Italy: Renzi resigns after rise of ‘anti-establishment’ Five Star Movement

Beppo Grillo and Matteo Renzi

After years of compromise, neoliberalism and austerity, Italy’s ‘centre left’ Democratic Party has been punished at the polls. Having won only 18% of the vote in the 4 March election, party leader Matteo Renzi resigned. In a hung parliament, the ‘anti-establishment’ Five Star Movement won the largest share of the vote with 32% and Lega, an explicitly hard right anti-immigration party, quadrupled its share to 18%. Lega has an electoral pact with Silvio Berlusconi’s conservative Forza Italia – which with 14% of the vote is weaker than ever – and two smaller parties, but they did not win enough seats between them to take power. It is likely that Five Star will head up a coalition government. The continued malaise on the Italian left meant limited political options mixed with resentment towards austerity and immigration left the emerging parties with an open goal. Brian Henry reports.


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Italian referendum: managing the fallout for capital

On Sunday 4 December, Italians voted ‘No’ in a referendum on constitutional reform, a consistent issue in Italian politics. A ‘Yes’ vote would have meant changes to the composition and powers of the Italian Parliament, ending Italy’s ‘perfect bicameralism’ by reducing the powers and size of the Senate. Currently, all laws must be passed in exactly the same wording by both houses, leading to almost unending navetta parlementare (parliamentary shuffle). The proposed reforms would have eliminated this requirement in the vast majority of cases, as well as modifying the division of powers.

This was the third constitutional referendum in the history of the Italian Republic and its roots date back to 2005 when former president Silvio Berlusconi proposed a Reform Bill, which in 2006 was also rejected by referendum. Discussions on constitutional reform resumed in 2011, during the technocratic government of Mario Monti (see FRFI 227). In February 2014, Matteo Renzi became Prime Minister and pledged to implement constitutional and electoral reforms, hoping to give the government more power and combat the ‘gridlock’ which characterises Italian politics. In January 2016, Renzi set the date for the referendum as October 2016 and announced that if he lost he would resign. 

On a turnout of 65.47%, 59.11% voted ‘No’. Immediately following the result, anti-EU right-wing ‘populist’ groups renewed their calls for new elections in an attempt to politically capitalise on the situation. For the ruling Partito Democratico (PD), things are more complicated. Some in the party feel that new elections would do nothing but give ground to Eurosceptic parties like the Northern League and the Five Star Movement  (see ‘European elections: irrelevant for the majority’) while others argue that delaying them will further infuriate voters and push them towards these parties, where currently they predict a PD victory due to the fact that the ‘populist’ vote is split and the fact that the centre-right Forza Italia party would probably form a coalition with PD in order to keep out the eurosceptics.

The Eurozone crisis is highlighting divisions in the Italian ruling class. On the one hand there are those who believe in the reactionary fantasy of an independent Italian imperialism, and on the other there are those who acknowledge that Italian imperialism can only survive as a part of a larger imperialist bloc.

The first trend is represented by groups like the Northern League. One of its key figures, in charge of economic policy, is Claudio Borghi, a former broker for Merrill Lynch and Deutsche Bank who favours ‘Italexit’ and a return to the Lira, which he insists on calling the ‘Florin’ in reference to past Florentine commercial supremacy. Borghi’s view is that outside the Euro, the Italian state would be free to shore up Italy’s problem-ridden banking sector: ‘You have to step in to save the banking system in a crisis otherwise everything is destroyed.’[1] Groups like the Northern League advocate the same kind of reactionary fantasies of an independent imperialism as the Brexit camp in Britain. They also represent the same class forces: the petty bourgeoisie whose living standards have been hit as the crisis drives the subsumption of small capital into big capital, sections of the big bourgeoisie whose financial interests lay outside of the Eurozone, and the most backwards sections of the labour aristocracy whose political role is to defend imperialism against the interests of the mass of the working class.

On the other side of the split is the dominant pro-Europe section. While the eurosceptic camp’s key priority is to capitalise on the referendum vote, the europhile camp’s key priority is damage control in the interests of big capital. Matarella stated on the day after the referendum that he will not call snap elections and ‘froze’ Renzi’s resignation until the 2017 budget was passed on 6 December.

On 12 December, Paolo Gentiloni, who was foreign minister throughout Renzi’s premiership, was sworn in as Prime Minister. His coalition government is supported by his own DP and the Popular Area, a Christian centre-right coalition – almost exactly the same majority which supported Renzi’s government. Renzi’s resignation has served the illusion of political change, but in reality very little has changed, and the representatives of big capital retain control of the government. For this section of the ruling class in particular the main priority now is Italy’s banking sector, and this ‘caretaker’ government, should be able make unpopular political decisions such as funneling public money into the ailing Monte dei Paschi bank, something which Renzi desperately tried to avoid in order not to infuriate voters.

European banks currently hold around €1trn in ‘non-performing loans’: loans that the borrowers are no longer paying interest on and on which they could be about to default. Of that €1trn, around €360bn is held by Italian banks. Italian banks, therefore, are offering low returns, which is discouraging investment. This, in turn, means that Italy’s banking sector is seriously lacking in capital. When the European Banking Authority carried out its annual stress tests in July, Europe’s worst-performing bank was Italy’s Monte dei Paschi de Siena. MPS shares are volatile, regularly posting double-digit swings in single trading sessions. They have fallen 86% over the last year, and by fell 4.2% on the day after the referendum.

The bank has been brokering a deal to raise around €5bn in capital funds, but investors have backed off since the referendum due to political uncertainty. The most important potential investment is €1bn from the Qatar Investment Authority, without which the other investments are likely to be retracted. JPMorgan Chase and Mediobanca (advisers to MPS) have been working with Finance Minister Pier Carlo Padoan (a technocrat who, before becoming finance minister, had worked for the IMF, World Bank, European Central Bank, the OECD and the European Commission) to persuade the Qatar Investment Authority to invest. On 6 December, Marco Morelli (chief executive of MPS) flew to Frankfurt to meet bank supervision officials at the ECB. At the end of trading on that day market confidence, and therefore MPS shares, recovered after Vladis Dombrovkis, the EU’s commissioner for financial stability, said that Brussels was in close contact with Italy over the banking sector. The Financial Times reports that according to ‘people close to the talks [between MPS and the ECB], other potential investors, including US hedge funds, have asked for the new government – preferably led by finance minister Pier Carlo Padoan – to be in place before proceeding.’[2] On 7 December , MPS wrote a letter to the ECB saying that it would be unable to conclude any deal until a new government is formed. The dominant sections of the Italian bourgeoisie have allies in the intra-imperialist bloc of the EU. Both favour a technocratic government to rescue MPS and to restore market confidence in the banking sector of the Eurozone’s third largest economy, the collapse of which could endanger the entire Eurozone. The likelihood of this outcome has reassured investors. Faith that MPS will be recapitalised in one way or another pushed the Italian banking index 9% higher on 5 December, its best one day performance since 8 July. Monte dei Paschi stock even added 1%. Confidence has also limited the shock on the euro: end of trading on Monday 4 December saw the euro at £0.842, down only 0.002 from the Friday prior to the referendum. Since the appointment of a pair of safe hands as prime minister, market confidence looks set to fully recover.

Imperialism is parasitic and decaying capitalism. Italy is a minor imperialist power that has been hit hard by the crisis. The reality of the Eurozone is that it forces the cost of the crisis onto the weaker powers in order to shore up French and German imperialism. The dominant sections of the Italian ruling class understand that even though a disproportionate amount of the cost of the eurozone crisis is forced onto Italy by membership in the European bloc, this is a necessary price to pay to prop up a weak Italian imperialism which cannot survive on its own. Without the power that the EU brings, Italian capital could never compete against US capital and its position as an imperialist power would collapse completely.

According to calculations by Michael Roberts since Italy joined the Eurozone in 2000 the rate of profit has fallen by 20% (double the decline of the US and the UK), and is now down 30% since 2004.[3] Between 2007 and 2016, real GDP per head at purchasing power parity fell 11% in Italy, while in Germany it rose by 11%. Real GDP growth per head has been negative since 2004. In the entire Eurozone, only Germany’s rate of profit has risen since 2009. Like all capitalist crises, this is a crisis of profitability. As the rate of profit has fallen, investment into Italy has slowed, leaving Italian banks with no capital to invest. This creates a contradiction for the ruling class. The solution to a falling rate of profit is the large-scale destruction of defunct capital, but this is something that the ruling class simply cannot countenance.

The great Italian communist Antonio Gramsci argued in his Prison Notebooks that the ‘historical unity of the ruling classes occurs in the state, and their history is essentially the history of states and groups of states.’ Big capital and its representatives are moving to cement their control over the Italian state. Matarella has stated that the priority for the new government before the next elections in 2018 will be to change the ‘Italicum’ electoral law which came in in July and which allows for the possibility of a majority Five Star Movement government, an undesirable outcome for big European capital. As the divisions in the ruling class are creating problems, the dominant section is moving to secure a ‘technocratic’ government in place of a right-wing populist one. We warned during the 2012 elections that if ‘the left does not find a way to unite and to create a structure where a class-based movement can grow, the country is in great danger of falling prey to the far-right and its petty-bourgeois decoys.’ (FRFI 227) It seems that the big bourgeoisie is moving to ensure that the country will remain in its parasitic grip.

Séamus Padraíc

[1] The Telegraph, 7 December 2016

[2] Financial Times, 7 December 2016

[3] Michael Roberts, ‘The long depression in Italy’,


Italy: Migrants – victims of racism / FRFI 236 Dec 2013/Jan 2014

Fight Racism! Fight Imperialism! 236 December 2013/January 2014

The tragedy that took place off the coast of Lampedusa on 3 October 2013, killing at least 359 people, shook the conscience of many in Italy and elsewhere. When Prime Minister Enrico Letta and European Commission President Jose Manuel Barroso arrived on the island to pay hypocritical tribute to the victims, boos and heckling greeted them. Lampedusans understand all too well that token gestures from politicians will not prevent migrants who are fleeing desperate poverty or civil wars from trying to cross the Mediterranean.

The island is at the centre of migration routes due to its proximity to the north coast of Africa – 70 miles at the nearest point. Frontex (the European Union agency for external border security) might beef up its patrols near the narrow strait that separates Sicily from Tunisia, but a sea border cannot be sealed off. This year alone, 12,000 migrants made it to Lampedusa; over the last decade at least 20,000 have drowned attempting the crossing.

The migrants are a boon to human traffickers of all kinds. A well-organised network of smugglers, with links to the Italian mafia, helps migrants reach European shores after paying £1,200 and £3,000 per person. This is where slave labour begins for many.

For most refugees, Italy is only the first stage towards a destination further north. To finance that onward journey, and to repay the smugglers and the Mafia, migrants are hired by Italian ‘entrepreneurs’ to work as slave labourers; tomato and grape production, for example, rely heavily on cheap labour. The local ’Ndrangheta mafia dominates the vegetable and fruit business in that part of Italy.

Corrupt local authorities do little to protect these workers since many of their members benefit directly from this exploitation. It was therefore an act of gross hypocrisy when on 8 October 2013, Prime Minister Enrico Letta decided to grant Italian citizenship posthumously to those who had drowned. That generosity did not extend to the shipwreck survivors.

Meanwhile, racism is on the rise and Italy’s fascist past is being resuscitated. Italy’s Minister for Integration, Cécile Kyenge, who is black, has been the target of attack, most notoriously in July by Roberto Calderoli of the far-right Lega Nord party and vice-president of the Senate, who compared her to an orang-utan. He remains in post. It was Calderoli who declared, after Italy’s win against France in the World Cup final in 2006, that Italy’s victory was ‘that of our identity, by which [the Italian team] won against a team that sacrificed its identity by calling forth negroes, Islamists and communists’.          

Dario Chiaradonna


Italy: Unstable coalition formed/ FRFI 233 Jun/Jul 2013

Fight Racism! Fight Imperialism! 233 June/July 2013

After weeks of haggling following the inconclusive general election in February, the Italian political class finally succeeded in putting together a ‘grand coalition’ to keep its grip on the country – at least for the moment. Although the Democratic Party (PD) won the most votes by a whisker, it was the success of Beppe Grillo and his MoVimento 5 Stelle in coming second which had created a three-month political stalemate. Rather than face new elections and a possible defeat at the hands of Grillo, the nominally-left PD chose to form a coalition with Silvio Berlusconi’s right-wing PDL and accept many of his lackeys inside the government.

The new Prime Minister is the PD’s Enrico Letta. A former president of the Christian Democratic Youth, Letta had a two-year spell as an MEP, and then replaced his uncle, Gianni Letta, as undersecretary to then Prime Minister Prodi in 2006. Ironically, Gianni Letta has been four times Berlusconi’s prime ministerial undersecretary and is now advising Goldman Sachs on business opportunities in Italy.

The ‘grand coalition’ was a last-minute deal Berlusconi had crafted. Even though the PD won the general election Berlusconi was able to impose his PDL’s programme on Letta. The abolition of the IMU, a mansion tax introduced by former Prime Minister Monti in 2012, was Berlusconi’s major promise during the election campaign and as such its repeal will be critical to the ‘grand coalition’s’ survival. A tax reform aimed at lowering rates for businesses and another on the payroll are in the pipeline. Last but not least, the elimination of public funding of political parties, a promise made by Grillo, will be agreed soon. This will delight media tycoon Berlusconi: as a billionaire he will have no problem paying for his PDL.

The promises made by the coalition parties will mean a fall in tax revenues of about £17bn which will satisfy the rich and powerful. Berlusconi’s masterstroke can be summarised as ‘killing two birds with one stone’ – controlling the government without leading it and creating the conditions for the implosion of the PD that has started with the resignation of its leader Pier Luigi Bersani.

Meanwhile, the media, be they the state-controlled RAI or Berlusconi’s networks, have been waging a campaign to discredit Grillo’s movement by casting doubts on whether its MPs are fit for the job. So far, the polls indicate that this strategy seems to be working. As for the left, the moment is not ripe yet but it has to strive to organise on a platform based on the defence of the working class and its interests.

Dario Chiaradonna


Italy: the day of reckoning /FRFI 232 Apr/May 2013

Fight Racism! Fight Imperialism! 232 April/May 2013

As we got to press, the political stalemate that followed the Italian general election of 24-25 February shows no sign of being resolved. Beppe Grillo and his MoVimento 5 Stelle have so far refused to come to any agreement with the other political parties and form a government. This both reflects and compounds the divisions within the Italian ruling class and adds to the general sense of crisis within the Eurozone.

At the election, the centre-left coalition was able to garner 340 seats in the lower house with 29.5% of the votes, the Democratic Party taking 25.4%. Silvio Berlusconi’s People of Freedom Party still managed to lure an impressive 21.6% of the voters despite years of sex scandals, cronyism and hide-and-seek with the judicial system. Overall, the ‘Teflon’ media tycoon’s centre-right coalition got 29.2% of the votes or 124 seats. The discrepancy in seats between the two coalitions is the product of a 2005 electoral law which gives extra seats to the winners. Former Prime Minister Mario Monti’s coalition could only muster 10.5% of the vote. Together, the Democratic Party, the People of Freedom Party and the neo-fascist Northern League lost 10.5 million votes compared to the 2008 general election.

However, the real victor was Grillo’s MoVimento. The polls before the elections greatly underestimated his support, and with 8.7 million votes and 25.6% of the electorate, MoVimento got more than any other single political party. Who are the ‘Grillini’ (the nickname given to the militants of the movement)? What do they stand for? Who do they represent? Firstly, they stand against austerity and against the programme of the Italian ruling class. They have given expression to a popular disgust with the corrupt and squalid Italian political set-up. They have managed this because there is no party or movement representing the working class. They do not represent a valid political alternative – Grillo does not address the real problem, capitalism. However, he has opened the eyes of the Italian people to new possibilities through his constant denunciations of the likes of Berlusconi and Monti.

The other questions are not easy to answer. One indication is that the current economic situation, combined with the Berlusconisation of Italian politics and culture, has led an entire generation of youths with few prospects to be deeply disillusioned by politics and by the entire Italian political class. This also in part explains the record level of abstentions – 27.5%, so that the turnout fell below 80% for the first time since the Second World War. The fact that nearly half the electorate either abstained or voted for Grillo demonstrates the degree of alienation of the Italian people from electoral politics.

There are several paradoxes with MoVimento. It does not see itself as a party; in fact in Grillo’s words it aims to ‘send the politicians home’. Playing an anti-politics card, then taking part in an election and then securing massive support now presents Grillo with some problems. First of all, the MoVimento has a weak structure. It is primarily based on social media like Twitter and Facebook and is quite averse to the concept of power. The second aspect of the problem is that by refusing to form a coalition and provide Italy with a government he is effectively giving a sign that Italy’s political system has run its course.

MoVimento describes itself as neither belonging to the right or to the left and it seems to have got support from both sides of the political spectrum. It has a distinctive petty bourgeois character. Many newly elected Grillini are either self-employed or employers. References to the working class, to class struggle or just workers’ rights are absent from Grillo’s speeches, except in so far as he polemicises against the three major trade unions (CGIL, CISL and UIL) or resorts to easy populist slogans about workers’ control of factories or companies.

MoVimento is now faced with stern reality. It either commits to being part of a government or accepts that there will be fresh general elections when it may find its support has evaporated. Either way, the working class will still lack real representation.

Dario Chiaradonna



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