Meloni may give Italy stability, but beware the enemy within
The average government in Rome lasts only 14 months, but the determined new Prime Minister Giorgia Meloni has a good shot at lasting an entire parliamentary term.
In a nutshell
- The new prime minister has traveled to reassure international partners
- Her hazy economic policy includes a 2023 budget with a higher deficit
- Big challenges include a sluggish economy, energy prices and inflation
Giorgia Meloni was the undisputed winner of Italy’s parliamentary elections on September 25 and is now the head of the Italian government. The country’s first woman prime minister, Ms. Meloni is a self-defined underdog: she came from a humble family and was raised by a single mother. She entered politics in the 1990s and was first elected as a representative in local government in 1998. Before that, she had multiple working experiences but no university degree.
Hers is, in a nutshell, an unlikely profile for the prime minister of a major European country these days: she is a right-wing, career politician who does not share the typical cursus honorum of world leaders. This is evidence of her determination.
Ms. Meloni’s rise over the past couple of years has been spectacular. In 2018, her party scored 4.3 percent of the vote. Then it won 6.5 percent in the 2019 European elections, and in September it garnered 26 percent. Certainly, Ms. Meloni leveraged her opposition to her predecessor Mario Draghi’s government, which served for more than a year, and gained credibility by opposing several Covid-19 restrictions. Yet few will dispute these successes bear only her signature.
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Tough times ahead
She has become prime minister in dire times. Italy has not seen such high inflation since 1980. The energy crisis is adding uncertainty and makes business lobbies and trade unions continuously bid for more government help. Italy’s growth is forecasted to reach 3.2 percent in 2022, but a recession is looming on the horizon. Public debt is 150 percent of gross domestic product and, while inflation helps ease that burden, any interest rate hike may make the country more vulnerable.
Ms. Meloni won the election at the helm of an apparently homogenous coalition. Names have changed with time, but in essence, she is leading the same group of political parties that first won elections in 1994. Silvio Berlusconi was then the front man and he succeeded in bringing together the federalists of the Northern League, or Lega Nord, and the nationalists of Alleanza Nazionale, which earlier on included post-World War II fascist nostalgists. These parties have lots of miles on them and represent, on paper, what looks like a stable coalition. Yet the internal equilibrium has changed over time.
In recent years, Mr. Berlusconi’s star has faded, and young leaders have emerged. In 2018, it was the Northern League’s Matteo Salvini who could claim to be the senior partner. Now, it is Ms. Meloni’s turn.
People familiar with Giorgia Meloni describe her as a careful student of whatever problem enters the agenda.
Mr. Berlusconi’s record as a head of government is quite poor. Except for easing labor market restrictions, no major reform was accomplished under his watch. Yet Mr. Berlusconi’s rhetoric, if not his practice of government, alluded to a set of actions that were certainly needed in Italy back then as now: deregulation, lowering and simplifying taxes and opening markets.
Now it is far more difficult to see what the right stands for. Mr. Salvini built his success around the fear of inordinate immigration. He seemed not to be capable of adjusting to different priorities. Ms. Meloni is a far more complex politician and a better-read one. People familiar with her describe her as a careful student of whatever problem enters the agenda.
She comes from a political tradition that is corporatist and rooted in the south of the country: the less enterprising part of Italy. Yet in the latest elections, her party – Fratelli d’Italia (the Brothers of Italy) was the first party in Veneto, the region where the Northern League used to be stronger, winning votes particularly among small businesspeople. Her personal credibility allowed her to change her electoral base. Once the leader of the most “southern” of Italian parties, now she leads the one which won bigger in the north.
Ms. Meloni has a strong personal leadership quality and knows the game she is playing well. Her coalition is made of partners used to each other. This could mean that she can reverse the curse of Italian politics. In Rome, a government lasts on average 14 months.
To achieve that goal, however, Ms. Meloni will have to withstand external and internal challenges.
Reassuring international partners
The external challenges reflect the bewilderment with which her victory was greeted by foreign leaders, including United States President Joe Biden and European Commission President Ursula von der Leyen. Born in 1977, Ms. Meloni is no fascist, but she was depicted as such by the international press. Her positions are nonetheless eccentric to the international elite: she is a proud Catholic in irreligious times and she is more of a communitarian than a globalist. Yet her personal story is powerful (an example of meritocracy), and she has a talent for coming across to even skeptics as serious and thoughtful. The late French President Jacques Chirac famously dismissed Mr. Berlusconi as a “buffoon.” That would be hard to do with Ms. Meloni.
Hence, her international trip to the G20 meeting in Bali was a success and Ms. Meloni is investing a considerable amount of time in international travel, trying to rapidly establish a reputation for herself and reassure international partners. Her continuous emphasis on her commitment to supporting Ukraine against Russia’s war fits the same bill.
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The Salvini factor
The internal challenges are due to two different but converging issues. One is the fact that Ms. Meloni’s government does not have an obvious economic policy. The other is a more difficult relationship with allies than expected, which amounts to a political time bomb. Ms. Meloni’s problem, in short, is the poor performance of Mr. Salvini’s Northern League in the September elections. His party got 9 percent of the vote, and Forza Italia 8 percent. The two parties’ electoral strength put together is less than Mr. Meloni’s coalition.
Forza Italia, 30 years after its founding, is still a personal party whose fortunes are intertwined with those of Mr. Berlusconi. Though he led a successful electoral campaign, doubling the vote forecast by opinion polls and, rather unexpectedly, proving a master of new media like TikTok, Mr. Berlusconi looks the 86-year-old he is and seemed unable to manage daily politics. This breeds uncertainty in his own party.
Mr. Salvini, on the other hand, is energetic and young and willing to do whatever it takes to regain the votes he lost. Ms. Meloni pleased him by awarding him a good chunk of important ministries, from the Ministry of the Economy (Giancarlo Giorgetti) to Education (Giuseppe Valditara) to the infrastructure portfolio that Mr. Salvini kept for himself. Clearly, Ms. Meloni wanted to engage him as much as possible in government. Keep your friends close, and your enemies closer, as the saying goes.
Yet Mr. Salvini is already showing that his strategy is to double down on whatever the government does. This creates tensions, particularly in the matter of economic policy and public finance. The days of the supply-side rhetoric of Mr. Berlusconi are long gone. Over the years, Mr. Salvini has been a champion of higher spending, regardless of the rationale of individual expenditures. In the electoral campaign, Ms. Meloni, despite not having a particularly fiscal conservative background, has preached the gospel of prudence.
Ms. Meloni has no clear economic policy and whatever she decides to do will need to go through a complex bargaining process.
Mr. Salvini’s pick for economy minister, Mr. Giorgetti, was the minister of industry under Mr. Draghi. He has a reputation for independent thinking and moderation. He is also credited with intermittent skepticism of Mr. Salvini’s own leadership. Mr. Giorgetti’s first budget law will create a slightly higher deficit than expected (4.5 instead of 3.5 percent). The details include some revisions of public spending, particularly for those measures introduced during the pandemic. Bravely, the government is challenging the Italian version of the basic income, implemented by the Giuseppe Conte government, by changing its architecture and entrusting it to municipalities that will be able to discern deserving recipients better than National Institute for Social Security. Yet, the higher budget deficit suggests the new government is not starting by tightening spending, which is what one would expect at the beginning of a new parliamentary term.
In the electoral campaign, Ms. Meloni often said that she believes in a government that does not hinder those who are willing to engage in economic activity. Some of the initiatives the government is contemplating, like raising the ceiling for cash payments, would increase the economic freedom of individuals and businesses. Yet most of her advisors are instead hinting at new nationalizations, which may include the telecoms network. One of the measures the government is apparently flirting with is an “Amazon tax,” to be levied on home deliveries.
Scenarios
Ms. Meloni has no clear economic policy and whatever she decides to do will need to go through a complex bargaining process with Mr. Salvini. Her leadership style suggests that she may accomplish the miracle of lasting an entire parliamentary term – which will give Italy the stability it craves and that could also help raise the country’s reputation within the business community. However, political bargaining with her allies and a lack of clear policy objectives are conspiring in the opposite direction. Ms. Meloni’s tenure may be a test of the importance of character in politics.
