Italian PM Matteo Renzi to use EU Council presidency to push for less austerity

July 2, 2014 1:46 pm

Italy took over the six-month rotating presidency of the Council of the European Union on 1st July, following on from Greece. In keeping with the clichés about the inefficiency of Italian public administration, the presidency started with its dedicated website still under construction and important information missing. There was no trace of the programme setting out the priorities of the Italian Government for the next six months, with only a short line informing that this would be published its official presentation on Wednesday 2nd July.

But while much can be said about the generally exasperating slowness of Italian bureaucracy, this time round Italian officials could have some plausible justifications for the apparent delays. Indeed, the centre-left government led by Matteo Renzi, the former Mayor of Florence, was sworn in only at the end of February and immediately embarked on an extremely ambitious programme of reforms which took much up most of the executive’s time during the past four months.

Yet, following the astounding victory of Renzi’s Democratic Party in May’s European elections many within the continental left look at the young leader as someone who might help break the hegemony of austerity ideology championed by Angela Merkel since the start of the economic crisis. This might not be an easy feat, even for a politician sometimes called Il Rottamatore (‘The Scrapper’), but Renzi has sent some strong signals that he intends to use the Italian semester at the helm of the Council to argue for a different approach to economic growth and job creation.

While having repeated in multiple occasions that Italy intends to comply with the 3% deficit target which binds Eurozone Member States as part of the Fiscal Compact, Renzi is keen to talk about introducing more ‘flexibility’ in how the rules are applied by the European Commission. Only a few days ago Sandro Gozi, the man in charge of European Affairs within Renzi’s cabinet office, told Italian radio that the government would push for a substantial change in how economic affairs are dealt with by the Commission after the end of Commissioner Rehn’s mandate.  Rehn has of course been seen as an enforcer of the austerity approach over the last few years and the Italian opposition may make it difficult for his successor, former Finnish Prime Minister Jyrki Katainen, to succeed him in the post.

Renzi’s keenness on starting to re-frame the economic agenda on the continent was also reflected in the way in which he played his cards during the negotiations for the appointment of Jean-Claude Juncker as new President of the Commission. As it was highlighted by British media, the Italian Prime Minister did not explicitly back the Luxembourger politician at first, stressing that agreeing on a programme was more important than agreeing on a name and arguing that there is a need for ‘new faces’. While his stance was hyped by some British media – which were desperately trying to identify an ally for David Cameron in his fight against Juncker – this was an eminently tactical move, which might have already borne fruit. Indeed, Gozi mentioned ‘significant’ advances towards introducing more flexible measures in the mandate for the Commission’s work over the next five years, including the possibility of ‘developing financial instruments for long-term investment projects.’

With the Italian semester only starting and Renzi’s government having to deliver a challenging set of promised reforms in Italy over the next few months, it would be premature to say that the dominant economic approach in Europe is shifting. However, the appointment of Juncker as President of the European Commission might have, paradoxically, signalled a weakening in Merkel’s political dominance – as highlighted by some analysts. According to an Italian pollster, Matteo Renzi currently enjoys a 74% approval rating, only beaten by the Pope among public figures in Italy. But will he be able to translate this popularity into real impact in Europe over the next six months?

Alessandro Fusco

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