Conte must heed the lessons of the past if he hopes to build a new, stronger government

Conte must heed the lessons of the past if he hopes to build a new, stronger government

For a few days, it seemed as if Italy’s “accidental Prime Minister” Giuseppe Conte had once again managed to snatch victory from the jaws of defeat. After former PM Matteo Renzi’s decision earlier in January to pull his small ‘Italia Viva’ party out of Italy’s fragile ruling coalition, predominantly over disagreements concerning Rome’s plans for how to spend Italy’s chunk of the EU coronavirus recovery funds, Conte narrowly survived confidence votes in both houses of Parliament thanks to a handful of abstentions. Conte’s minority government, however, didn’t last long—facing near-certain defeat on a judicial report vote in the Senate later this week, the Prime Minister pre-emptively handed in his resignation on the morning of January 26.

Conte’s resignation is widely seen as a strategic—albeit risky—gamble. The political upheaval comes as Italy faces up to the highest figures for coronavirus deaths and the second highest public debt pile of all EU member states, while the nation’s GDP is estimated to have shrunk 10% last year. In resigning, Conte is banking on the fact that there is little appetite for snap elections which could accelerate the virus’s spread and tarnish Italy’s G20 presidency, meaning that he has a decent chance to return as prime minister in what would be his third administration in as many years. In order to ensure that his third government provides the stability which Italy needs in this time of crisis, however, Conte will need to address the issues which doomed his second.

The first step will be to address Renzi’s most prominent gripes—those concerning how Italy is planning to spend over €200 billion of European Union coronavirus aid. The Conte administration’s original plan called for a mere €9 billion to be spent on the cash-strapped health system, a choice that Renzi wasted no time in excoriating. Renzi is of course acting with his own political interests in mind, but Conte’s dubious spending choices throughout 2020 left him wide open for the suggestion that he might misspend the EU recovery funds. Indeed, Renzi’s conviction that Conte is not the best steward of Italy’s recovery funds comes from moves such as renationalising Alitalia without a clear plan on how to make the chronically loss-making airline profitable again and aggressively pushing for a new single broadband network— despite concerns that this would slow high-speed internet rollout and undermine competition.

Conte’s government has seized on the EU’s relaxation of state aid rules amidst the pandemic to take over the failing flag carrier. Rather than let sleepy airlines lie, as the UK did with Flybe, Rome is using crucial cash deposits to buoy Alitalia’s Boeings. Conte’s government was not deterred by the fact that Alitalia has not posted a profit for over 20 years, or that profitability will remain a distant goal as long as the coronavirus wages war on travel. The airline often seems to be a bottomless money pit–despite a recent government injection of €3 billion, Alitalia is still struggling to pay costs, including employees’ salaries. What’s more, it’s unclear that relaunching the feeble airline as a supposedly new company called “Ita” will accomplish anything. Ita’s monopoly on routes between Sicily and the mainland risks “triggering divestments from [other airlines] in Italy,” according to pundits. Brussels, meanwhile, is asking for clarification on a number of issues, including why there has yet to be any tender for the sale of former Alitalia assets, as well as the strategy for the supposed newco Ita.

If the renationalization of ailing Alitalia has sparked concerns among both investors and policymakers in Brussels, Conte’s desire to return Italy’s telecom industry to the failed monopoly model of the past is even more troubling. The government is currently pushing hard for a merger between former monopolist Telecom Italia (TIM) and wholesale challenger Open Fiber, to create a single ultrafast broadband network named AccessCo. Peculiarly, Rome seems to have forgotten why it launched Open Fiber in the first place in 2015—in order to turbocharge the rollout of broadband by introducing competition in a market dominated by the stagnating incumbent TIM. The move was by all accounts a success and even inspired similar policies in the UK and Germany—yet Conte is inexplicably trying to reverse it, touting a return to a single broadband network as the creation of a so-called “national champion”.

Conte’s sudden desire to hand TIM back the keys to Italian broadband hasn’t been warmly received—consumer associations have warned that the scheme “could be detrimental for the market, with the ultimate price to be paid by Italian consumers and businesses”, while members of Renzi’s Italia Viva party also expressed concern that rather than aiming for a wide-spread fibre network at a fair rate guaranteed by the state, Rome’s opaque plans risk delaying the peninsula’s technological advancement even further. As such, Conte’s obsession with intervening in the telecom sector was one of the factors that fractured the ruling coalition and catalysed its collapse.

The spectre of pandemic-era elections which would almost certainly usher in a far-right government may hand Conte another chance to forge a more stable government. It nevertheless remains unclear whether he will manage to attract enough centrist and unaffiliated lawmakers to succeed—and whether he will offer significant enough compromises to bring disaffected partners like Renzi back on board. In order to do so, he will need to rein in his interventionist streak and curb government spending that lacks any semblance of organisation or coherent strategy.

Photo from Wikimedia Commons, Creative Commons License 4.0

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