Italy: new hope or protracted decline?

It’s business as usual in Italian politics. Late last week, the prime minister, Enrico Letta resigned, having been ousted by the mayor of Florence, Matteo Renzi, as leader of the centre-left Democratic Party (PD).

Early this week, Renzi was asked to form a government by Italy’s president, Giorgio Napolitano. It will be Italy’s 65th administration since 1945. An “optimistic way” to look at this apparent coup in the PD, says Economist.com’s Charlemagne blog, is that Renzi “is bursting with energy” and may be able to push through crucial reforms that eluded Letta.

Italy is in deep trouble. The economy has barely expanded in 20 years and is still growing too slowly for Italy to start making a dent in its debt mountain of 130% of GDP, which has raised fears of eventual bankruptcy.

The list of long-delayed structural reforms includes liberalising the service sector to foster competition, making the labour market more flexible and cutting taxes on businesses. A revamp of the electoral law to make governments more stable is also on the agenda.

A key problem, however, is that Renzi “will have to rely on the same fractious coalition”, an alliance of centre-left and centre-right, that “hobbled” his predecessor. And he has never even served in parliament.

The “dysfunctional governmental system… has a way of defying” would-be reformers, warns Alan Johnston on BBC.co.uk. We should know quite soon, says FAZ.net, whether Renzi represents new hope or just another symbol of Italy’s protracted decline.

Merryn

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