Renzi handed govt mandate, sets ambitious reform goals
Premier-designate eying one major reform every month till May17 February, 20:03
Renzi, 39, is set to become Italy's youngest-ever premier after torpedoing the coalition administration of his PD colleague Enrico Letta last week over his lack of progress with much-needed institutional reforms and measures to revive the troubled economy.
Italy is slowly emerging from its longest postwar recession, but it is still ravaged by unemployment of over 12% with over four in 10 under-25s out of work. Constitutional changes are also needed to streamline government and reduce the cost of the country's expensive, slow-moving political system.
The premier-designate said his government would seek to achieve one major reform every month until May, starting this month with a new election law to replace the dysfunctional old system that was declared unconstitutional in December. An election-reform bill Renzi negotiated with ex-premier and centre-right leader Silvio Berlusconi is scheduled to go before the House Tuesday. "This will be followed immediately afterward by labour reforms in March, public-administration reforms in April and fiscal (reforms) in May," Renzi said. Renzi said it would take him "a few days" to get a new government ready, with talks with other parties on a programme and a cabinet set to start Tuesday.
If the negotiations are successful, Renzi and his ministers will be sworn in and the new government will face confidence votes in both houses of parliament.
The problem is that the PD did not win a majority in the Senate in last year's inconclusive general election, which means Renzi is probably going to have to work with the same fractious alliance Letta struggled with.
He will need the support of several small centrist parties and the New Centre Right (NCD) of Deputy Premier and Interior Minister Angelino Alfano, with the anti-establishment 5-Star Movement (M5S) and Berlusconi's centre-right Forza Italia set to stay in the opposition.
Alfano has warned that Renzi's government will never come to life unless the NCD's demands are met.
And ratings agency Fitch said Monday that it was keeping a negative outlook for Italy with a BBB+ rating, as Renzi "will probably have the same problems as his predecessor" in pushing through reforms. Fitch said Letta's resignation as premier highlighted the "volatility of Italian politics", pointing out that Renzi was set to be the country's fourth premier since November 2011.
He is also set to become Italy's third-straight non-elected premier, after Mario Monti and Letta. But if Fitch has it doubts about a Renzi administration, former British prime minister Tony Blair is optimistic.
"The challenges are absolutely formidable, but Matteo is dynamic, creative and strong enough to make it. He has the right combination of realism and idealism for the times we are living in," said the Labour Party politician. Renzi has often been compared to the charismatic young Blair who achieved a Labour landslide after years of Conservative dominance and plotted a 'Third Way' that combined post-Thatherite economic policies with leftwing social ones.
The money markets have responded well to Renzi too.
The yield on 10-year Italian bonds fell to 3.61% on Monday, its lowest since January 24, 2006, while the spread between 10-year Italian paper and the ultra-safe German bund narrowed to 193 points. On Friday, the Milan bourse rose to its highest level since July 2011 on the prospect of the business-friendly mayor of Florence taking over the national government. On Monday trading was virtually static.
European Economic and Monetary Affairs Commissioner Olli Rehn, meanwhile, expressed confidence that Italy under Letta would continue to respect EU budget pledges, including keeping the deficit-to-GDP ration within 3%.
Renzi and the PD got a boost from Sardinia, where the "fratricide" of Letta did not prevent centre-left candidate Francesco Pigliaru winning regional elections there.