Economy

Likely victory for Italian right portends risks but no lurch into extremism

The victory predicted in exit polls for the Italian right in Sunday’s parliamentary elections is, in a certain sense, a landmark moment for Italy and for European democracy. But there are strong grounds for questioning the view, occasionally expressed outside Italy during the election campaign, that the result portends a lurch towards extremism.

Under the Christian Democrats, the right dominated Italy’s governments during the cold war. From the 1990s, it continued to hold the upper hand much of the time, thanks largely to Silvio Berlusconi’s Forza Italia party. But this is the first election in which a party with neo-fascist roots, the Brothers of Italy, has emerged as the strongest force on the right and in the country as a whole.

Despite some electoral successes for similar parties in western European democracies such as Austria and Sweden, the Brothers of Italy’s victory stands out. It seems certain that Giorgia Meloni, the party leader, will become prime minister, making her the first woman to hold the post since Italian unification in 1861.

Yet the fact remains that Meloni achieved her triumph on a conservative nationalist platform that owed much more to the formulas that brought success to Berlusconi’s coalitions than to any policies associated with the Italian Social Movement, the neo-fascist party of the late 1940s and 1950s from which the Brothers of Italy is indirectly descended. “Talking of fascism is plain wrong,” says Lorenzo Codogno, a former director-general of the Italian Treasury.

This is not to suggest that no difficulties lie ahead. Meloni has only minimal experience of government, and her party colleagues have even less. The international renown of Mario Draghi, the outgoing technocratic prime minister, amplified Italy’s voice at the tables of Nato and the EU. The new government will struggle to command the same respect.

Yet Meloni has positioned herself as a solid supporter of the west’s stance against Russia’s aggression in Ukraine — more solid, in fact, than either Berlusconi or Matteo Salvini, leader of the League, her rightwing coalition allies. The Brothers of Italy’s electoral programme also omitted controversial proposals once embraced by the party, such as asserting the primacy of national over EU law.

More generally, the steadiness of Italian policy is to a large extent guaranteed by strong institutions in the shape of the presidency, constitutional court, parliament’s two chambers, the central bank and the finance ministry. Partly in response to the fascist experience of 1922-1943, postwar Italy carefully disperses power across different centres in ways that make it hard for the executive to act in a dangerously radical fashion.

From the viewpoint of financial markets, a major test of the new government will be the annual budget it will need to prepare by the end of the year. The victorious coalition’s programme called for tax cuts for individuals and businesses, combined with higher spending on pensions and family benefits.

Any attempt to implement such policies in full would risk a severe reaction from markets concerned about Italy’s public debt of about 150 per cent of gross domestic product. It appears possible that, to allay such fears, Meloni will pick a respected independent public figure as finance minister — as previous Italian governments of various stripes have done over the past 30 years.

The Brothers of Italy stands for a degree of state economic intervention and national protectionism that risks alienating Rome’s EU allies as well as the markets. Meloni has also aired the idea of rewriting the terms on which Italy has access to roughly €200bn in EU post-pandemic recovery funds.

The larger question is whether the new government will have the skill and determination to continue the economic and administrative reforms that Draghi started. These are a precondition for the continued release of EU funds.

The incentive to maintain the reform effort is clear. But no less obvious is the possibility that the rightwing parties — which hardly see eye to eye on all economic matters — will descend into internal squabbles that impede reform. The dismal record of Berlusconi’s governments on economic reform serves as a reminder that even a healthy parliamentary majority for the right is no guarantee of progress in Italy.

Meloni has her chance because she ran an effective campaign and stood out as the only significant party leader not to have joined Draghi’s national unity government. But she will know that most Italian prime ministers since the second world war have never come close to serving a full five-year term, falling prey instead to political intrigues and loss of authority. If matters turn out differently for her premiership, that might well be her biggest achievement of all.

tony.barber

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