The average government in Rome lasts only 14 months, but the determined new Prime Minister Giorgia Meloni has a good shot at lasting an entire parliamentary term. The new prime minister has traveled to reassure international partners. Her hazy economic policy includes a 2023 budget with a higher deficit. Big challenges include a sluggish economy, energy prices and inflation.
Giorgia
Meloni was the undisputed winner of Italy’s parliamentary elections on
September 25 and is now the head of the Italian government. The country’s first
woman prime minister, Ms. Meloni is a self-defined underdog: she came from a
humble family and was raised by a single mother. She entered politics in the
1990s and was first elected as a representative in local government in 1998.
Before that, she had multiple working experiences but no university degree.
Hers is,
in a nutshell, an unlikely profile for the prime minister of a major European
country these days: she is a right-wing, career politician who does not share
the typical cursus honorum of world leaders. This is evidence of her
determination.
Ms. Meloni’s
rise over the past couple of years has been spectacular. In 2018, her party
scored 4.3 percent of the vote. Then it won 6.5 percent in the 2019 European
elections, and in September it garnered 26 percent. Certainly, Ms. Meloni
leveraged her opposition to her predecessor Mario Draghi’s government, which
served for more than a year, and gained credibility by opposing several
Covid-19 restrictions. Yet few will dispute these successes bear only her
signature.
Tough
times ahead
She has
become prime minister in dire times. Italy has not seen such high inflation
since 1980. The energy crisis is adding uncertainty and makes business lobbies
and trade unions continuously bid for more government help. Italy’s growth is
forecasted to reach 3.2 percent in 2022, but a recession is looming on the
horizon. Public debt is 150 percent of gross domestic product and, while
inflation helps ease that burden, any interest rate hike may make the country
more vulnerable.
Ms.
Meloni won the election at the helm of an apparently homogenous coalition.
Names have changed with time, but in essence, she is leading the same group of
political parties that first won elections in 1994. Silvio Berlusconi was then
the front man and he succeeded in bringing together the federalists of the
Northern League, or Lega Nord, and the nationalists of Alleanza Nazionale,
which earlier on included post-World War II fascist nostalgists. These parties
have lots of miles on them and represent, on paper, what looks like a stable
coalition. Yet the internal equilibrium has changed over time.
In
recent years, Mr. Berlusconi’s star has faded, and young leaders have emerged.
In 2018, it was the Northern League’s Matteo Salvini who could claim to be the
senior partner. Now, it is Ms. Meloni’s turn.
Mr.
Berlusconi’s record as a head of government is quite poor. Except for easing
labor market restrictions, no major reform was accomplished under his watch.
Yet Mr. Berlusconi’s rhetoric, if not his practice of government, alluded to a
set of actions that were certainly needed in Italy back then as now:
deregulation, lowering and simplifying taxes and opening markets.
Now it
is far more difficult to see what the right stands for. Mr. Salvini built his
success around the fear of inordinate immigration. He seemed not to be capable
of adjusting to different priorities. Ms. Meloni is a far more complex
politician and a better-read one. People familiar with her describe her as a
careful student of whatever problem enters the agenda.
She
comes from a political tradition that is corporatist and rooted in the south of
the country: the less enterprising part of Italy. Yet in the latest elections,
her party – Fratelli d’Italia (the Brothers of Italy) was the first party in
Veneto, the region where the Northern League used to be stronger, winning votes
particularly among small businesspeople. Her personal credibility allowed her
to change her electoral base. Once the leader of the most “southern” of Italian
parties, now she leads the one which won bigger in the north.
Ms.
Meloni has a strong personal leadership quality and knows the game she is
playing well. Her coalition is made of partners used to each other. This could
mean that she can reverse the curse of Italian politics. In Rome, a government
lasts on average 14 months.
To
achieve that goal, however, Ms. Meloni will have to withstand external and
internal challenges.
Reassuring
international partners
The
external challenges reflect the bewilderment with which her victory was greeted
by foreign leaders, including United States President Joe Biden and European
Commission President Ursula von der Leyen. Born in 1977, Ms. Meloni is no
fascist, but she was depicted as such by the international press. Her positions
are nonetheless eccentric to the international elite: she is a proud Catholic
in irreligious times and she is more of a communitarian than a globalist. Yet
her personal story is powerful (an example of meritocracy), and she has a
talent for coming across to even skeptics as serious and thoughtful. The late
French President Jacques Chirac famously dismissed Mr. Berlusconi as a
“buffoon.” That would be hard to do with Ms. Meloni.
Hence,
her international trip to the G20 meeting in Bali was a success and Ms. Meloni
is investing a considerable amount of time in international travel, trying to
rapidly establish a reputation for herself and reassure international partners.
Her continuous emphasis on her commitment to supporting Ukraine against
Russia’s war fits the same bill.
The
Salvini factor
The
internal challenges are due to two different but converging issues. One is the
fact that Ms. Meloni’s government does not have an obvious economic policy. The
other is a more difficult relationship with allies than expected, which amounts
to a political time bomb. Ms. Meloni’s problem, in short, is the poor
performance of Mr. Salvini’s Northern League in the September elections. His
party got 9 percent of the vote, and Forza Italia 8 percent. The two parties’
electoral strength put together is less than Mr. Meloni’s coalition.
Forza
Italia, 30 years after its founding, is still a personal party whose fortunes
are intertwined with those of Mr. Berlusconi. Though he led a successful
electoral campaign, doubling the vote forecast by opinion polls and, rather
unexpectedly, proving a master of new media like TikTok, Mr. Berlusconi looks
the 86-year-old he is and seemed unable to manage daily politics. This breeds
uncertainty in his own party.
Mr.
Salvini, on the other hand, is energetic and young and willing to do whatever
it takes to regain the votes he lost. Ms. Meloni pleased him by awarding him a
good chunk of important ministries, from the Ministry of the Economy (Giancarlo
Giorgetti) to Education (Giuseppe Valditara) to the infrastructure portfolio
that Mr. Salvini kept for himself. Clearly, Ms. Meloni wanted to engage him as
much as possible in government. Keep your friends close, and your enemies
closer, as the saying goes.
Yet Mr.
Salvini is already showing that his strategy is to double down on whatever the
government does. This creates tensions, particularly in the matter of economic
policy and public finance. The days of the supply-side rhetoric of Mr.
Berlusconi are long gone. Over the years, Mr. Salvini has been a champion of
higher spending, regardless of the rationale of individual expenditures. In the
electoral campaign, Ms. Meloni, despite not having a particularly fiscal
conservative background, has preached the gospel of prudence.
Mr.
Salvini’s pick for economy minister, Mr. Giorgetti, was the minister of
industry under Mr. Draghi. He has a reputation for independent thinking and
moderation. He is also credited with intermittent skepticism of Mr. Salvini’s
own leadership. Mr. Giorgetti’s first budget law will create a slightly higher
deficit than expected (4.5 instead of 3.5 percent). The details include some
revisions of public spending, particularly for those measures introduced during
the pandemic. Bravely, the government is challenging the Italian version of the
basic income, implemented by the Giuseppe Conte government, by changing its
architecture and entrusting it to municipalities that will be able to discern
deserving recipients better than National Institute for Social Security. Yet,
the higher budget deficit suggests the new government is not starting by
tightening spending, which is what one would expect at the beginning of a new parliamentary
term.
In the
electoral campaign, Ms. Meloni often said that she believes in a government
that does not hinder those who are willing to engage in economic activity. Some
of the initiatives the government is contemplating, like raising the ceiling
for cash payments, would increase the economic freedom of individuals and
businesses. Yet most of her advisors are instead hinting at new
nationalizations, which may include the telecoms network. One of the measures
the government is apparently flirting with is an “Amazon tax,” to be levied on
home deliveries.
Scenarios
Ms.
Meloni has no clear economic policy and whatever she decides to do will need to
go through a complex bargaining process with Mr. Salvini. Her leadership style
suggests that she may accomplish the miracle of lasting an entire parliamentary
term – which will give Italy the stability it craves and that could also help
raise the country’s reputation within the business community. However,
political bargaining with her allies and a lack of clear policy objectives are
conspiring in the opposite direction. Ms. Meloni’s tenure may be a test of the
importance of character in politics.
****Alberto
Mingardi is director general of the Italian free market think tank Istituto
Bruno Leoni. He is also associate professor of the history of political thought
at IULM University in Milan and a Presidential Scholar in political theory at
Chapman University.
Mr.
Mingardi has authored or edited several books. His most recent are Contro la
tribù. Hayek, la giustizia sociale e i sentieri di montagna (Marsilio,
2020) and The Myth of the Entrepreneurial State (with Deirdre
McCloskey, AIER/ASI, 2020).
He
frequently contributes to newspapers such as the economic supplement
of Corriere della sera, as well as the EconLog blog. His commentaries have
appeared in the major Italian dailies, and his opinion pieces have also been
published by the The Wall Street Journal and Politico.
Mr.
Mingardi holds a PhD in political science from the University of Pavia.
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