Italy has 4th Government in 3 Years, the Last 3 Unelected; Questions of the Day

Following the ouster of Italian prime minister Enrico Letta in a political party power struggle, Matteo Renzi Set for Mandate to Lead Italy’s Next Government.

Matteo Renzi will on Monday be formally handed the job of forming Italy’s fourth government in just over two years with the aim of presenting his reform programme to parliament by the end of the week.

The 39-year-old leader of the centre-left Democrats, who ousted prime minister Enrico Letta in a party power struggle, has a mid-morning appointment at the presidential palace where he is expected to receive the mandate to govern from Giorgio Napolitano, Italy’s 88-year-old head of state. 

Despite Mr Renzi’s hurry to take over following last Thursday’s party coup, the timetable slipped over the weekend after his likely centre-right coalition allies asked for more time to agree on their agenda and the division of cabinet posts. Nonetheless, the presidential mandate will arrive in time to reassure financial markets at the start of the week that the process is moving ahead.

Although markets were relatively sanguine after Mr Letta’s ousting, there is some concern that Italy’s lending could increase should Mr Renzi consider breaching the 3 per cent budget deficit limit.

Fabrizio Saccomanni, outgoing finance minister, has added his voice to José Manuel Barroso, European Commission president, who prodded Mr Renzi to stay on course with Italy’s economic reforms while maintaining fiscal discipline. Mr Saccomanni urged Mr Renzi not to contemplate breaching the budget deficit limit set by Brussels.

Mr Renzi’s first challenge is to work out a coalition deal with Angelino Alfano, leader of the New Centre-Right, whose support is vital for the Democrats to secure the majority they lack in the Senate following inconclusive elections a year ago.

Mr Alfano, who held the posts of deputy prime minister and interior minister under Mr Letta, warned at the weekend: “We cannot do things in a rush.

Polls suggest a majority of Italians, while pinning their hopes on Mr Renzi breaking political logjams blocking reforms, do not approve of how the mayor of Florence reneged on his repeated promises to seek office only through the ballot box.

Opposition in parliament will be dominated by the centre-right Forza Italia of former prime minister Silvio Berlusconi and the anti-establishment Five Star Movement led by comic-activist Beppe Grillo.

Mr Renzi, who is not even a member of parliament, is set to become Italy’s third prime minister after Mr Letta and technocrat Mario Monti, who were nominated by the head of state without having won an election.

Questions of the Day

1. Can you have a mandate with no votes?
2. Can someone who breaks repeated promises win confidence of his constituency?
3. Can Renzi succeed in implementing badly needed  reforms including dismantling union work rules, or will that stir up more pitchfork protests?
4. Can Renzi possibly meet deficit targets mandated by the nannycrats in Brussels?

I propose the answer is "no" to all of the above questions.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com