Matteo Renzi, Italy’s former prime minister, won the race to lead the ruling centre-left Democratic party (PD) on Sunday, but the question is whether he can beat the anti-establishment, populist Five Star Movement in the next national election, which is due in early 2018.
Mr Renzi won a resounding victory over Andrea Orlando, the justice minister, and Michele Emiliano, the governor of the Puglia region in southern Italy, with 70 per cent of the ballots cast by 2 million PD supporters (the number, though, was below the 2.8 million who voted in the last PD leadership contest in 2013). He used the primary contest to gain new legitimacy, taking the first step to win back the premiership.
Mr Renzi stormed to national prominence from his Florence base on a promise to turnaround the eurozone’s third-largest economy. He came to power in 2014 in an internal party coup. Italians eager for change were firmly behind him. The PD won 41 per cent of the vote in the 2014 European Parliament election. But popular support for his economic reforms gradually faded. Mr Renzi’s term in office ended last December when he suffered a heavy defeat in a referendum on his flagship constitutional reforms designed to overhaul Italy’s political system. A group of leftwing dissidents left the PD to form their own party, called the Progressive and Democratic Movement, because they disliked the PD’s business-friendly agenda. Mr Renzi resigned as leader of the PD in February, but rather than exit a political stage, he started to work on a swift political comeback.
Mr Renzi’s aspirations are linked to the fate of the current government led Paolo Gentiloni, Mr Renzi’s former foreign minister. Last month, the government approved 3.4 billion euro, or 0.2 per cent of GDP, in extra budget deficit cuts to comply with EU fiscal rules. Without extra budget reduction measures, Brussels would have opened an excessive deficit procedure for Italy. Austerity measures, however, are not politically appealing to voters after years of sluggish economic growth and high unemployment.
Italy’s economic performance has been lagging behind the rest of the eurozone and its banking system is burdened by a large stock of non-performing loans, estimated at 360 billion euro. According the European Commission’s latest forecast, Italy will be the slowest growing economy of all eurozone countries, with expected growth of just 0.9 per cent this year, the same pace as in 2016. Unemployment remains above 11 per cent, above the EU average. The youth jobless rate is almost 40 per cent. Italy runs a budget deficit below the EU-mandated 3 per cent of GDP limit, but Rome has flouted rules related to countries, which have high public debt levels. The debt-to-GDP ratio stands at 133 per cent, the second highest in the eurozone after Greece. Italy needs economic reforms, but Mr Gentiloni lacks the political support to implement them.
The split on the left threatens Mr Renzi’s plans to win back disillusioned PD supporters, who have defected to populist groups such as the Five Star Movement and the anti-immigrant Northern League.
The Five Star Movement, which wants to bring Italy out of the eurozone, has mismanaged the city of Rome, but it leads in opinion polls nationally, with about 30 per cent of the vote. The chances of any party securing the 40 per cent threshold, which will award a portion of extra seats to ensure a parliamentary majority, are remote, because Italy’s party system is in fragments. The result of the next national election, thereby, is likely to be a hung parliament.
Photo © European Union 2014 – European Parliament / CC BY-NC-ND 2.0
