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Tuesday, January 22, 2008

Prodi Calls Confidence Vote in the Lower House, Live Blogging

According to Reuters 5 minutes ago:


Italy's Prime Minister Romano Prodi will call a confidence in the lower house of parliament to test support for his administration after an ally deserted his centre-left coalition, a party leader said on Tuesday.

The vote will be held at around 1600 GMT on Wednesday, said Angelo Bonelli, head of the Green Party group in the coalition in the lower house, after a meeting of party leaders.


This follows a La Stampa report earlier this morning that Bertinotti wants institutional reforms (presumeably associated with the electoral law) before any elections are held.


Fausto Bertinotti, president of Italy's lower house of parliament, called for a caretaker government to push through institutional reforms before fresh elections are held, La Stampa reported, citing an interview.

``There are institutional and social reforms that can't wait,'' Bertinotti told the newspaper in an interview. Bertinotti's party, the Refounded Communists, is a member of Prime Minister Romano Prodi's governing coalition.


The background to the crisis is, of course, the decision yesterday taken by former justice minister Clemente Mastella to withdraw the support of his Udeur Catholic party from the Prodi coalition. The implication of this would seem to be that Prodi loses his majority in the Upper House, but it should be borne in mind that he may well still have a workable majority in the Lower House - and hence the decision to hold the vote of confidence and test it, I presume - so all of this may continue for some time yet.



The government of Premier Romano Prodi appeared to be on the brink of collapsing on Monday after former justice minister Clemente Mastella said his small Udeur Catholic party would no longer support the executive. Without the Udeur's three senators, Prodi does not have a majority in the Senate. ''If there is a confidence vote we will vote against the government. This center-left experience is over,'' he added.


The political turmoil is in Italy is also affecting Italian financial markets. This is of course part of a general global trend, but there are also certain local details, like for example the fact that Alitalia plunged as much as 8.6 percent in Milan trading today on concern that the collapse of the government could derail the planned sale to Air France-KLM.

The Prodi government has been teetering on the brink of something since it won the closest elections in modern Italian history in April 2006. Those elsections left him with a razor-thin majority in the Senate. He has been constantly forced to resort to confidence votes, staking the survival of his government on the outcome, in order to try to keep his bickering allies in line. He passed the 2008 budget last month using the 31st confidence vote of his 21-month old administration (so that will make this one the 32nd.

Constant divisions within the government have been steadily sapping his popular support. A Dec. 23 survey by polling company Ispo Ltd. showed only 29.6 percent of Italians had confidence in Prodi, down from 44.5 percent a year earlier.

And now of course the Italian economy is about to enter a critical moment in its history. The long term growth concerns see chart below) have not been resolved, it is either currently entering, or already in, recession and the necessary underlying structural reforms to put the budget on a sounder footing have not been made. Which means at some point in the not too distant future watch out what happens next from the Credit Ratings Agencies on the government debt front. My colleague Manuel Alvarez on Global Economy Matters entitled his summary and analysis of Prodi's firts resignation offer last February "A crisis is born in Italy", could it be that subsequent the crisis he then anticipated is now finally about to arrive?

"If I go down, I'll do it standing up." Prodi is quoted as saying. Well said! But could these be some of those proverbial last words? Perhaps, though, it is the best way to go, better not to drag things out too much. Unlike Venice, or the Italian economy, which both seem to be condemned to sink and sink in the absence of anyone who is really ready, willing and able to lend them a helping hand.




I have entitled this post "live blogging" since I will try and post regular updates as and when more news arrives. If anyone has any additional insight to offer, please feel free to comment away.


Wednesday Morning

Well the mood in the prodi camp is optimistic this morning, and the general consensus is that the government will survive, for the time being, with the emphasis being on the time being part. As the Financial Times says:

"Mr Prodi is generally expected to secure approval when the lower house votes on Wednesday afternoon, but the Senate battle on Thursday will be much closer. Should Mr Prodi scrape through after the defection to the opposition of a small Catholic party led by the former justice minister, then the 68-year-old prime minister will probably owe his escape to the seven unelected life senators"


However:

"Whatever the immediate outcome, analysts pronounced Mr Prodi’s bickering, multiple-party coalition to be in its death throes."


I concur. As I say to Hans in comments:

The thing is the coalition is virtually bound to fall apart at some stage, since the economic problems are about to mount in an important way, and then the "medicine" in terms of public spending cuts which may need to be dished out are probably going to be just too much for the left allies.

Basically I think we are soon going to be into a long running tussle between ratings agencies - who you will recall are now sure to become a lot more strict after the most recent debacle, and Italy's steadily mounting social services and welfare costs. Again, as I've been flagging, we should also expect to see a growing North-South dimension to the problem.

I mean, I resist the idea that there is no alterantive at all, since this would begin to imply that Italy had now - as a nation state - passed the point of no return. Some sort of realignment in the centre is obviously necessary, and Bertinotti's departure only makes that even more remote. Or at least that is my impression from here.

Japan and Germany are already visibly wilting under all the reform fatigue, but could we say that Italy already has the fatigue without having actually carried out that much in the way of reform. Those participation rates in the 55-64 age group I cited are absolutely scandalous given the high level of male life expectancy.


and perhaps the most scary thing of all is the fact that the Prodi discourse seems to bear no relation to the seriousness of the economic recesion which Italy is now - in all probability - entering:

Calling for the votes of confidence on Tuesday, Mr Prodi defended his economic record. “This is a government which put the country back on its feet,” he told parliament. “We need continuity of action, above all at a moment when the world economy is faced with negative developments.”


For "world economy" read here the United States, a discourse which is propagated today by EU Commissioner Joaquim Almunia.


“The main reason [for the turbulence] is the risk of a recession in the US,” said Joaquín Almunia, the European Union’s monetary affairs commissioner. “It’s not about a global recession. It’s about a recession in the US, because big imbalances have built up over the years in the US economy – a big current account deficit, a big fiscal deficit and a lack of savings.”



Would that this view were right, not in the sense that I wish ill on the United States, but in the sense of "would that these were the only problems we were facing" (or was he really talking about Spain there, and had just got the name of the country wrong!). Unfortunately this coming recession is far more general, and the weakest point in the whole global picture as far as I can see is Eastern Europe. So I fear a lot of people are in for a rude awakening, though not perhaps in this afternoon's Senate vote.

Romano Prodi is also reported by Corriere della Sera today to be lobbying senators from small independent parties to support him in a confidence vote tomorrow in the Senate. The basic idea is that he can win tomorrow's vote if he maintains the support of six unelected life Senators and manages to persuade at least one opposition Senator not to show up for the vote.

My colleague, and Election Resources on the Internet specialist Manuel Alvarez mailed me yesterday saying "I must say Prodi looks decidedly optimistic, and barring a meltdown of the center-left coalition I think he should easily win the vote of confidence in the Chamber tomorrow". So obviously Prodi - and presumeably Corriere - aready know somthing we don't.

Wednesday Evening:

Things are warming up again, since Prodi easily won - as expected - the lower house vote, but now it seems he may face insurmountable difficulties in the Senate, as two left senators are threatening not to vote for him according to news reports.

Italy's Prime Minister Romano Prodi, facing shrinking odds of winning a vote of confidence in the opposition-controlled Senate, is considering resigning instead of facing the test, media reports said Wednesday.

Citing government sources, the reports said President Giorgio Napolitano advised Prodi not to submit to the vote set for Thursday in the Senate.

On a day of otherwise dire news for Prodi, his team easily won a vote of confidence Wednesday evening in the lower house Chamber of Deputies, where Prodi enjoys a comfortable advantage. The motion passed by 326 to 275. But the fate of the centre-left leader was all but sealed as two leftist senators said they would vote against Prodi on Thursday -- if the vote goes forward.


The "leftist senators" referred to above appear to belong to the Liberal Democrats who had formed part of the coalition. The party said on Wednesday that its three senators will not back Prodi in the Senate confidence vote. However, one of the party senators later put out a separate statement distancing himself from that position and saying he would indeed vote for Prodi. Thus we have a certain confusion and are left with only two "nay saying" senators.


Thursday Morning

Well Prodi it seems is going to go to the Senate. Does he know something we don't?

Italian Prime Minister Romano Prodi said Thursday he would take his case to the Senate as he struggles against increasing odds to save his centre-left government from collapse, the ANSA news agency reported.

"I told the president (Giorgio Napolitano) that I will go to the Senate at 3:00 pm (1400 GMT)," Prodi, 68, told reporters.

He did not state explicitly whether he was prepared to face the vote of confidence he said he wanted in the upper house on Tuesday.

Prodi, crippled by the defection of a small centrist party, faces almost certain defeat if the Senate vote, set for 8:00 pm, goes forward.

"It was a calm and constructive meeting," the embattled centre-left leader said after his second talks in 24 hours with Napolitano, who on Wednesday reportedly advised Prodi to consider resigning instead of facing the vote.

Prodi told the Corriere della Sera that he wanted the vote to go ahead for the sake of the nation. "It's painful, but I have to do it for the country," he said. "Italians have the right to know who is in favour of my government and who is opposed."



Thursday Night Prodi Resigns

Well this stage at least is over. Now we wait to see whether we are going to have a temporary interim government, or if we are going straight to elections.


Italian Premier Romano Prodi resigned Thursday after his center-left coalition lost a Senate confidence vote, a humiliating end to a 20-month-old government plagued by infighting. The government lost 161-156 after a fiery debate during which one senator was spat upon, fainted and had to be carried out on a stretcher. Calling early elections or asking a politician to try to form another government are among President Giorgio Napolitano's options as head of state. Until he decides, Prodi will stay on in a caretaker role.

Former Premier Silvio Berlusconi, the billionaire media magnate who lost to Prodi in 2006 and is eager to return to office, said Napolitano should call early elections, the Italian news agency ANSA reported.

"We need to go to the polls in the shortest time possible without delay," Berlusconi was quoted as saying outside his Rome residence.

But the leader of the largest party in the government, Rome Mayor Walter Veltroni, contended that early elections would only "push the country into a situation of dramatic crisis."

Veltroni, the head of a leftist group of former Communists and pro-Vatican centrists, is considered the likely candidate for the left.

The presidential palace said Napolitano would start consulting with political leaders Friday on what to do next.

2 comments:

Hans Suter said...

"better not to drag things out too much"
Ed, it seems that you see an alternative to the actual government and its program. I don't.

Edward Hugh said...

Hi Hans,

"Ed, it seems that you see an alternative to the actual government and its program. I don't."

No, sorry, I'm not going that far. I was getting myself carried away by my own rhetoric. It was that expression of his about "going down standing up that got to me". I find it hard to see how - literally speaking - you can do that :).

I mean there are far too many theatricals going on here, and far too few real hard thought out political plans for really changing things.

The thing is the coalition is virtually bound to fall apart at some stage, since the economic problems are about to mount in an important way, and then the "medicine" in terms of public spending cuts which may need to be dished out are probably going to be just too much for the left allies.

Basically I think we are soon going to be into a long running tussle between ratings agencies - who you will recall are now sure to become a lot more strict after the most recent debacle, and Italy's steadily mounting social services and welfare costs. Again, as I've been flagging, we should also expect to see a growing North-South dimension to the problem.

I mean, I resist the idea that there is no alterantive at all, since this would begin to imply that Italy had now - as a nation state - passed the point of no return. Some sort of realignment in the centre is obviously necessary, and Bertinotti's departure only makes that even more remote. Or at least that is my impression from here.

Japan and Germany are already visibly wilting under all the reform fatigue, but could we say that Italy already has the fatigue without having actually carried out that much in the way of reform. Those participation rates in the 55-64 age group I cited are absolutely scandalous given the high level of male life expectancy.