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Germany and Italy: one step forward, four steps back

Posted By on March 9, 2018 @ 11:00

In the past week we’ve seen two important developments that will materially shape the new (post-Brexit) Europe.

On 4 March the German Social Democratic Party (SPD) announced that about two out of every three of its members had supported, in an internal poll, another ‘grand coalition’ (GroKo) with Angela Merkel’s Christian Democratic/Christian Social Union (CDU/CSU). This means that on 14 March, 171 days after the September 2017 elections, Germany will at last have a new government, with Merkel as chancellor.

Also on 4 March, Italian voters delivered what many would see as a typically chaotic result, with one of the most populist, Euroskeptic and anti-establishment of Italy’s parties—comedian Beppe Grillo’s Five Star Movement (M5S)—easily becoming the strongest individual party. But neither M5S nor the other party blocs, including the so-called Centre-Right (Centrodestra) coalition engineered by Silvio Berlusconi, was able to deliver a majority. So Italy, the Eurozone’s third-largest economy, is effectively in a political stalemate.

What are we to make of these major outcomes?

On the face of it, the fact that Merkel is back as chancellor, at the head of a sensible GroKo made up of established parties, is a huge relief, especially after the more than five months that it has taken to achieve this. Europe needs a strong, stable and prosperous Germany to help deal with the many challenges it faces.

But the German outcome is not all good news. For a start, Merkel has emerged damaged from the many months of bruising coalition negotiations; from the unusually open criticism levelled at her from within her party about her approach and style; and for the concessions she has had to make to entice the SPD back on board. So this will almost certainly be her last term as chancellor.

Typically, though, she has set the first steps in the succession in train in an orderly way, through her choice of a new Secretary-General for the CDU (the premier of the state of Saarland, Annegret Kramp-Karrenbauer) and the renewal of CDU members in her new cabinet. And she is back at work already, highlighting European reform and global issues like Syria.

And anyone who saw the photos of the SPD’s leadership announcing their party’s support for another GroKo with the CDU/CSU will have noticed, as German commentators have, that no one was smiling. This has been a very tough decision for the SPD and a lot of reputations and careers were put on the line in bringing about this outcome.

The SPD is in free-fall: from the party that produced chancellors and governments, it has declined to the point where the latest opinion polls show that it has its lowest support since 1878 (16%). SPD members’ support for the GroKo was more the result of the need, for Germany’s sake, for good and responsible government, not enthusiasm for a GroKo.

These two problems—the succession to Merkel and the deep unhappiness and restiveness of her coalition partner—will certainly shape the next four years in German (and therefore European) politics and in German (and European) approaches to the huge problems Europe is confronting.

And a further problem has been added in the form of Italy. Given the Byzantine nature of Italy’s electoral system, it’s still too early to predict the government that will emerge from the (no doubt) lengthy coalition negotiations ahead. But the facts as we now know them are worrying enough.  M5S currently looks like having about 221 seats in the new Chamber of Deputies, with the Centrodestra coalition holding about 260 seats.

For the sake of completeness it’s worth mentioning that former Prime Minister Matteo Renzi’s Centre-Left coalition (Centrosinistra—including the Italian version of the social democrats, the Democratic Party (PD)) currently has about 112 seats.

An absolute majority is 315 seats, which no one grouping has achieved. Under normal circumstances, Italian President Sergio Mattarella would call on the largest party, M5S, to have a go at forming government. The leader of M5S, Luigi di Maio, has been quick to abandon, publicly, his party’s absolute commitment not to enter into coalition talks with any of the others. M5S wants to govern.

The most likely coalition partner would be the PD. But Renzi, for one, has been urging his party not even to think about it. An M5S coalition with the Centrodestra (or part of it) is also hard to imagine, but you never know. It would scare markets but there are policy similarities between them, on immigration and Europe for example.

And there are also big problems within the Centrodestra, which is made up of Berlusconi’s Forza Italia (FI), the League (which used to be a rightist and anti-immigrant party demanding independence for Italy’s north but has expanded its remit) and the extreme right Brothers of Italy.

There was apparently agreement that whichever of FI or the League won the most seats would supply the prime minister if called upon to form government. The League, under Matteo Salvini, has more seats than FI, but this is something Berlusconi is already dismissing. He’s claiming the prime ministership for his own nominee.

The key point is that Italy seems to be yet another country—and a major one in European and even global terms—captured by populists and nationalists as a result of voters’ extreme disillusionment with existing parties, politicians and policy approaches on issues such as immigration and the future of Europe. It’s no coincidence that M5S won almost all of Italy’s impoverished south.

The government that eventually forms in Rome will make Chancellor Merkel and President Emmanuel Macron’s jobs just that much harder in the years ahead.



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