EU issues take back seat in Italian election campaign

Date: 11/04/1996

By Ivo Ilic Gabara

SINCE the 21 April general election was called, the Italian media has kept Europe on the backburner.

Before the decision to go to the polls was finally taken, Italy's presidency of the EU was systematically invoked as a good reason to put off the elections until after Ireland took over the helm.

But since the starting gun was fired in the race to form the next Italian government, the electoral campaign has been waged on other fronts. Taxes that will have to be paid - and taxes that will be eluded - are now the main bone of contention.

Europe is an electoral issue only in terms of the Maastricht convergence criteria.

For the two main contenders, the centre-left bloc grouped around the former Communists of the Democratic Party of the Left (PDS) and the centre-right bloc lead by Silvio Berlusconi, putting in order the country's finances in good time for the 1997 deadline is a set objective - yet neither bloc specifies how it intends to achieve this goal.

None of Italy's political leaders is promising blood, sweat and tears to “join Europe”, while several are actually distancing themselves from any “sacrifice in the name of Maastricht”.

The post-fascist Alleanza Nazionale (AN), now likely to emerge as the senior partner of the centre-right bloc, is strongly nationalistic.

The AN is not only questioning the cost of EMU, but it is also critical of the EU institutions and openly opposed to the transfer of any further powers to Brussels. Should it win a relative majority within the centre-right, it would push the whole coalition further to the right and away from Europe.

With the moderate liberal wing of Berlusconi's Forza Italia effectively decimated, the media tycoon's party has itself shifted significantly to the right. In an interview this week, Berlusconi openly stated that should his alliance win power, Italy could seek a delay in the introduction of a single currency and a flexible interpretation of the tough convergence criteria.

“I believe that it would be a disservice to Europe to start with a single currency that isn't single in the sense that it could exclude important countries, among them a country important to Europe such as Italy,” he said.

And while the centre-left is committed to pursuing the convergence criteria, it stresses a “gradual” approach to Europe, implying that it will not raise taxes or slash public spending at an unacceptable social cost. Caretaker Prime Minister Lamberto Dini, one of the most prominent members of the centre-left bloc, recently stated that the financial manoeuvres required to enable Italy to meet the criteria on time was “a decision for the next government and parliament to make”, adding: “I have always declared that the adjustment must be proportionate to the socially acceptable price.”

But support for a firm commitment by whoever forms the next Italian government to meet the Maastricht criteria in time for EMU is coming from an unexpected quarter.

In its World Economic Outlook report, to be published on 18 April - only three days before the elections - the International Monetary Fund will recommend that Italy should make budgetary sacrifices in 1996-97, insisting it is crucial to peg the country to the likely hard-core members of EMU in order to bring its interest rates down. Without a reduction in interest rates, financing Italy's deficit will impose even tougher sacrifices than those required by Maastricht.

But only a stable new government would be in a position to pursue this policy - and there is little hope that the forthcoming election will yield one.

Italy is going to the polls under the same electoral rules as in March 1994, a combination of the first-past-the-post system and the old proportional representation. In 1994, the system spawned three dozen political parties and consequently a divided parliament which was unable to produce a stable government.

The present campaign is witnessing a further growth in the number of parties and deep divisions within the two main blocs.

This bodes ill for Europe. An inconclusive electoral result would mean that the country's politicians would, once again, focus their energy on stitching together a new coalition - a process that may well take the best part of the remaining two months of the Italian presidency.