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Type of Paper: Code [Please Amend/Delete Transcript Q&A Italy’s Election Explained Professor Francesco Caselli Norman Sosnow Professor of Economics, LSE Beppe Severgnini Columnist, Corriere della Sera Dr Marco Simoni Member, National Executive, Italia Futura Chair: John Lloyd Contributing Editor, Financial Times 10 April 2013 The views expressed in this document are the sole responsibility of the author(s) and do not necessarily reflect the view of Chatham House, its staff, associates or Council. Chatham House is independent and owes no allegiance to any government or to any political body. It does not take institutional positions on policy issues. This document is issued on the understanding that if any extract is used, the author(s)/ speaker(s) and Chatham House should be credited, preferably with the date of the publication or details of the event. Where this document refers to or reports statements made by speakers at an event every effort has been made to provide a fair representation of their views and opinions, but the ultimate responsibility for accuracy lies with this document’s author(s). The published text of speeches and presentations may differ from delivery. Transcript: Italy’s Election Explained John Lloyd: Okay, I haven't heard such pessimism from three people about their own country since I left Russia at the end of the 1990s and the place was collapsing. I don't know how many of you want to challenge – I guess, there are a number of Italians in the audience and there are, certainly, a number of Italophiles, people who are knowledgeable about Italy. I don't know if anybody wants to challenge that pessimism but it's over to you now. Whether you wish to challenge or, indeed, deepen the pessimism. Question 1: I have a question for Mr Severgnini as he mentioned Matteo Renzi. I followed the Italian election and I see that the parliament is really fragmented. So, I want to ask you whether – before the national election, you have the party election when Bersani won against Matteo Renzi. I want to ask you, if Matteo Renzi had won that election, would we have had a better government, a different kind of parliament right now? Thank you. Beppe Severgnini: Before I answer, there's an easy answer. The answer is, I don't know and no one does. Because historically in politics, ‘if’ is impossible. From polls and projections and common sense, Berlusconi would not have run, first of all. Berlusconi waited until the moment he knew that Bersani would be his opponent, and then he decided to run. So, with Matteo Renzi, Berlusconi thinks he would lose; so he would not have run. That's the one almost certainty. The second certainty is that if you believe, as I believe, that Italy, in a way, wants change and Grillo was very much a protest vote but also a vote for change – yes, I think, probably, the Democratic Party would have had enough votes, and they really didn't need very many, to have a majority in the senate. Or enough to join forces with Monti and his party and form a government. But, again, it's an ‘if’. One thing to you John, I'm not a pessimist; I'm worried. It's different. Because I hope I have a chance before we say goodbye to say that I do believe that there is a younger generation of Italians and as soon as we help them to come out – what I call, the Erasmus generation – they are ready at all levels to step in. As long as we help them to go into parliament and change the electoral law. www.chathamhouse.org 2 Transcript: Italy’s Election Explained But I think the new generation – I've been talking at so many universities in the last few months because of a book and I tell you, the brand new Italians are not worse – actually sometimes are even better than many people I meet all over the world and all over Europe. Just give them a chance. So, I'm not entirely a pessimist, sorry. Question 2: I used to cover Italy for the Financial Times between l'autunno caldo and the mancato sorpasso. In those days, there were two great historic problems, problems between the north and the Mezzogiorno. I'd like to know whether this was also reflected in the voting pattern, whether this is still one of the major structural problems to be solved or has it been solved? The other thing is that in the old days when [Gianni] Agnelli couldn't sell cars in Germany, he went round to the president and they devalued 10 per cent. So, what happens – is getting out of the euro, going back to national currencies and the flexibility to devalue, would that be a possible way of adding a certain flexibility to a blocked economy? Thank you. Francesco Caselli: Okay. Very briefly, I think the north/south divide is as severe a problem as it's always been and perhaps it's become even more entrenched. I think that one thing has become much more severe, which is the penetration of organized crime in even more spheres of economic life and moving up the peninsula. So, that problem is very severe. It is a massive structural problem for the country because the north/south fiscal transfers create all sorts of political implications and, also, have a very perverse effect on the economy of the south. So it is a massive problem. I actually think that it was quite fortuitous that it didn't play a more prominent role in the election. I think that has to do with the scandal that hit the Northern League a couple of years before the election. We see, in places like Spain, for example, that as the crisis deepens, the political pressure for separation and independence of certain regions is becoming more acute. My suspicion, my guess, is that had the Northern League not been in the throes of a scandal leading up to the crisis, that probably would have been our first-order issue in the election. So, it was a bit fortuitous that it wasn't, I think. www.chathamhouse.org 3 Transcript: Italy’s Election Explained Now, the euro: it would be great to get out of it if you knew how. The problem is that getting out of the euro from below, for the countries in crisis, would create terrible dislocations. It's a terrible, terrible, difficult problem to do. It would involve all sorts of defaults on various international commitments, both political and more importantly financial. There is no solid legal basis for achieving this without dragging this on for many years; an Argentina-like situation where you cannot borrow in international markets for many years. So, it would be very, very difficult. But, retrospectively, clearly Italy has paid a very heavy price for euro membership. Question 3: A quick follow-up and then a second question. At what point are the markets going to step in when there's no government and say ‘get a move on with it’ and try to force the issue? Secondly, is this election issue part of a more Europe-wide thing; we had the UK in 2010 with a coalition, we had France with Hollande, Spain, Italy. What's going to happen with Germany? Marco Simone: Yes, what was the first one again? Yes, that we should ask the markets, I think. Well, I think that they are still – apart from jokes – they are not punishing Italy right now because they still consider Italy a fundamentally solvent country. The amount of assets that – I totally agree with the diagnosis on the Italian economy, but the amount of assets that Italy still owns is massive. So, it is a problem of economic growth and dynamism that… markets can't be patient forever but there is not a liquidity problem anymore, thanks to the recent reforms. Hence, there is no reason to panic right now. On the ‘what this tells the rest of Europe’ kind of question: I think it does tell something about the ability of democracy to deliver an equitable and, perceived, fair welfare to a large part of the population and include all of this in the economic growth. Because the insider/outsider dynamic that Italy has experienced is not very different from what other countries are experiencing. What is different is the speed. I was looking at numbers recently, depending on the indicator you use, the excluded, the outsiders, in Italy have multiplied by four in the last 10 years. Whereas they increased much more slowly in other countries so that different www.chathamhouse.org 4 Transcript: Italy’s Election Explained welfare measures, new welfare measures and a new form of inclusiveness could be devised. But the types of problems that emerge when you have an increasingly divided society are, of course, not a singularity of Italy. The combination of two things, the economic crisis and the crisis of legitimacy, go together to explain this massive shift. But they are issues of all European countries, I think. Beppe Severgnini: Just very briefly about the government: we do have a government, Mario Monti's government. I think they've been working in the last few weeks probably better than – because he was not busy with the campaign and he did exactly what he can do, that is to be a solid, reliable, civil servant who happens to be prime minister. That's his job. Nothing is going to happen until we have a new government; they're going to be in charge.
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