Thursday, December 13, 2012

Why Mourn Monti?

New Leadership is in Italy's best interests, and America's

The Atlantic has seemed suspiciously quiet lately. Greek disaster was (temporarily) averted, while issues closer to home have grabbed our attention as we brace for Thelma (Barack Obama) and Louise (John Boehner) to drive their car (the United States of America) over a cliff (of the fiscal variety) rather than get in trouble with the cops (ideological crazies on both sides.) But the eerie transatlantic quiet is no reason to stop worrying about the European Union. It just means we’re looking for trouble in the wrong places. Sure Ireland is still the bail-out poster child, Portugal is still OK(ish), Greece still hasn’t imploded, and Spain is still making progress. Yet Italy’s election next year may be a make-or-break event for Europe, the ripples of which will not fail to reach American shores. In spite of urgent chatter in leadership circles supporting a new mandate for technocrat Mario Monti, America should hope for center-left candidate Pier Bersani.
                Even by Italian standards, the approaching election is a complex one. Mario Monti, the technocratic Prime Minister who has overseen a unity government since November last year is due to resign early after passage of the 2013 budget. Though Monti has moved to squelch speculation that he may run to renew his mandate, he may yet return to the Chigi. Meanwhile, disgraced former PM Silvio Berlusconi, the ever-present Master of Ceremonies of the Kit Kat Klub of Italian politics, resumed leadership of his People of Liberty Party (PDL), adding to a sense of disarray on the right. Finally, the newly confident and increasingly capable left recently chose center-left Democratic Party (PD) leader, Pier Luigi Bersani, as its candidate amid unexpectedly energetic and enthusiastic turnout.
It has been trendy to support Mario Monti, and, though unlikely, he may renew his mandate. He has stood up well after instituting unpopular reforms, and even under recent withering attacks by Berlusconi’s PDL.  Should the election prove divisive and uncertain, or if the policies of either party appear totally unpalatable to markets, Monti’s supporters may be able to engineer public demand for a renewed mandate.
Despite instituting unpopular reforms and austerity measures, Monti’s government is well-liked. This is mainly due to technocracy; Italians have often looked to technocratic unity governments in a crisis. Monti is extraordinarily well respected in Europe as well, and is credited by Italians and eurocrats alike for instituting one of the more balanced reform/austerity packages, applying a portion of increased tax revenues to stimulative infrastructure investment.

It is supposed that only a technocratic is capable of introducing such reforms in the wildly unpredictable arena of Italian politics. But this is not the case. Much like European markets, European and American leadership are highly risk-averse preferring what they know to what they do not. By that logic, America should desire a Berlusconi victory. After all, he has been intensely pro-America, would avoid military cuts, and may even be able to somewhat ease market fears as a familiar face with familiar small-government rhetoric.
Yet no one wants Berlusconi to return, least of all America. The United States’ first priority is long-term peace and stability on the continent, which requires a strong and democratic Italy. In addition, America’s long-term preferences also include an Italy which views America favorably, is militarily capable, and is a willing military partner. In the short term, American recovery demands stability and growth in Europe. In the medium term, America seeks a reformed Italy with prospects for reasonable growth and that remains loyal to the United States. No potential Prime Minister offers the full package.
Bersani comes closest to fitting the bill. True, his is a former Communist, and represented a the Democrats of the Left, a socialist outfit, in the European Parliament as recently as 2006. That may make markets nervous. But Bersani, a competent former Minister of Economic Development known for market and anti-corruption reforms, is the only credible candidate to reaffirm Italian democratic institutions.
In spite of his Communist past, Bersani conducted  a range of liberalizing reforms as a minister in the Prodi government, and has remained a staunch supporter of the Monti administration. He would likely continue along the path laid out by Monti, lightening heavy regulatory loads and slimming the bloated state. Vague suggestions that investment, especially R&D, should play a greater role might mean a small stimulus sufficient to diminish worries about severe recession without undermining fragile faith in the Italian debt situation.
Most importantly, Bersani would continue these reforms with a democratic, not technocratic, mandate. Another Monti administration would fail to break the perceived tendency in Italian politics to develop crises, institute technocracy, and then return to the dysfunctional system that created the problem. Berlsuconi’s election would only confirm perceptions of Italian politics as theatre of the absurd. Meanwhile, Bersani’s history of corruption-fighting and reformism may make him the Prime Minister to prove that it doesn’t take a technocratic government to create strong policy. Given broad support from center-right to far left, Bersani may have the democratic legitimacy necessary to buck his trade union base. Indeed, coming on the heels of Monti’s tenure, widespread support for centrist reform, and a scattered opposition may finally allow an intellectual center-left PM time to execute a full range of reforms.
Pier Bersani is the best option for both Italy and the United States. Bersani is not the great cheerleader for America that Berlusconi was, but then neither is Monti. And, like Monti, Bersani is also likely to cut military spending against America’s preferences. However, the very low likelihood that America would seek Italian aid in the near future means that a temporary period of marginally anti-American government is tolerable in pursuit of long-term ends.
That is the case today. America needs a stable Europe, and Europe needs a strong Italy. So long as he doesn’t give in to his party’s statist tendencies, Bersani can reassure markets, blunt the effects of recession and boost medium- and long-term growth prospects with targeted investment, reduce chances of EU contagion, and relegitimize Italian democracy. These are all American priorities. It’s a big bill, but Bersani is the only candidate with a chance of achieving it.

No comments: