10.11.2011

Bye bye, euro too?

While the departure of Silvio Berlusconi will be a cause for celebration amongst workers, it will open the way for a more effective government of vicious austerity, warns Toby Abse

The Italian economic and political crisis is deepening by the day. After the fall of George Papandreou and the imposition on the increasingly restive Greek people of a government of national unity - the favoured solution of the European Union/International Monetary Fund - Italy is now at the centre of the crisis of the euro zone.

Whilst a Greek default or even a Greek exit from the euro would have very serious consequences, the collapse of the Italian economy - the third largest in the euro zone, with a national debt of €1.9 trillion - would be absolutely catastrophic for European and indeed world capitalism.

The spread between Italian and German bonds reached a new record of 497 points on Tuesday November 8, while the interest on 10-year bonds soared to a terrifying 6.77%, but only to reach even higher the day after. Yields on 10-years bonds reached 7.45%, or in other words around the level at which Ireland, Greece and Portugal were forced to ask for IMF/EU bailouts. Meanwhile, the Milan stock exchange continued to plunge, recover and fall again. It was very noticeable that its rapid fluctuations were connected with news about prime minister Silvio Berlusconi - rising when rumours of his resignation intensified and falling when the premier denied them. Finally, on November 9, the premier confirmed he would step down.

Berlusconi’s statement after the November 3-4 Cannes G20 summit had been bizarre, even by his own eccentric standards. He had claimed that “Italy does not feel the crisis”, that the selling of Italian bonds was a “passing fashion” and that “the restaurants are full, the planes are fully booked and the hotel resorts are fully booked as well”. In reality Italy was already being treated as if it had asked for a bailout. Berlusconi claims that he refused an offer of an International Monetary Fund loan, something which IMF managing director Christiane Lagarde denies was ever offered, although “officials familiar with the deliberations told the Financial Times that they had been urged to accept as much as €50 billion” (Financial Times November 5-6).

Ever since the August letter to the Italian government signed by Mario Draghi and Jean-Claude Trichet on behalf of the European Central Bank, Berlusconi’s Bonapartist regime - which often ignored the tenets of neoliberal orthodoxy in favour of a corrupt and clientelistic populism, enriching parts of its petty bourgeois mass base as well as a number of shady entrepreneurs close to organised crime - has been replaced by what is in effect an ECB protectorate.

Berlusconi’s October 26 letter, setting out a detailed timetable for ‘reforms’ and delivered to the EU leaders a week before the G20, was not a spontaneous programme for action collectively devised by the Italian cabinet - indeed finance minister Giulio Tremonti gave very public signs of disavowing it - but a document written and rewritten in accordance with telephoned instructions from officials in Brussels under the guidance of Angela Merkel and Nicolas Sarkozy. The duo had clearly demonstrated their obvious lack of trust in Berlusconi on October 23 with their uncontrollable public smirking when asked by journalists about their faith in the Italian premier’s promises - an incident seen on television all over the world, even if Berlusconi managed to prevent it being shown on the major Italian television channels.

By agreeing at the G20 summit that IMF inspectors will monitor the progress of his promised ‘reforms’ on a monthly, rather than annual, basis, Berlusconi had abdicated the last vestiges of Italy’s economic independence and severely compromised its political autonomy. There is now very little difference between Greece’s subjection to the ‘troika’ (EU, European Central Bank and IMF), which has already aroused such overwhelming hostility amongst the Greek masses, and the ECB/IMF tutelage over Italy to which Berlusconi voluntarily consented. Whilst Berlusconi, unlike George Papandreou - who for a day or two , albeit belatedly and under enormous pressure from the Greek working class, showed some brief signs of resisting the appalling austerity package being imposed on his country - submits to German and French blackmail with the same alacrity that he has shown in other situations to Sicilians who have made offers he could not refuse, his grotesque servility no longer suffices as far as the international bourgeoisie are concerned.

In god’s name, go!

The Financial Times editorial - “In god’s name, go!” (November 5-6) - reflected the views not just of its own journalists or its proprietor, but of the European, and indeed the American, ruling class as a whole (it is significant that the only direct exchange between Berlusconi and Obama at Cannes occurred when the Italian vainly attempted to engage the president in conversation whilst the latter jogged past him).

The ECB had bought €70 billion of Italian bonds since August and despite attempts to increase the size of the European Financial Stability Facility, there is no way it could cover an Italian default, even if it might, arguably, be able to cover a Greek one. It has been claimed that the ECB’s buying of Italian bonds on November 7 was more intermittent and limited than on previous occasions when Italy was on the edge of a precipice. In such circumstances, the indulgence that was long accorded to Berlusconi by his counterparts - exemplified by Tony Blair’s 2004 Sardinian holiday as Berlusconi’s guest - was a thing of the past.

The afternoon of Tuesday November 8 signalled the end for Berlusconi. In the vote on the public accounts for 2010, Berlusconi obtained 308 votes, clearly less than half of the deputies (the opposition did not participate in the vote). This outcome suggested that Berlusconi would be unable to muster a working majority to pass any measure that the opposition was determined to obstruct and, even if the vote on the public accounts was not in itself a vote of confidence, it raised grave doubts as to whether Berlusconi any longer had the numbers to win one.

The leadership of Berlusconi’s party, Popolo della Libertà (PdL), met in the immediate aftermath of the vote, following which Berlusconi went to see the Italian president, Giorgio Napolitano, to discuss the new situation. After this he announced his intention of resigning, but not, and this should be stressed, with immediate effect. Suddenly playing the patriotic card after weeks of ignoring calls to step down in the national interest, he said he would resign after the 2011 budget is passed, honouring his (and Italy’s) undertakings to the EU and ECB.

This law would clearly be a neoliberal austerity package of a rather unpopular nature and Berlusconi is essentially blackmailing the parliamentary opposition to support - or at any rate not oppose - its passing. The Partito Democratico (PD), including its former ‘official communists’, would like to get it through with the same speed as was displayed with the August austerity package - allegedly it could all be done in 10 days if the opposition abstains and the government reduces the measures to the essential ones and does not include anything, such as an immediate attack on pensions, which might seriously disrupt the PD’s relationship with its supporters in the CGIL trade union confederation. The PD then hopes that after Berlusconi’s resignation in a fortnight’s time, Napolitano’s consultations with the political parties will lead to a technocratic government led by Mario Monti, the economist and former EU commissioner, delaying the prospect of a general election for a year or so.

Berlusconi has a different plan. He hopes to drag out discussion of the budget for three weeks or more in the hope of sabotaging the chances of a technocratic government being formed. In Berlusconi’s favoured scenario, after Napolitano’s failure to bring a Monti government into being, the president would be forced to allow Berlusconi to continue as caretaker prime minister until an early general election in January or February 2012. Whether Berlusconi is sufficiently out of touch with reality to believe he has much chance of winning such an election or whether he is determined to take the PdL down with him in a Wagnerian or Hitlerian finale is unclear.

On Monday November 7 the Corriere della Sera put forward a number of scenarios, some of which remain valid. One that appeals to the more rational elements on the centre-right is that in which Berlusconi steps down in favour of Gianni Letta or Renato Schifani, both PdL senior figures, in the hope that the PdL and Lega Nord could then enlarge their majority to include the Unione di Centro (essentially the right wing of the old Christian Democrats and a grouping most of whose members were involved in Berlusconi’s earlier governments in 1994 and 2001-06), effectively dividing the ranks of the current parliamentary opposition. The Financial Times categorises this scenario as a “glimmer of hope” (November 4). The Corriere gave this a 25% likelihood. Other options floated are the technocratic government led by Monti (to which the Corriere gave a 30% probability) and a government of national unity (15%). The Monti option is by far the Financial Times’s favourite - the “dream team”, as it dubbed it.

Weak left

Berlusconi’s promised resignation would, if it materialises, undoubtedly be regarded as a cause for enormous celebration amongst not just the organised working class, but a large spectrum of the more progressive forces in Italian society. It would give increased credibility to the idea that positive change is really possible and not just desirable in an abstract way. However, it has to be acknowledged that in the short run it would also increase the intensity of the neoliberal offensive against all that remains to the Italian workers of the gains of the ‘hot autumn’ of 1969.

The problem is that the parliamentary opposition is by and large in favour of the EU-ECB-IMF programme of ‘reforms’. The PD is obviously still subject to a certain amount of pressure from the CGIL and might, to some degree, resist attacks on pensions and on the protection against arbitrary dismissal in medium and large-scale workplaces embodied in article 18 of the workers’ statute of 1970, but could not be relied upon to oppose privatisation and ‘liberalisation’ (ie, deregulation) in general. Any technocratic administration led by Mario Monti or any cross-party government of national unity is likely to try to implement the whole EU-ECB-IMF programme as rapidly as possible before spring 2013, during the remainder of the projected life of the present parliament, to avoid any test of popular sentiment at the ballot box. At present the PD leadership - which is anxious to keep on good terms with UdC, whose current stance favours such an austerity package - is very clearly inclined to support a technocratic or national unity government rather than call for early elections.

While Nichi Vendola’s Sinistra Ecologia e Libertà (SEL) - currently running at 7% in the opinion polls - is still a left social democratic party, it is not represented in the present parliament and, whatever it might say in the course of a hypothetical general election campaign next year, is deeply committed both to an electoral cartel with the PD and Antonio Di Pietro’s populist Italia dei Valori and to participation in a government with these forces in the event of a centre-left victory. Certain elements of the PD, especially Massimo D’Alema, would be very inclined to dump SEL if they could make a deal with the Christian Democratic UdC instead, but if SEL ended up as a left opposition within the parliament next year it would be from such a necessity and not through choice.

The latest opinion polls give the Federation of the Left (principally the Partito della Rifondazione Comunista and the Partito dei Comunisti Italiani) a dismal 1.5%. Whilst it is arguable that forces not represented in parliament might gain more publicity during the course of a vigorously conducted election campaign, during which they could raise clear demands opposing the EU-ECB-IMF consensus, the odds against a renewed communist presence in the Italian parliament are currently rather high because of the electoral system. This favours coalitions and sets relatively high thresholds on small parties that adopt an independent stance.

Whilst the objective situation in Italy may increasingly resemble that of Greece, as external pressure for austerity policies mounts, the Italian radical left does not have anything approaching the following of the left nationalist KKE or Syriza radical left coalition. The overwhelming rejection of neoliberal policies, such as water privatisation, in the June 2011 referenda, as well as the substantial numbers of participants in both the CGIL’s general strike in September and the October 15 demonstration called by the Indignati in Rome, are indications that considerable potential for mass resistance to austerity can be found in Italian society. Nevertheless, the coming battles will be hard ones, given the lack of principled political representation currently available to workers, pensioners, the unemployed and other targets of the neoliberal offensive.