013
46
Europe
And it could struggle to meet the target. A report to the cabinet on September 23rd re vealed that at that point only 13 of the 51 ob jectives had been reached. Italy’s reform programme is not the problem; that is ahead of schedule. In May a package was approved that simplifi ed a wide range of bureaucratic procedures. And a shakeup of the criminaljustice sys tem is about to be implemented. A further reform, focusing on civil justice, is in the pipeline. Offi cials say that legislation to promote competition is also coming soon. The problem is with investment. The outstanding footdraggers appear to be the ministry of tourism, which at the time of the report had yet to implement any of the six investments for which it is responsible; and the department for ecological trans ition, which had implemented only one. Looking beyond the end of this year, two doubts arise. The fi rst concerns the fate of legislation after it is handed out for implementation at the subnational level. “In Italy, the intention of policies is all too often lost in translation,” says Paolo Gra ziano, who teaches political science at the University of Padua. There is a shortage of the necessary projectmanagement skills among offi cials charged with implement ing complex programmes—a shortcoming the Draghi government says it has begun to address. But another reason, says Fabrizio Tassinari of the European University Insti tute in Florence, is that “secondary legisla tion becomes hostage to vested interests, from local authorities to trade unions.” A further doubt centres on Mr Draghi himself. He is known to want the presiden cy, which becomes vacant in February, and if he were chosen he would have to resign as prime minister. Even if he does not be come head of state, he is unlikely to remain in government after a general election that has to be held by the spring of 2023, and may well come sooner. On October 18th mayoral candidates from the Democratic Party (pd) were elect ed in Rome and Turin, completing a clean sweep of Italy’s biggest cities by the centre left. But the pd and its allies are weaker in the provinces. Polls continue to suggest that Italy’s next government will be a co alition dominated by two parties that have long been critical of the European Com mission: the Brothers of Italy (fdi) party, which has links to neofascism, and the hardright Northern League. Those close to Mr Draghi argue that his departure need not lead to a radical break. His government has established bureau cratic mechanisms for steering and con trolling the fl ow of the recovery money that will, with luck, outlive it. And future governments will be just as constrained by the deadlines the commission imposes and loth to forfeit the fl ow of cash from Brussels by failing to meet them.
The Economist November 6th 2021
2
The rise of the Brothers Italy, voting intention, main parties, %
40 Northern League 30 Brothers of Italy
20
Democratic Party Five Star Movement
10
Forza Italia 0 2020
2021
Source: National polls
Perhaps. But the League, which is a part of the coalition underpinning Mr Draghi, and the fdi, which is not, are both wedded to policies and interests that are at odds with the reforming thrust of the recovery plan. The League has already succeeded in parrying it in one important area. A signif icant weakness of the Italian economy is that, while taxes on labour are too high, those on property are too low. Mr Draghi’s government moved to adjust the balance by changing the criteria used in the land registry in a way that would have boosted the revenue from property. But he ran into determined opposition from the League’s leader, Matteo Salvini. As a result, the changes will not now come into eff ect un til 2026; and even then they will not be used to calculate tax liability. “I am more positive now than I was a year ago,” says Nicola Nobile of Oxford Eco nomics. “But I still consider a permanent improvement in Italy’s economic pros pects to be an upside scenario rather than a base case.” n Portugal
The contraption crashes LISBON
Snap elections are called after the prime minister’s allies desert him
A
geringonça is pleasing to say, but dif fi cult to operate. The Portuguese term, sometimes translated as “contraption”, re fers to a device patched together from odd ly fi tting parts. Although the governing ar rangement that António Costa, Portugal’s prime minister, assembled in 2015 was dubbed the geringonça, it proved surpris ingly durable. But on October 27th it fi nally fell apart, as two leftwing partners voted down his budget, triggering elections two
years early—a rare occurrence in Portugal. Though the budget was expansive, splashing out on free kindergarten and other goodies and increasing the mini mum wage, it was not lavish enough for Mr Costa’s radical allies, the Portuguese Com munist Party (pcp) and the Left Bloc (be). Marcelo Rebelo de Sousa, the president, had announced in advance that if it failed, he would call elections. If he was hoping to put pressure on the parties to seal the deal, the gamble failed. The parties are scrambling to infl uence the electoral timetable. Most want elec tions on January 16th, to avoid prolonged instability. But the calendar is complicated by the plans of the biggest opposition par ty, the Social Democrats (psd), a centre right outfi t despite its name, to hold lead ership elections on December 4th. That would leave the winner scant time to pick candidates for the general elections. One psd candidate, Paulo Rangel, is lobbying Mr Rebelo de Sousa (who hails from the psd himself) to hold the elections later, to allow the party time to regroup. The cur rent leader, Rui Rio, wants to postpone the primary instead. The president was due to announce the date on November 4th. After an inauspicious start Mr Costa has won respect, not least in neighbouring Spain (where the centreleft Socialists also depend on a farleft party, Podemos). His Socialists came second in 2015’s election, then toppled the shortlived minority psd government, cobbling together a majority with the be and pcp, previously considered untouchable by the moderate Socialists. The thenpresident required a written agreement between the parties: the be and pcp never joined the government but made clear commitments of support. But Mr Costa increased his party’s seat count in 2019’s elections. Mr Rebelo de Sousa decid ed not to insist on a formal agreement be fore blessing the second geringonça. The Bloc and the Communists, weakened and unbound by any deal, were sure to fl ounce out at some point. Some think Mr Costa might have been happy for them to do so now. Portugal’s co vid19 vaccination rate, 87%, is one of the world’s highest. He can point to decent gdp growth and falling unemployment until the pandemic (which in 2020 caused gdp to plunge further than in any year since the 1930s). He has kept the defi cit, which made Portugal a ward of the European Union and the imf after the fi nancial crisis, low enough to win international respect. But this has come at the cost of public investment: Portugal’s is thought to be the lowest in the eu in 2020 and 2021. Salaries are low by Western European standards: the minimum wage, at €775 ($900) a month, is around €300 less than Spain’s. Many Portuguese head abroad to work. If Mr Costa nonetheless does well, he
