Italian leader raises his profile in the EU amid domestic pressure
Italy’s Prime Minister Matteo Renzi has elevated his profile as he angles to become Europe’s dominant leader.
WASHINGTON (MarketWatch) — The European Union may be in trouble and its de facto leader, German Chancellor Angela Merkel, mired in a refugee controversy at home. But never fear — Italian Prime Minister Matteo Renzi is ready to step into the breach.
Brimming as ever with a surfeit of self-confidence, the 40-year-old Renzi noted in an end-of-the-year press conference that his Democratic Party drew the most votes of any party in the 2014 European Parliament elections — more even than Merkel’s Christian Democrats.
In a report on that press conference, Politico’s European edition quoted Italy’s state secretary for Europe, Sandro Gozi, saying that Renzi maintains good relations with Merkel, “but of course now on the European stage there is a new leader, Renzi, who puts forward a different vision.”
“People used to grimace when Italy spoke, but that era is over.”
–Prime Minister Matteo Renzi
Politico goes on to have a little fun with Renzi with five tips for being a true European leader, ranging from small ones like showing up for EU meetings on time and improving his foreign language skills, to bigger ones like actually winning an election — Renzi took power in 2014 through an intraparty change of leadership and has never led his party in a general election.
It may be, however, that Renzi has no real pretensions to replace Merkel as leader of Europe, but needs to show Italian voters that he represents an alternative in Europe to the deflationary policies mandated by Berlin for the eurozone EURUSD, -0.1006% .
In his widely diffused prophecy of doom for the EU, economist Nouriel Roubini wrote for Project Syndicate this week that one of the many examples of “austerity and reform fatigue” in the eurozone periphery was the pressure that euroskeptic populist parties in Italy are putting on Renzi.
Charlie Hebdo Anniversary: Hollande Pays Tribute to Police(2:24)
One year after the Charlie Hebdo attacks, French President Francois Hollande addressed police forces in Paris, thanking them for their service and saying that the terror threat continues to weigh on France. Photo: AP.
And in fact Renzi’s Democratic Party has steadily declined in the polls from its peak above 40% at the time of the European Parliament elections in 2014 to nearly 30% recently. (Ironically, one of Renzi’s successful reforms is granting bonus seats in Parliament to the winner of an election, but only if that party gets at least 40% of the vote.)
The decline has come at the expense of gains by the Five Star Movement, the protest party led by comedian Beppe Grillo, which has bounced back from its decline after the 2013 general election so that it is now nearly even with the Democratic Party and most polls show it winning a runoff second round against Renzi’s party.
The Northern League, a regional party that is separatist and euroskeptic, has also posted strong gains since its poor showing in the European elections and is putting additional pressure on Renzi.
Renzi is well aware of the danger posed by these euroskeptic forces. In an interview with the Financial Times the day after elections in Spain resulted in Prime Minister Mariano Rajoy losing his parliamentary majority, he drew a lesson for himself.
“I don’t know what’s going to happen to my friend Mariano,” he said, “but I know that those who have been in the front line of being the faithful allies of the politics of rigor without growth have lost their jobs.”
Renzi made it clear in that interview that he thinks the successes of his government — last year he passed reforms increasing flexibility in labor markets and currently is shepherding legislation through Parliament that will strip the Senate of any real power and end its obstructionist role — mean Italy will be taken more seriously in international meetings.
“People used to grimace when Italy spoke, but that era is over,” he said. “There’s another Italy now which is in a position to say what it thinks of Europe.”
At the final EU summit of the year last month, Renzi did not hesitate, for instance, to criticize Germany for going ahead with expansion of a northern gas pipeline from Russia after a southern pipeline that would have delivered gas to Italy was scotched in the wake of Russia’s maneuvers in Ukraine.
Renzi has also criticized Germany for its failure to go along with a joint deposit insurance scheme in the EU and for resisting Italy’s request to temporarily exceed deficit-to-GDP ratios in order to push through structural reforms and deal with the refugee crisis.
With due respect to Germany and Merkel, Renzi said in the FT interview, “Europe has to serve all 28 countries, not just one.”
The vacuum left by the failure of France under Presidents François Hollande and Nicolas Sarkozy to act as a counterweight to Germany certainly leaves room for an alternative.
Whether Renzi has the political heft to play this role remains to be seen, but it won’t be for lack of ambition.