The Econmist - USA (2021-11-06)

46 Europe TheEconomistNovember6th 2021

And it could struggle to meet the target. A

report to the cabinet on September 23rd re­

vealed that at that point only 13 of the 51 ob­

jectives had been reached. 

Italy’s  reform  programme  is  not  the

problem; that is ahead of schedule. In May

a  package  was  approved  that  simplified  a

wide  range  of  bureaucratic  procedures.

And a shake­up of the criminal­justice sys­

tem is about to be implemented. A further

reform,  focusing  on  civil  justice,  is  in  the

pipeline.  Officials  say  that  legislation  to

promote competition is also coming soon.

The  problem  is  with  investment.  The

outstanding foot­draggers appear to be the

ministry  of  tourism,  which  at  the  time  of

the report had yet to implement any of the

six investments for which it is responsible;

and  the  department  for  ecological  trans­

ition, which had implemented only one. 

Looking  beyond  the  end  of  this  year,

two  doubts  arise.  The  first  concerns  the

fate of legislation after it is handed out for

implementation at the sub­national level.

“In Italy, the intention of policies is all too

often  lost  in  translation,”  says  Paolo  Gra­

ziano, who teaches political science at the

University of Padua. There is a shortage of

the  necessary  project­management  skills

among  officials  charged  with  implement­

ing complex programmes—a shortcoming

the Draghi government says it has begun to

address. But another reason, says Fabrizio

Tassinari of the European University Insti­

tute in Florence, is that “secondary legisla­

tion  becomes  hostage  to  vested  interests,

from local authorities to trade unions.”

A  further  doubt  centres  on  Mr  Draghi

himself. He is known to want the presiden­

cy, which becomes vacant in February, and

if he were chosen he would have to resign

as prime minister. Even if he does not be­

come head of state, he is unlikely to remain

in government after a general election that

has  to  be  held  by  the  spring  of  2023,  and

may well come sooner.

On  October  18th  mayoral  candidates

from the Democratic Party (pd) were elect­

ed in Rome and Turin, completing a clean

sweep of Italy’s biggest cities by the centre­

left. But the pd and its allies are weaker in

the  provinces.  Polls  continue  to  suggest

that  Italy’s  next  government  will  be  a  co­

alition dominated by two parties that have

long  been  critical  of  the  European  Com­

mission:  the  Brothers  of  Italy  (fdi)  party,

which  has  links  to  neo­fascism,  and  the

hard­right Northern League. 

Those close to Mr Draghi argue that his

departure need not lead to a radical break.

His  government  has  established  bureau­

cratic  mechanisms  for  steering  and  con­

trolling  the  flow  of  the  recovery  money

that  will,  with  luck,  outlive  it.  And  future

governments will be just as constrained by

the  deadlines  the  commission  imposes

and  loth  to  forfeit  the  flow  of  cash  from

Brussels by failing to meet them.

Perhaps.ButtheLeague,whichisa part

ofthecoalitionunderpinningMrDraghi,

andthefdi, whichisnot,arebothwedded

topoliciesandintereststhatareatodds

withthereformingthrustoftherecovery

plan.TheLeaguehasalreadysucceededin

parryingitinoneimportantarea.A signif­

icantweaknessoftheItalianeconomyis

that,whiletaxesonlabouraretoohigh,

thoseonpropertyaretoolow.MrDraghi’s

governmentmovedtoadjustthebalance

bychangingthecriteriausedintheland

registryina waythatwouldhaveboosted

therevenuefromproperty.Butheraninto

determinedoppositionfromtheLeague’s

leader, Matteo Salvini. As a result, the

changeswillnotnowcomeintoeffectun­

til2026;andeventhentheywillnotbe

usedtocalculatetaxliability.

“IammorepositivenowthanI wasa

yearago,”saysNicolaNobileofOxfordEco­

nomics.“ButI stillconsidera permanent

improvement in Italy’s economic pros­

pectstobeanupsidescenarioratherthana

basecase.”n

The rise of the Brothers

Italy, voting intention, main parties, %

Source:Nationalpolls

2

40

30

20

10

0

2020 2021

ForzaItalia

Northern League

FiveStar

Movement

DemocraticParty

Brothers

of Italy

Portugal

The contraption

crashes

A

geringonçaispleasing to say, but dif­

ficult to operate. The Portuguese term,

sometimes translated as “contraption”, re­

fers to a device patched together from odd­

ly fitting parts. Although the governing ar­

rangement  that  António  Costa,  Portugal’s

prime  minister,  assembled  in  2015  was

dubbed  the  geringonça,  it  proved  surpris­

ingly durable. But on October 27th it finally

fell  apart,  as  two  left­wing  partners  voted

down  his  budget,  triggering  elections  two

years early—a rare occurrence in Portugal.

Though  the  budget  was  expansive,

splashing  out  on  free  kindergarten  and

other  goodies  and  increasing  the  mini­

mum wage, it was not lavish enough for Mr

Costa’s radical allies, the Portuguese Com­

munist  Party  (pcp)  and  the  Left  Bloc  (be).

Marcelo  Rebelo  de  Sousa,  the  president,

had announced in advance that if it failed,

he would call elections. If he was hoping to

put pressure on the parties to seal the deal,

the gamble failed. 

The parties are scrambling to influence

the  electoral  timetable.  Most  want  elec­

tions  on  January  16th,  to  avoid  prolonged

instability. But the calendar is complicated

by the plans of the biggest opposition par­

ty,  the  Social  Democrats  (psd),  a  centre­

right outfit despite its name, to hold lead­

ership  elections  on  December  4th.  That

would leave the winner scant time to pick

candidates  for  the  general  elections.  One

psd candidate,  Paulo  Rangel,  is  lobbying

Mr  Rebelo  de  Sousa  (who  hails  from  the

psd himself ) to hold the elections later, to

allow  the  party  time  to  regroup.  The  cur­

rent leader, Rui Rio, wants to postpone the

primary instead. The president was due to

announce the date on November 4th.

After an inauspicious start Mr Costa has

won  respect,  not  least  in  neighbouring

Spain (where the centre­left Socialists also

depend  on  a  far­left  party,  Podemos).  His

Socialists  came  second  in  2015’s  election,

then toppled the short­lived minority psd

government,  cobbling  together  a  majority

with the beand pcp, previously considered

untouchable by the moderate Socialists. 

The  then­president  required  a  written

agreement between the parties: the be and

pcp never joined the government but made

clear  commitments  of  support.  But  Mr

Costa  increased  his  party’s  seat  count  in

2019’s elections. Mr Rebelo de Sousa decid­

ed not to insist on a formal agreement be­

fore  blessing  the  second  geringonça.  The

Bloc  and  the  Communists,  weakened  and

unbound by any deal, were sure to flounce

out at some point. 

Some  think  Mr  Costa  might  have  been

happy for them to do so now. Portugal’s co­

vid­19  vaccination  rate,  87%,  is  one  of  the

world’s highest. He can point to decent gdp

growth  and  falling  unemployment  until

the  pandemic  (which  in  2020  caused  gdp

to plunge further than in any year since the

1930s). He has kept the deficit, which made

Portugal a ward of the European Union and

the  imf after  the  financial  crisis,  low

enough to win international respect. 

But  this  has  come  at  the  cost  of  public

investment: Portugal’s is thought to be the

lowest in the eu in 2020 and 2021. Salaries

are  low  by  Western  European  standards:

the  minimum  wage,  at  €775  ($900)  a

month,  is  around  €300  less  than  Spain’s.

Many Portuguese head abroad to work. 

If  Mr  Costa  nonetheless  does  well,  he

LISBON

Snap elections are called after the

prime minister’s allies desert him