Italy’s kings of crisis

“You are kings!” cried Roberto Benigni, Italy’s First Comedian, best known to foreigners as the director and star of the bitter-comic satire on fascism and Nazism, Life is Beautiful (La Vita e Bella). Benigni was presenting a widely watched TV program celebrating the signing of Italy’s constitution. “It’s a beautiful charter,” he proclaimed.

Benigni was conferring royalty upon Italians because, in voting on June 2, 1946, for a republic over a monarchy — King Umberto II, though soiled by collaboration with the fascists, was available — Italians had at once rejected a king and become kings of their own country. Benigni ended in a burst of soaring hope: “We’re a country of a permanent miracle, no one can stop us and we’re destined to have a fantastic future!”

It was a typical Benigni crescendo, yet maybe one too far from reality for most Italians, not the least cynical of humans. Kings of what? Miracle, where? Fantastic future, when?

Italy is a country of great beauty and civility, with an unmatched history for creativity, drama and splendor. But in the 21st century, it has been cursed with a dreary economy and social tensions, which a fragmented and often despised political class now has the responsibility to mend. The part of that class in power strains — seemingly honestly but with little sign of success — to do so.

It must. Italy has a public debt of some 133 percent of its 2015 gross domestic product — that’s 2.2 trillion euros, or $2.5 trillion, with annual interest payments totaling more than 83 billion euros. To be free of the threat of default, it has to get back on a healthy growth path and stay there.

Right now, debt growth has been robust and GDP growth anemic at a little more than 1 percent annually. The country hasn’t defaulted, but it still might.

Italy celebrated its Festa della Repubblica modestly. Apart from Benigni, public figures evidently thought that official joy looked inappropriate. The country’s low-key president, Sergio Matarella, held a garden party at his splendid Quirinale Palace atop one of Rome’s hills, where he said, damning with faint praise, that the country is “in better shape than it’s very often painted” —  though it was, he added helpfully, certainly in the grip of acute economic difficulties.

The Bank of Italy celebrated Republic Day by releasing a report showing that Italians have suffered a reduction in their average income over the past 40 years; that the decline  accelerated after the country joined the euro in 2000; that the rich were richer and the poor more numerous, and that more and more households depended on the pensioners in the family for a larger and larger proportion of their spending. It is, in short, a country desperate for change — and with every kind of barrier against it.

Here’s a short list. It has low productivity, low investment and its universities are, according to Gianfranco Viesti, in decline, with a “role and an importance much reduced compared to that of other advanced countries.” That means that tens of thousands of Italy’s brightest youth, if they have families who can afford it, are educated abroad — and often stay there. The country has little foreign investment, a slow and tortuous justice system, with the various mafias, corruption and bureaucratic barriers combining to frighten citizens and foreigners alike. What’s not to detest?

What’s not to give up on is the fact that while its political system is fragmented into parties that hate each other, the electorate has, so far, put its trust in a hyperactive — he rivals Benigni in energy, if not in wit — prime minister, the 41-year-old Matteo Renzi. Renzi, in his third year of power, has a young cabinet, a working majority in parliament and a technocrat’s ability to push his ministers, officials and ambassadors to revive their country.

He’s running as fast as he can but, as the Economist commented, “he will need time that the voters are unlikely to give him.” It’s very hard to jerk a country out of its decline when the cure – most likely longer work hours for less money– seems worse. President Francois Hollande, another center-left leader, is experiencing the consequences of his efforts to reform the labor market in France, where its most militant union has decreed a strike until the death of the relatively modest legislation.

Italian Economy Minister Pier Carlo Padoan at a news conference with the foreign press in Rome, August 4, 2015. REUTERS/Tony Gentile
Italian Economy Minister Pier Carlo Padoan at a news conference with the foreign press in Rome, August 4, 2015. REUTERS/Tony Gentile

Renzi’s popularity remains relatively high, if dropping. In regional elections last week, his Democratic Party lost the city hall of Rome to the eccentric Five Star Movement, and suffered another defeat in Naples at the hands of a far-left group.

Renzi pronounced himself “disappointed” with the results and pledged to give greater attention to his party, especially in the south. He has called for a referendum in October to change the constitution so that the Senate, presently equal in power to the lower house and able to delay the passing of laws indefinitely, is reduced to a chamber without a veto. He has said he will resign if he loses, a gamble that now seems more perilous than when he announced it.

The stakes are high. No other political grouping has the experience or ability to do better, though several could do worse. At the annual “Economy Festival” in Trento last weekend, I spoke with others about the dangers of Brexit, Britain’s June 23 referendum on whether to leave the European Union. Most of the audience wanted the Britain to stay in. None raised the thornier topic of Italy plunging out. But that may be the greater threat.

John Lloyd co-founded the Reuters Institute for the Study of Journalism at the University of Oxford, where he is senior research fellow. Lloyd has written several books, including What the Media Are Doing to Our Politics. He is a contributing editor at FT and the founder of FT Magazine.

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