote for Berlusconi was to show that quickly. Rather, they basically exchanged the political class in an attempt to keep the kind of political and social bargains intact that had been prevalent in the previous decades. It was just another round of trasformismo, this particular way of keeping things in a slow change, just enough to make the underlying structure persist. Contrary to the view which sees the end of the Cold War as triggering domestic changes, I maintained that both changes were incidences of adjustment processes to globalization pressures, namely the effect of transnational and societal dynamics on modern welfare states that have upset the consociational/clientelistic bargain on which Italy's domestic political economy rested (and which I develop in the article). The many successes of the judiciary campaign had been triggered by the concomitant financial crisis of the state, its parties and major Italian industries which undermined the major actors' ability to uphold their clientelistic system.

The Italian political system had been since long in a kind of permanent legitimacy crisis, which the political system tried to ease by dishing out payments to a large variety of constituencies. Yet, the demand for such payments increased by the need to recruit more and more political and social actors into the system because the DC’s – and the Catholic Church’s - power base kept slowly eroding over the decades. First, the Socialists became junior partners of the DC; eventually providing even the Prime Minister in the 1980s (Bettino Craxi). Then also the PCI was co-opted when, for instance, it ‘got’ the smallest of the three public TV stations. And so forth. Adding more and more people to bribe and favours to return, the system at some point simply could no longer deliver. Just as with the recent corruption scandals in Lombardy, businessmen started to collaborate with the judiciary when they paid politicians but did not get the returns they had paid for (and Mani Pulite had also then started in Lombardy, i.e. Milan’s region). Anticommunism was nothing more than a shiny veneer to provide a legitimate cover over much of these hidden exchanges and implicit bargains (such as the accepted tax evasion in the North in exchange for public development policy in the South). It also conveniently allowed its Western allies and European partners to close their eyes before the realities of Italian politics, because it was allegedly so important on the anti-communist frontline. Anti-communism being just a useful tool, the end of communism did not ditch the DC and the system of hidden exchanges, but, if anything, provided a more acute legitimacy deficit for it.

FT: How does Berlusconi's rise, his political trajectory fits into the pattern you describe?

SG: I think that Berlusconi’s career fits it very well. This said, that is hardly astonishing, since no one would come up with an explanation which would not to some extent take its clues from his political career.

Berlusconi was and is a typical product of the First Republic. Son of a banker (of a bank later investigated for mafia money laundering), he had been known for his closeness to the Socialist Party starting from the time it allied not with the left but with the right (i.e. since the early 1960s). The PSI was also a major player in Milan. Berlusconi made his first major money in the real estate and construction business where he was given development projects for the urban expansion of Milan. He then invested also into advertisement and media, which is the part most well known by now, since he runs 3 nation-wide TV channels (one on frequencies which do actually not belong to him, but the EU Court’s judgment was never applied), some major newspapers, and the biggest printing house (Mondadori). But his Financial Holding (Fininvest) is also represented in the banking and insurance business, retail, and you can go on (see graph). The initial push was however only possible via political support mainly through the PSI, the party most hit by the scandals then. At a time when nation-wide private TVs were not yet allowed, he circumvented this law by having his programs recorded a day before and concomitantly distributed through regional antenna networks. That was illegal, but he was allowed (protected) to go on. When a tribunal asked to stop this broadcasts on 16 October 1984, four days later the Craxi government passed a decree that let him continue (the legal situation stayed uncertain for several years, though, needing further decrees). By the time private national TVs became legal, he was already on the market and could bar the entry to any newcomer. He has tried hard to keep his monopoly of nation-wide private channels. And only recently a channel was able to make an indent (La7) which, however, is making a deficit and on its way to be sold by its owner, Telecom Italia.... perhaps indirectly to Berlusconi.

When the system crumbled, Berlusconi was exposed. The left made it clear in the forefront of the 1994 elections that they would take a deep look into his rights to run his Media Empire and would also otherwise try to provide some justice to the illicit advantages he had received before. His companies were heavily indebted and he ran the risk of having to make large payments, yet with potentially no support for new bank loans or stock launches. In the end, it would have made him declare bankruptcy, as his advisor and chief collaborator Confalonieri also later stated. When Craxi fell, Berlusconi eventually saw no other way to protect his interests, but to run himself. Ever since, Italy has been taken hostage to shelter the private interests of a man who, without political power, would see his economic empire reduced, and himself probably convicted, possibly jailed. Although his companies are financially much sounder now, the judicial pressures have not resided. His political career is still his best own protection.

FT: If the consensus among today's commentators is anything to go by, we are now witnessing the "implosion" of the Berlusconi era. But what explains his continuing political resilience?

SG: So far I mentioned his motives, not why people would actually vote for him, let alone why they would continue voting for him. Here, the reasons are multiple. The main reason is the above mentioned trasformismo. Berlusconi came in as something new, therefore also all the hype about the “Second Republic”. But he came in to re-organise things such that the main bargains would stay the same. (In his years of government, he has not done any major reform that would affect the underlying political system.) In fact, he clearly appealed to the fear of things truly changing in Italy. As in all systems which go on for long, one might not necessarily like it, but has often found ways to live with it. If such ways are not always entirely legal, or relied on personal contacts who could become exposed and removed, then ‘a cleaning up’ of the system is not greeted with cheers, but with fear. The Italian system was precisely built upon turning more and more parts of the population into its implicit accomplices. Berlusconi would defend them.

In social and economic terms, this mobilises mainly the population which is working in private business, often in small or micro business. In fact, big business is an ambivalent ally (Gianni Agnelli once famously declared Berlusconi-Italy not even a Banana-Republic, but a Republic of ‘fichi d’India’ – Kaktusfeige/prickly pear), happier to sit with centrist parties or Monti today. It may sound great in principle to say that there should be fiscal justice, everyone paying his/her due into the system, as the left (but not only) often does. But everyone knows what that means. It means that the retired electrician (hairdresser, etc.) whose pension is far too low, should not work on the black market to ‘help out friends’; that the public employee whose salary is usually quite low, should not round up his pay; that the little shopkeeper who slaves 60-70 hours a week to make ends meet should start declaring all the low revenue he/she may get. There is undoubtedly much tax evasion which is based on convenience or even greed. But there is also quite a large proportion of evasion whose motive is perceived by those doing it as sheer necessity. The Italian economy includes extremely competitive components (textile, agro-alimentary industry, etc.), but it hosts also a myriad of largely unproductive components which would not survive, or only miserably, if everything would be made according to the books. The First Republic had allowed a series of grey-area practices to evolve so as to keep people off the dole. It still does.

This explains, that many governments of the First Republic, DC or Berlusconi-led, have repeatedly offered fiscal amnesties. In exchange of paying some kind of fine, people could get all their fiscal books of the past closed. Berlusconi just announced another one in case he would win. It also explains that Berlusconi always tries to get rid of property taxes, as (ridiculously) low as they may seem to any Danish tax payer. 80% of Italians own their home, which is very high on European average. That makes them rich of sorts, at least in terms of stock. But, if regular income, i.e. income flow, is not high, then taxes would start to bite into living standards. And being forced to mortgage or sell property would undermine the savings base of the future when pensions are often not enough.

Again, I do not wish to convey the impression that there are not clear abuses, and many people could easily cut on their 3rd TV or 3rd car (since the kids usually live at home until quite late). The numbers about tax evasion in Italy are staggering, only comparable to countries like Greece and Romania in the EU. Italy is estimated to have a tax evasion of at least €100 billion per year. In some part of the South, where organised crime is particularly strong, for every 100€ taxes paid, there are more than 60€ not paid (in the North the numbers are usually around 20€). But the numbers also show that where income per capita is high as in the North, the absolute amount of tax evasion is higher than in the South. Less people pay taxes in the South, but more absolute tax evasion happens in the North, tendency rising in 2012.

Whether or not low income is prompting tax evasion, Berlusconi’s resilience has one origin here. When potential voters are told that here someone comes who says he will even pay back the property taxes that the Monti government (with Berlusconi’s support) had levied in 2012, as incredible as it seems, signals that he is on the right side, whether or not he will actually keep that promise. That is all what is needed.

A second explanation for Berlusconi’s electoral success is to be found on a level of identity discourses which is more difficult to quantify. As in many countries, the right and left in Italy define two quite different political families which share almost opposite views of what Italy is or should stand for. The DC did succeed in doing something quite remarkable, by constructing a post-war consensus which was anti-fascist and yet still acceptable to the right and the many who had been fascists before. If it had not, anti-fascism would have an almost exclusive privilege of the left, severely undermining any other legitimacy-project. Yet, both Catholics and communists died in their fight against the regime (although the latter perhaps more and surely earlier). Being anti-communist and anti-fascist, ‘anti-totalitarian’ that is, was the DC’s way to steer a legitimate line in Italian politics, which the PCI, for obvious reasons, could not imitate. Sure, there are a series of facile exculpatory moves attached to this, like “the worst was when the German Nazis took over”, etc. But it is a clear feature of the First Republic that the DC was both honestly representing a wing of anti-fascism (as parts of it clearly were), and able to provide a cover for the accomplices, and sometimes more than that, of the previous fascist regime.

Now, when the early 1990s exposed what everyone knew, namely that the system was systematically corrupt and that this could only work if most people contributed, or at least had turned a blind eye, to it, this produced a difficult situation. Suddenly, being an accomplice was no longer tacitly justified by the sheer fact that many were. It needed open justification, just as in the post-war period. And in this justification, one could of course go the Christian way of penitence (or the Communist way of public self-critique), accepting one’s own mistakes, misjudgements, and so on. Or, one could basically try to deny that there was much else possible. The produced various variations on the theme of legitimate ‘self-defense’: the old political class was hopeless and left us no choice; “the business I created helped other people”; my family needed to survive, and so forth. Berlusconi recently used nothing less than the 2013 ‘Day of Memory’ of the Shoah to declare that Mussolini was surely wrong with his Jewish policies (although, again, that was partly due to German pressure), but that he did also good things – conveniently passing over the question whether or not one needed to be a fascist to do those positive things. Doing so, he taps exactly into this kind of exculpatory reservoir which defines many on the Italian right (or, indeed, which makes people flock to the right). With Berlusconi, there will be no self-righteous ‘truth commission’ which establishes misdeeds of the past, even at the cost of their impunity. Every time Berlusconi is not sentenced, a silent crowd is redeemed. Every time he is sentenced, it will rally to his support to build fences. Berlusconi basically makes many Italians live at ease with themselves – ‘not like those “catto-communists” who judge from their self-anointed moral high ground’.

And this produces a vicious circle the more it goes on. People feel that at some point, some more general admission would be on order. But they naturally try to postpone that date, and Berlusconi is happy to oblige. The longer they postpone, the more there is to justify, the more they need someone like Berlusconi to protect them from a re-writing of history of the First Republic where neither the endless re-convening of DC governments, nor the repeated Berlusconi palliatives would be justifiable, and where they would be being proven historically wrong and morally despicable. What shall not be, cannot be. It is here where the otherwise rather bizarre anti-communism in Berlusconi’s political campaigns makes sense (Prodi – a communist government?). It does not mobilise against a real risk of communism sweeping over Italy; Italian voters are no dupes. But it signals that people who were not on the left when Italy went from a corrupt government to the next (Berlusconi’s included), were justified being there. Us here – them there.

A third factor is connected to the political competitor, the left. The left surely has a long-standing frustration for having been excluded from power. But it seems to make the mistake time and again, to proudly announce that its passing to power would provide some clean-up of the misdeeds accumulated before. The famous political theorist and commentator Norberto Bobbio wrote after the 1994 elections, that Italy is afraid of the left. Probably it is fairer to say that it is more afraid of ‘change’ other than the fake trasformismo and impatient with the passing of judgement which seems attached to such real change. And hence, when the left runs for a change in Italian politics, it is attractive only to those who would have voted for them anyway. Worse, now being outflanked by a grass-root movement, Beppe Grillo who can point to the many compromises, and some of them more than shady, that also the left has made, it finds itself outperformed on its own ticket.

In a related manner, the left also carries a kind of inferiority complex along, which is again the result from having been excluded for so long. It seems to be under the impression that it needs constantly to show that it is a ‘reliable’ partner for business at home and European allies abroad. The few years of d’Alema’s government were not enough to establish its credentials. And so, much to Berlusconi’s delight, the PD goes out of ifs way to present itself as the respected and respectable party which ends up just as much imposing the widely hated austerity measures as Monti did. It can be construed as a EU or German puppet. It needs to defend a political programme which is hardly attractive for the small shopkeepers mentioned above, but also for the many workers in their increasingly precarious contract conditions. Whereas Berlusconi wins by faking a change to keep things as they are, the left would be well advised to fake leaving things as they are to work for a real change. But that is a hard sell for an opposition which has defined its identity in contrast to the status quo. The opposition is cornered by itself.

A final explanation for Berlusconi’s electoral success, one which it is politically incorrect to mention in Italy, is his media Empire and hence his grip on public debate which is unique in any Western democracy. It is politically incorrect, since it seems to imply some ‘whining’ of the political competitor ‘whose’ journalists (allegedly all on the left) control the main newspapers and public channels. All these ‘intellectuals’ who preach their story are then pitted against the common man like Berlusconi (yes, he gets away with this, even if he finds himself in this most common situation of needing to pay 48 Mio. USD a year, 100000 € a day, in the divorce with his second wife - he says he pays twice as much including back payments). And by being against Berlusconi, any such critique of his conflict of interest is by definition partisan and, so the story goes, hence immediately disqualifies whoever uses such argument.

That shows that there are multiple ways in which Berlusconi’s media position is biasing public debate in a mighty way, both by direct censorship and by indirect self-censorship. With regard to direct censorship, the far most dangerous people are not left-leaning journalists, but those on the right who refuse to become accomplices of the system. They stand for the possibility that there is another way in the same political family and electorate. It used to be the left/truly anti-fascist wing of the DC. The two most prominent representatives were undoubtedly Indro Montanelli (1909-2001) and Enzo Biagi (1920-2007). Montanelli was a renowned journalist for the Corriere della Sera (and others) and became the founding editor-in-chief of the newspaper Il Giornale, which passed into the ownership of Berlusconi and then his brother. A staunch anti-communist and unflinching anti-fascist (a regime he experienced in full), a liberal-conservative historian openly identifying on the political right, Montanelli resisted Berlusconi’s politicisation of news and his intent to openly run Il Giornale for his first campaign in 1993-4 – and was hence ousted. Long before The Economist, he wrote that Berlusconi was not only unfit for ruling Italy, but positively dangerous for Italian democracy. Enzo Biagi, another journalist who had worked in the past with center-right newspapers (again the Corriere della Sera) was running one of the most awarded TV programms, called Il Fatto whose time on air was just after the main evening news. This relatively short programme (around fifteen minutes) would, on a daily basis, provide comments and interviews on political and social issues. In 2002, Berlusconi declared at a press conference in Sofia that Biagi and two other journalists (from the left) should not be retained by the public TV, whose majority in the administration council had passed now into the political hands of the Berlusconi-government after the 2001 elections. They were all made to go. For the place of its announcement (and obvious connotations of a communist practice), this open censorship has become famous as the ‘Bulgarian Edict’.

The more indirect self-censorship happens not only in all media where the job is directly dependent on Berlusconi, or indirectly through the advertisement channelled through him (!) and on which all TVs now depend, but also in the very setup of the sphere of political debate. Berlusconi polarises that sphere in a way which ends up confusing any critique of his own person with an ideological move. When The Economist, not exactly known for its agitprop in support of the left, started its long ongoing campaign against Berlusconi (on why he was not fit to govern Italy), he answered by calling it The Ecommunist. This worked on a perfectly syllogism: Communists are against me; The Economist is against me; The Economist is communist. Well, he obviously does not really think that. But again it mobilises a central confusion between objectivity and neutrality which is pre-dominant in the public debate and which works much to silence critique. If one says that Berlusconi’s Media Empire has been a factor helping his political career, or that it introduces a conflict of interest unheard of in other democracies, one makes an objective statement. But it is obviously not a neutral statement, at least for people who are aware of the divisions of power necessary for well functioning democracies.

Now, every time there is a critique of what Berlusconi does (and that can be made against him just as against any other), that can claim to be objective, as in The Economist’s dossiers, one can swiftly show that it is not neutral, since he is the target. It comes down against one political side. Hence (sic!), and in a fallacious reversal of the argument, by not being neutral, it cannot be objective, either. As a consequence, many journalists tend to stay neutral (and hence not objective!), since even an objective statement, if it has Berlusconi as its target, will immediately be criticised as being not neutral, hence (sic!) non-objective or partisan. By definition, therefore, the critical journalist must be from the other political side. That makes the statement by definition true which says that any critical journalist is from the left. And that explains why people like Montanelli and Biagi were so dangerous. They did not fit the scheme where critique is immediately boxed as coming from the political competitor. The usual: ‘You do not need to listen to them’, ‘They say so for their ideological reasons’ would not work. Such a polarisation of the public sphere makes free political communication impossible, because in the name of neutrality, it kills objectivity and the common ground for rational debate. Hannah Arendt’s and Habermas’ nightmare of a democracy.

As a result of all these many factors to support him, Berlusconi’s electoral strategy does not need more than to tap into the reservoir of right-wing vote which was has been astonishingly constant over the decades. The left alone never had a majority. Never. Hence, Berlusconi needs to mobilise his own electorate and make sure that the message gets through that any vote for Monti is a vote for the left (never mind that Monti belongs to PPE...). Berlusconi would be the only true defender of the status quo (by another name, of course). He is not expected really to win, since the Parliament will be much more divided than ever before. His aim is to become a veto power, making the life of whatever government miserable and then picking up the crumbs later. Politics in Italy is nothing for tender souls.

FT: Today's political landscape in Italy is again in flux. That, for a change, is confusing to a foreign audience and it may help to sum it up. Let us start from the left of the political spectrum. We have the Democratic Party (PD), allied to the left, which despite many leadership changes and a sometimes contradictory party line on key issues, is currently ahead in the polls, but most probably not enough to obtain a ruling majority. Then there is current prime minister, and former- technocrat, Mario Monti, who is effectively running a centrist alliance of parties and movements and may form an alliance with the PD after the election. What are the programmatic and if applicable, ideological fault lines? Where do these parties draw support? On which issues can they converge?

SG: That is actually not that easy, since most major political party families in Europe have lost their clear ideological references. Since the electoral composition of Berlusconi’s support should shine through my earlier answers, let me start from the other side of the spectrum.

The PD under Pier Luigi Bersani is by all means a quite typical social-democratic party, being that part of the former communist party which merged with the left wing of the Christian Democracts. It defends what it sees as the common good which should be publicly available and not marketised. It tends to defend state responsibilities and hence a certain level of taxation (and fight against tax evasion). But its voter base has become stretched and thinner. It has its roots in the labour movement, considers itself still a labour party, but caters at the same time to many who are working in the public sector (lower income, e.g. nurses and teachers, but not only), the laic voluntary sector in civil society, and, more generally, the higher educated. This is no easy bridge and therefore, it is not so difficult to see how it can be easily ‘outperformed’ by smaller parties which have no ambition to become a Volkspartei or catch-all party, and can therefore target their electoral appeal to specific sub-groups. The SEL (Sinistra Ecologia Libertà – Left Ecology Freedom), its allied party on its left, is closer to the formerly communist trade unions, and sometimes looks for ‘rainbow’ or green topics. It has by now little of a far-left or revolutionary force left. And hence, it is outflanked by even smaller parties, and so on. In its attempts to define itself as a reformist social-democratic party, the PD has gone out of its way to support the austerity programme, even the truly painful pension reform, as long as it would not cut too much into labour rights. In its previous passage in government, it was also the party most committed to combat the corporatist organisation of Italian society, the variety of licenses, and small professionally organised privileges. To give one example. As bizarre, as it may sound, Pharmacists in Italy did not necessarily need to have a degree in Pharmacology, if they were inheriting the shop from their parents. This anti-privilege facet which ends up supporting different types of ‘liberalisations’ puts the PD in alliance with liberal (not neo-liberal) forces in Italy, which are, however, not particular strong.

And so we move to the center under the recent leadership of Mario Monti. Now, of course, in any country Monti would be considered on the center-right, as his collocation in the European Parliament testifies. Quite logically, his support comes from parties, almost all former allies of Berlusconi, which used to be Christian-Democratic or further to the right. But for the special place of Berlusconi in Italian politics, this center-right is translated as centrist. Also here, we have some ideological commitment to the state (but moderately), but also to liberalism and its undermining of inherited privileges (but not too much). One should also never forget that trade-unions in Continental Europe were no monopoly of the left. At some point in the 1950s, the Christian-Democratic trade-union had 1 Mio. members. Hence, also the center includes a working-class and a public sector component. Otherwise, Monti tries to appeal to a center-right vote of free professionals which understands that one cannot just go on like before, but would come down with the costs for change in a manner which would be slightly different than the PD. I say slightly, since Monti had considerable fewer difficulties during his time as Prime Minister with managing the support of the PD for his reforms, than with Berlusconi (his government depended on both).

Therefore, a possible coalition between the liberal Monti and the PD could result in a series of reforms of the political system. This includes a reform of the system of political representation, since Italy with its multiple governmental layers and bloated Parliaments has a huge cost for its political class. Both want to cut this (also a way to diminish patronage). It also includes a reform of the tax system, which is far too complicated, since there are too many ‘leggine’ (small laws) allowing exception, and a reform of the electoral system and a push for more demand-led economic policy. There seems also some overlap in their European policies, in that both support the Tobin Tax and Euro-Bonds (although Monti’s allies may be more cautious) and generally accept that the European project is very important and may involve also costs for Italy.

With this overlap, whereas Monti tries to present himself as the respectable center-right, Berlusconi will portray him as the Trojan Horse of the left. In a majoritarian electoral system (to this later), votes to the center can be constructed as votes taken away from either side. Since Monti comes from the right, it would be taking them from the right, dilute its vote and representation – and make a left government possible. This has been Berlusconi’s winning strategy in the past to avoid any right-wing competitor to him.

FT: Trailing the PD by some 5-10 percentage points, we have Berlusconi's party and its ally the Northern League, both recently hit by major corruption scandals and organizationally in disarray, but for the time being still kept above water, primarily by Berlusconi’s populist drive (and his enviable stamina.) Beppe Grillo, the comedian-turned-activist, heads a popular "anti-political" protest movement which made a strong showing in the recent regional elections, hovers firmly around 15% of the votes in most polls.

SG: Since I have said much about Berlusconi’s electoral appeal before, let me add the other main component of his coalition, the Lega Nord. The Lega Nord is usually presented as a mix of a right wing populist party for its anti-immigrant stances, and as an anti-state party for its willingness to cut state prerogatives and taxation. Some of the Lega’s open xenophobic if not racist remarks and policies have made the press, time and again. But, well, it is not that easy. The Lega represents large parts of the former Christian Democratic vote in the North, particularly in the North-East, i.e. Veneto, parts of Lombardia, Friuli, parts of Northern Emilia (the vote of the Socialists went mainly to Berlusconi, which says more about the former than the latter). Hence, it is not only a strident or radical vote, although it does surely include it. It mobilises a kind of welfare protectionism of the North. In other words, its proposals for fiscal autonomy are not necessarily meant to cut down the state in the North (where public services often work extremely well), but to be better able to support those very welfare programs there. It also implies that if more taxes are kept in the richer regions instead of going South, the attack on tax evasion does not need to be too tough, since there is enough money around. Its economic reference point, and on their ticket with his own little party, is still Giulio Tremonti, the Finance Minister in the previous Berlusconi governments, responsible for many tax amnesties in the past and attempts to ease the life of smaller business. There is much trasformismo here, where the system has to change so that the North can stay the same.

Moreover, the relations between the Lega Nord and Berlusconi’s Popolo della Libertà are not exactly excellent. The voters of the Lega Nord think of themselves as rather ‘clean’, despite a recent string of scandals. After all, the party did start in opposition to the established party system, described as corrupt. Hence being in alliance with Berlusconi has recently been a hard sell to Lega voters. The deal is that Berlusconi will help the President of the Lega Nord, Roberto Maroni to become President/Governor of the Region Lombardia (which was usually held by the PdL) and in exchange, the Lega Nord makes an electoral alliance with Berlusconi nationwide. The other condition was that Berlusconi would not be allowed to stand as Prime Minister if they would win. Hence, we get this odd combination that Berlusconi is the head of the electoral alliance, but the Prime Minister would be Angelino Alfano, the continuously humiliated President of the PdL, while Berlusconi would be accepting a lower job – as Finance Minister.... It is not seldom to hear among the Lega Nord (as e.g. from Flavio Tosi, the Lega mayor of Verona), that they did that only for convenience and are expecting to lose nationwide, yet hope to pocket the Presidency of Lombardy. Not sure, how well the Lega will get away with this.

Finally, we have the real newcomer, the MoVimento 5 Stelle led by Beppe Grillo who made his career as TV moderator, political cabaret/satirist and as stand up comedian. For years, he has been running a very popular blog on which he commented on social and political affairs of all sorts and launched a series of initiatives. When the electorate was put before the choice to basically return to ‘business as usual’ after the Monti inter-regnum, he first tried to become a candidate in the primaries of the PD, and then, when this did not work, launched his own movement as political party. He does not run himself for Parliament, but wants to use the movement as a platform for people to make a change. The party has made remarkable inroads into electoral strongholds and has become the major party in Sicily in the regional elections of 2012 (with 14.9% which says something about the dispersion of the vote). In the municipal vote in 2012, it was strong mainly in the usually left regions. It is given at 15% and it mobilises protest vote of all kinds (right and left), but also the young vote, the vote of the ‘non-political’ civil society, and importantly, the vote of many who would not have otherwise voted. Its programme is quite heterogeneous so far. But judging from its actual politics where it has municipal power, it tends to be vaguely comparable to some green movements. This will be the main unknown in the new Parliament, but to judge from its actions in Sicily so far, it could support some of the reforms, in particular of cutting down the political class.

Given the electoral law in Italy, which is one of the weirdest there can be (and whose often attempted reform Berlusconi has always avoided so far), the winning coalition will be given a bonus in the Low Chamber (the Chamber of Deputies/Parliament) which assures an absolute majority. No risk there. But the High Chamber (the Senate) is elected according to the sum of regional majorities which themselves have some majoritarian component. Hence, the future government needs to have a majority in both chambers and here the geographic distribution may help Berlusconi to block the Parliamentary majority.

Geographically speaking, there used to be a relatively clear division (see graph). In the 2008 elections, there were regions in the Center North (West) which have been traditionally on the left, i.e. PCI since World War II (Emilia-Romagna, Toscana, Umbria, North of Marche, parts of Liguria and of Piemonte). The North (-East) is on the right, and the homeland of the Lega. The autonomous regions of the North (Alto-Adige, Valle d’Aosta) tend to be center-left. The Center-South has been to the right (South of Marche, Abruzzo, Basilicata, Molise, etc.), and in particular in Sicily. But the trend has been turning. In fact, there are only few regions with a majority to the right. Hence, the majority in the next elections will probably decided in the Senatorial vote of some swing regions, like Sicily and Lombardy – if Berlusconi does not even succeed to rally enough support through his myriad of small allied parties to win the Low Chamber.

FT: Let’s move on to Europe, and the implications of the Italian elections will have for the EU and the Euro-zone in particular. While Italy is not new to experiences of technocratic government, the ways in which the Monti government came about was in some respects unusual. Much has been made in Italy about the letter sent by the sitting and incoming presidents of the European Central Bank on August 5 2011, asking the Berlusconi government to enact reforms in exchange for the bank’s support on the Italian bond market. Berlusconi's inability to meet these demands, and the subsequent market pressure, is perceived to be among the reasons behind his resignation in November 2011, and President Giorgio Napolitano's decision to shepherd the appointment of Monti, a darling in EU circles. What do you make of that turn of events and of the Monti experience? And what do Italians make of it?

SG: Indeed, so-called ‘technical’ governments (governo dei tecnici), are not new in Italy. Some of them, in particular the Ciampi government in the 1990s have been moments of reform. As such, they exemplify the increasing blockage of the party system and the delegitimation of great parts of the ‘political class’. With left and right coalitions too heterogeneous, too weak and/or too illegitimate, the Italian political system allows itself something like the solution of the Roman Republic, where the Senate could ask the Consuls to appoint a ‘dictator’ to run for a limited time with more powers and independence from the Senate. One should, however, not think that moving ‘technical’ means moving out of politics, or that these people were not part of a wider political environment to start with. Monti himself was a quite tough EU commissioner – nominated by Berlusconi, confirmed by d’Alema, not confirmed by Berlusconi – which is surely not a position one acquires by being far from Italian politics.

The Monti government had a relatively high legitimacy at the start, since people were basically sick and tired of the never ending scandals and the stalemate in the coalition, or, rather, what was left of it. Berlusconi had lost several members, in particular Gianfranco Fini and his supporters, and had to struggle hard not to lose repeated votes of non-confidence. This was a completely new situation for him, being forced to focus his efforts to get sufficient votes simply to survive in power, let alone to make any major laws. The remaining coalition was therefore completely blocked and could not find a common line. Instead, Italians saw endless bickering between the Lega, pushing for fiscal autonomy (which never came) and the PdL, between Berlusconi and his own Minister of Finance Giulio Tremonti.

That also relativises or, at least, provides the background for the EU pressure. I am not sure to what extent Berlusconi did not himself prefer to leave at this point before his weakness would go on for a prolonged time, a weakness that would contradict all his self-portrayal as a ‘men of action’. In other words, I am not sure whether EU pressure would have been sufficient in itself, or, indeed, whether it would have been applied to such an extent, if the situation was not basically blocked inside. In other words, with a Berlusconi comfortably sitting on a majority, and not already on the brink, and yet pursuing the same policies, I am not sure either side would have acted the same. Even ‘the future of the Euro’, as overriding concern as it then was, is usually not enough to push for some kind of regime change on a stable government. And for Berlusconi, it is always nicer to see the mess cleaned up by someone else, since it was to be accompanied with painful measures – and then come back to say that if one had been left ruling, one would have done otherwise. This sounds like arguing with hindsight, but commentators already then had the impression that he was forced to leave too early to undermine his political future. After all, his choice was either a snap election which the left would have won hands on, and which may have killed off his future, or a government dependent on his support and of which, as he said at the very start (sic!), he could always ‘pull the plug’ (staccare la spina) when it was no longer needed. As he then eventually did. In the situation, ‘giving in’ was in his interest, and not only forced upon him. If it was a constraint, it was by his coalition’s own weakness. The defection of Fini and his group, more than the EU, made Berlusconi go. He would have loved to stick it out against Merkel and Sarkozy.

At any rate, the Monti government immediately took actions which people were grudgingly ready to accept, because most people knew Italy needed to move forward and that the Berlusconi coalition was simply unable to do it. Wanting change, but not too much, a care-taker government was a more conservative option than a left wing government after an election. (And the politicians kept quiet at first, since they knew that they were given time to re-group their troops for the unavoidable electoral battle to come.) These reforms had basically two objectives. The short-term objective was to raise sufficient money for the budget to calm international investors and bring the cost of debt, i.e. the interest of Treasury Bonds, down. This made ‘spread’ (between the interests of Italian and German Bonds) the single most hated or ridiculed word in Italian these days. The long-term objective was to have structural reforms started, that would work also for future budget years and would more equally distribute the costs of adjustment. And since the government needed a bipartisan support from Parliament, this had to come in a somewhat balanced manner. Hence, fiscal reforms to increase fiscal justice (by having taxes on property, which touches the more wealthy by definition, and not only on salaries) and by increasing the fight against tax evasion was a concession to the left; the labour market reforms and pension reform was a concession to the right. He was able to sell this compromise also abroad, since he knew very well how to ‘play’ the EU and international investors and so he almost literally ticked things off the usual lists. He was not going very much the way the Trichet-Draghi letter was asking for, which included much wider labour market reforms and liberalisations of public utilities highly unpopular in Italy and indeed in many parts of the EU, be it Brussels or national capitals (Italians had voted against the privatisation of water in a referendum). In fact, again, the letter was most probably meant to increase pressure on Berlusconi more than to provide the actual checklist for most reform, at least to judge from Draghi’s later actions.

But every time, the government touched core issues beyond budget-fixing, its power went as far as the supporting parties in the Parliament would allow (which included the PD, PdL, and the centrist coalition, but not the Lega or SEL). When Ministers started to say that the auction for TV frequencies which were given away for ridiculous sums to Mediaset would be re-opened, or when the electoral law was to be changed, or when the law cutting down the number of Provinces to diminish the cost of politics in Italy was to be passed, it all stalled. And so, also this government started to languish when the political parties began jockeying for the best position in the upcoming electoral race. And how convenient was it now to have a common enemy on whom to upload all the things which Italians began to loath (when the bills arrived). In particular, Berlusconi has it easy here, since he can more credibly say that all this government was not his preference. Hence, Monti must have found himself in a situation not too uncommon for a EU bureaucrat: when things go well, it was because of the parties (read: EU member states) supporting him; when it did not, it was all his government’s (read: Brussel’s) fault.

FT: What have been the consequences when it comes to support for, and legitimacy of, the EU in Italy?

SG: the legitimacy or reputation of the EU suffers almost in parallel with this development of the Monti government. At the start, people were almost shocked that it had come so far that the EU had to intervene, as it was perceived. Some were relieved, and, expectedly, that sentiment was shared more on the side of the opposition. On the left and with the centrist coalition, and in front of all the corruption and stalled system also in larger circles of the population, the EU taking initiative was accepted as legitimate, even though no one really likes to be told from others what to do. But things moved over time. When, at the start, the Monti government’s independence from the party political class was clearly an asset and provided a clear legitimacy, over time, its technocratic character, and obviously Monti as a former EU commissioner, gave rise to the impression of yet another political class aloof and separated from the common people and their concerns, an impression widely mined (and reinforced) by Berlusconi in his campaign. If Monti was legitimate because it was not the normal political class, the more he appeared to look like them, the less legitimate he was. In the wider population, the general sense that there is a political class divorced from ‘its’ people ended up being only exacerbated by this extra level of parachuted rulers. Hence, there is a sense of ambiguity in its legitimacy, positive because saving Italy from its political class and getting things done, and negative for staying too aloof. It is hard to identify with and feel identified by ‘tecnici’.

As a side-effect, the evolution of the Monti government has hardened a party cleavage on the EU which has developed over the last decade and which fits more general European patterns. There, the social-democratic left (and greens, but there is no comparable green party in Italy), many liberal parties and Christian Democrats remain staunch supporters of the European project (there are exceptions), whereas parts of the further left, as well as regional, conservative and nationalist parties mobilise against. The only EU measure towards Italy which seemed to find support from all sides, was the Commission’s critique of the Monti government’s property tax for being too un-egalitarian. The left was obviously concerned about this in principle, and the right sensed the possibility to diminish the taxes.

That development of Italy’s cooler relation to the EU and of the (almost) breaking-up of an earlier bipartisan support, is related to the Euro from early days on. The Euro was seen by many as having made most things more expensive. Its initial popularity (to have ‘real’ money, not the Lira) disappeared in many parts of the population, although most still see it as the minor evil. And although one could fault the very Berlusconi government for not having imposed any price discipline in the years of change, it is the Prodi government which he succeeded in faulting for having accepted to join the Euro in the first place.

Moreover, in the present debate, it became clear that Germany, often used as a stand-in for the EU in Italian debates, has been the winner of the common currency. Almost no one knows that real salaries in Germany in 2011 are still not on the level of 2000, i.e. that Germans have accepted a lower income to stay competitive for more than a decade by now. That is almost unparalleled in any Western society which did not go through recession. But what many Italians do know is that it is no longer possible to play the usual trick to keep Italian small and medium business competitive, not only for export but also for the domestic market, by making regular devaluations of the Lira. Hence, Germany locked all others into a productivity game, comparable to what it used to be in the early EEC under the fixed Bretton Woods exchange rates. Then, it was seen as an advantage to force laggers like France and Italy to modernise. But the costs are higher today. Just as all other countries in Europe, Italy is under a huge productivity pressure cooker. The only way to make up for the strategy of competitive devaluation is either to accept similar decreases in real salaries (which is what is happening now) or massive investment to increase capital productivity. But where should that investment come from with a government and many firms indebted? Foreign investment becomes hence crucial. And the circle for more fiscal discipline and staying in the Euro is closed: who is going to invest money which can lose, say, 30% of its value, if Italy is forced to leave the Euro? Perhaps because that latter part is usually not understood by the wider public, there is resentment about the EU and Euro, mainly on the political right, for somewhat having ‘caused’ these problems, rather than just making them plain visible. Small businesses (and the Lega, as well as parts of the PdL) have turned from EU supporters to critics.

And here concentrating on Germany is an easy populist card for Berlusconi (yet not all in his PdL) and the Lega. Merkel is often portrayed as arrogantly telling others what to do. Whether for a general sense of inferiority (the German figures compare just way better to Italy’s) or for some elder resentment, for nationalism, or simply for what Italians call ‘campanelismo’ (not looking for anything beyond the shadow of the local Church’s belltower – il campanile), German-Italian relations work oddly now better on the left, than on the right. In fact, and this is no joke, Berlusconi’s recent acquisition of Mario Balotelli for his club AC Milan, although rubbing against the grain of latent and open racism in Northern football stadiums, was also welcomed, because ‘SuperMario’ scored the two goals with which Italy qualified for the European Championship Finals ... against the then favourite German team. This said, one should be careful not to imply that therefore there would be sympathies for the UK position (except in the Lega, probably until the Scottish referendum). Although appeals to national interest come always handy in campaigns, it is generally seen as a way to steel oneself out of the solidarity, for instance, with Italy.

But even there, I would conclude on this question by adding an ambiguity in Italian reactions. It should make one pause when, as I did hear from a CGIL trade-unionist (i.e. close to the post-communist wing), ‘Italy needs to be ruled (‘commissariato’) by Germany for a while’. This is not only unheard of before in the political left, but expresses well the deep concern and almost despair with Italian politics in general, not just with its representatives. True, that is again more discernible in the political left, but I think more generally about many young people, especially with higher education, but not only. There, it expresses also a deep longing for Italy to really become or stay part of the European project. Italians are a nation of migrants. This migration is in most of the cases not really voluntary. Youth unemployment is high; well educated young people eventually find a job but heavily underpaid and in hierarchical settings in which little concern may be given to merit. Good connections, money, etc. make often up for merit (and Berlusconi’s recruitment of some politicians for their beauty makes an easy case). In such a blocked system, to pack a suitcase and try to study abroad, then work abroad, then end up living abroad, means trying to join Europe. Here, ‘Germany’ as a stand-in for Europe has no bad reputation; to the contrary, it stands for an attempt to meritocracy, to give anyone to his abilities (whether or not the situation is as rosy is another question, but compared to Italy, it stands). Hence, people leave to join Europe, but many who stay would love Europe to join them.

It is an often underestimated feature of the EU’s policies to its member states that in some countries, the EU imposed rules and control, the interference with domestic politics is welcome, at least by parts of the population. Here, the EU’s reputation suffers not from intervening too much, but for doing too little. Careful reading of the press of Southern European states in crisis clearly show that many local actors are quite happy about the support they can mobilise through the EU for making domestic changes and reforms (and blame local politicians for not drawing the right conclusions). Yet if there is no crisis, not much is done. And so do many Italians still not understand how the EU could let Berlusconi get away with his conflict of interest and media control; many Hungarians are deeply disappointed with the EU letting Victor Orban apply his media laws, indeed let him get away with what many perceive as the systematic undermining of any checks and balances to his regime, as now, since the Constitutional Court still blocks some laws, having its 4th or so reform of the constitution to overrule them; and many Slovenes would not mind at all some outside support in front of their political elite’s corruption scandals and the difficulty of its new democracy to effectively deal with it.

FT: Stefano Fassina, the economic spokesman for the PD and a likely minister in the next government, said in a recent interview to the Financial Times that the centre-left would be open to the idea of a super-commissioner on fiscal matters. “The residual empty and formal sovereignty over fiscal discipline in national parliaments" he said, "should be transferred to Europe." What do you think Italians would make of such propositions pushing for further integration, particularly fiscal integration, in the EU?

SG: Well, for this to work, the German government (and some other hiding behind it) would have to warm up to the idea themselves a bit more, since obviously this can only be done if it is applied to all equally. Fassina knows this only too well. And my sense is that Italy will be able to live well under whatever compromise that would come out of this. But it is generally true, that the PD is clearly saying that the EU is a project of solidarity and that all should contribute to it, just as Monti never tires to tell foreigner leaders, who may tend to forget it, about the conspicuous money Italy provides for all these Euro emergency funds.

Hence, how Italians would react to more integration will depend a bit on the type of media debate that Italy will have in the future. It is obviously a harder sell to tell Italians to show solidarity with others, than to pocket their solidarity. But there is a widespread sense that one cannot have the one without the other. This said, it all depends whether there is a chance to have some reasonable debate on it. One would need to discuss, for instance, whether there is really only some residual empty and formal sovereignty or not, or whether more integration has to come in this form or in another, and so on. One can be in favour of the ‘ever closer Union’ project without thinking that adding special Commissioners are always the best solution (since they may only add layers but little power). One can be against such a project not because one clings to an illusionary sovereignty long foregone (as some do), not because one is actually happy to leave more sovereignty to unregulated financial and other markets (as David Cameron’s defense of the City seems to indicate), but because the democratic implications are not yet really fully appreciated.

As the crisis showed (again), political decisions have become dependent on market actors which are surely less democratically legitimated than even the most bureaucratic EU could ever be. And yet, the democratic solution to this problem has been a major problem of democracies under globalisation that is not yet resolved. For the time being, there is a certain consensus on the European level, including Germany and Italy, which asks for far more control and regulation on financial actors (including the Tobin Tax) to regain a sovereignty lost, which can only be regained at a community level, not on the national level. Hence, the transfer of (formal) national sovereignty is needed to regain the real one, as paradoxically as this may sound. This is a vision since the 1980s and had also informed the Euro, even though we tend to forget this (and politicians do, too). But if it does not work, no sovereignty or control has been regained. More political integration will also be judged on these grounds. This is no easy discussion and hence shortcuts in terms of ‘losing sovereignty’ can easily appear stalling any better debate. As in all the other questions, Italians will be split over this.

FT: And lastly: what consequences would a renewed period of instability in Italy after election have on the Euro-zone crisis management?

This is obviously guess-work. This scenario would be a weak government after these elections. According to present polls, this would be a government headed by the left coalition plus Monti, plus some Grillini (?)... It would however be, in principle, a government which is ready to accept the responsibilities to stay within the Euro. The situation would be then similar to other Southern European countries. I think any Italian government would want to avoid the impression not to run the show itself, though. Yet the weaker the government, the less it will be able to influence politics in Brussels. Still, with a government which has not campaigned against the EU, it does not need to flex muscles for the sake of it. It will try to keep in line. If, however, Berlusconi would win, then all the bets are off.