Italy Falls Out Of Love With The Euro: Beppe Grillo Resurgent In The Polls

Authored by Mike Shedlock via MishTalk.com,

Recent polls for Italian politicians supporting the eurozone and EU have collapsed.

Pro-Europe polls are highly likely to get worse as a  further splintering of Matteo Renzi’s PD party takes place.

It is not out of question for Beppe Grillo’s eurosceptic Five Star Movement (M5S) party to achieve an absolute majority in the next election. However, please note that 40% is the threshold for a “majority”.

The Financial Times reports Italy is Falling Out of Love with Europe.

Foreigners often underestimate Italy’s ability to sidestep calamity. That said, the stakes are higher now than in 1992. Solutions may prove harder to find. The reason lies in the radically different EU and Mediterranean contexts in which Italy finds itself.

Some of contemporary Italy’s challenges appear similar to those of the early 1990s. The party system is once again in fragments. The ruling centre-left Democratic party (PD) split last month. The right is divided. The most popular opposition party is the anti-establishment Five Star Movement. Since November 2011 four prime ministers have taken office not because voters chose them, but because of a financial emergency, factional squabble, party coup and failed constitutional reform.

Matteo Renzi, the former premier and PD leader, suffered a blow this month when it emerged that Tiziano Renzi, his father, and Luca Lotti, a close political ally, had been caught up in a judicial probe into suspected graft in public procurement.

The most disturbing comparison between 1992 and the present day concerns the Italian economy, which is projected this year to be the slowest-growing in the eurozone. Public debt is more than 132 percent of gross domestic product. Unemployment is almost 12 per cent; the youth jobless rate is over 37 percent.

As a consequence, ever more Italian politicians question the merits of eurozone membership. So do Italian voters. In a Eurobarometer poll published in December, 47 percent called the euro “a bad thing” for their country and only 41 percent “a good thing”. This is the big difference with 25 years ago.

As long as the moderate left or right governs Italy, it may be possible to contain this disenchantment with the EU and the euro. But the PD’s fissures are the latest sign that the party system is cracking under the strain. The Five Star Movement is waiting in the wings.

PD Suicide

Via email, Eurointelligence comments on the costs of Matteo Renzi’s PD’s suicide mission.

We have been saying it for a while – political parties that preoccupy themselves with their internal divisions are electorally doomed. It is happening to the Labour Party in the UK, and it is now happening to the Partito Democratico. This tendency is now being picked up by the polls, which show the Five Star Movement ahead of the PD by five points. We are now at the point where it becomes increasingly improbable for the PD to regain power after the next elections. They cannot do it on their own, and they do not have natural coalition partners to help them. Even a hypothetical alliance between Matteo Renzi and Silvio Berlusconi would not, on its own, meet the 40% majority threshold for a coalition, and there is no way the two parties would enter the election with a pre-arranged electoral pact in the first place.

The Five Star Movement is now only 6 points away from an absolute majority that would allow it to govern on its own – assuming that the present electoral law for the chamber of deputies forms the basis of a new electoral system for the Senate. If one adds up all the non-extremist parties (and let’s count Berlusconi’s Forza d’Italia among them for the sake of argument), one would get to just over 40% – with the PD, Forza Italia, and the New Centre Right of foreign minister Angelino Alfano which only gets 2.8%.

Worse for the PD, its support will fall even more after the split of the party becomes a reality – which it will before the elections. The poll puts the hypothetical support for PD dissidents at 7.1%, which would reduce the PD’s overall support to under 20%. The new left, together with the old left, would have the support of close to 10%. All this shows that there can be only two election outcomes: either a fragmented parliament, with unstable and shifting coalitions, or a majority reign of the Five Star Movement. The Five Star Movement promises not to enter coalitions, and it will be interesting to see whether the party maintains that position after the elections.

On the issue that interests us the most – Italy’s future in the EU, and in the eurozone in particular – the picture is even more grim. The only two parties that unconditionally support Italy’s membership of the eurozone are the PD and the New Centre Right. Forza Italia is toying with the idea of a parallel currency, while the Five Star Movement has pledged a consultative referendum on Italy’s future in the euro. While this referendum can legally not end Italy’s membership in the eurozone, it would send a devastating signal to the outside world.

The Five Star Movement has its own share of scandals – for example involving the new municipal government in Rome, and the party is in an internal state of war over the candidate for the mayoral elections in Genoa. But none of that seems to stick.

Our conclusion is that the Five Star Movement is rational to avoid alliances with other parties, as this approach is paying off electorally. With that strategy in place, they will either gain a sufficient majority (over 40%) at the next elections, or in the one after that.

Italian Polls

Eurointelligence referenced a specific Italian poll that has been since superseded.

However, support for PD is clearly on the wane. Let’s take a look at all of the recent Italian Election Polls.

In only one poll since March 9 (clearly an outlier) did Matteo Renzi’s PD party come in first place. Moreover, PD has not yet split for polling purposes but it will.

I fail to see how M5s was “6 points away from an absolute majority that would allow it to govern on its own” as Eurointelligence states, but a coalition of eurosceptic parties totaling over 50%  is easily at hand.

Support for M5S (Five Star Movement) + Fi (Forza Italia) + LN (Lega Nord), all eurosceptic parties, totals 54.5%in the most recent poll.

Forza Italia is former prime minister Silvio Berlusconi’s  party.

On March 9, Bloomberg reported  Enter Berlusconi: A Man, a Ban, and His Plan to Restore the Lira.

If elections were held today, eurosceptic parties would easily hit not only a 40% threshold but a 50% threshold as well.

Whether eurosceptic could agree to form a coalition is another matter, but I suspect they would, especially if the alternative was a minority government led by PD.

Italy's Renzi Promotes Renzi-ism As Alternative To Trump-ism, Le Pen-ism, Grillo-ism

Submitted by Mike Shedlock via MishTalk.com,

Former Italian prime minister Matteo Renzi announced today that he would call a PD party congress, effectively putting his role as party leader into question.

In his speech, Renzi stated “Some people wanted a party congress to find an alternative to Renzi-ism. It needs to be done as an alternative to Trump-ism, Le Pen-ism and even Grillo-ism.”

Recall that Renzi resigned as prime minister following a landslide defeat of a referendum he sponsored. He did not have the decency to disappear, instead he called for early election with him as party leader.

Italy is in the midst of a 4th consecutive technocrat prime minister, with Paolo Gentiloni now heading the government.

Renzi has now concluded early elections in June would give an advantage to Beppe Grillo’s Five Star Movement, so he first wants a party congress to affirm his leadership. He also seeks parliamentary rule changes that would benefit him in any coalition movement.

Renzi’s Gamble

Please consider Renzi Gambles on Leadership Contest to Unite Party.

Matteo Renzi has triggered a leadership contest in his ruling centre-left Democratic party, opening up a tussle that he hopes to use as a springboard for a comeback at Italy’s next general election.

He said the party needed to unite around a platform that would confront surging populism across the world, rather than be consumed by infighting.

“Some people wanted a party congress to find an alternative to Renzi-ism. It needs to be done as an alternative to Trump-ism, Le Pen-ism and even Grillo-ism,” he said, referring to the US president, leader of the French National Front, and founder of Italy’s anti-establishment Five Star Movement.

During the party leadership battle, likely to be fought in April or May, Mr Renzi is expected to be challenged by one of a group of left-wingers who consistently criticised him for his centrist policies and domineering style during nearly three years in office.

New elections are not due until February 2018, but both Renzi and some leading opposition figures have been pushing for the national poll to be held earlier in order to clarify the will of the people.

This has raised the possibility that an Italian election could join the list of consequential elections in Europe this year, alongside the Netherlands, France and Germany. But Mr Renzi’s decision to call a leadership contest this spring means that any early Italian election would probably be pushed back to the autumn.

Rules Changes

The above article did not discuss rules changes but Eurointelligence fills in the details.

Renzi is pressing the Gentiloni government to pass the electoral reforms quickly – essentially an extension to the Senate of the new system for the chamber of deputies, minus the bits challenged by the constitutional court. Crucially, Renzi wants a majority premium not only for parties but also for coalitions. We infer from this that Renzi could be seeking a majority premium for a hypothetical alliance with Forza Italia, hoping that both parties would together surpass the 40% threshold. Renzi, however, favours everybody running individually, and then forming a coalition afterwards. In this case the majority premium would be irrelevant since no single party in Italian politics comes close to 40%.

Needless to say, there is opposition to Renzi’s plans within his own party. The mildest opposition is from the new prime minister, Paolo Gentiloni, who expressed doubts whether it would be possible to form such a coalition. He said Italy might end up like Spain last year – without a government for a long time (we think that would be that most benign of all scenarios). Another establishment politician who has already voiced his opposition to Renzi’s planned coup is Romano Prodi, still influential in Italian politics. He wants to wait until 2018, and favours Giuliano Pisapia, the former mayor of Milan.

La Repubblica recorded a negative reaction also from the Left of the PD, unsurprisingly, amid reports that Massimo D’Alema and even the fiercely loyal Pier Luigi Bersani are considering splitting away from the party.

Europeans are used to the idea that Grand Coalitions are the ultimate solution to an electoral impasse. But we find it hard to see how this could work in Italy. We are not even sure that such an alliance would necessarily have a majority. And would Berlusconi support Italy’s membership of the eurozone? He himself would be neither in government nor in parliament, as he is barred from holding office until 2018. So this raises the question of how stable such a construct would be.

Complicated Political Mess

This is a complicated mess. Berlusconi wants election in 2018 so he would be able to run. Renzi wants an election this year as does Beppe Grillo. But Renzi also wants to squash opponents of Renzi-ism first.

This may push back elections to August. Alternatively, the president may just decide to wait until 2018. A delay until 2018 is to the benefit of Berlusconi, and a delay also runs the risk of splintering PD with more infighting even if Renzi were to remain as party leader.

Given PD is the only major party that wants to stay in the Eurozone, coalition math favors Grillo.

Renzi struggles to get out of the box he is in, but it looks increasingly difficult.