x Abu Dhabi, UAEFriday 19 January 2018

Italians cannot afford to vote down reforms

Italy's voters, finding Mario Monti's responsible budgeting to be a nasty shock, have given him a firm rejection. But what will they get instead?

Like a man turning off an alarm clock and pulling up the covers, Italian voters tried this week to deny reality. They said a loud "no" to Mario Monti, the reformist prime minister who has been steering the country through the roiling waters of the euro crisis.

What they said "yes" to, however, is much less clear. The biggest party in parliament's lower house will be the Five Star Movement (M5S), a party not yet four years old led by Beppe Grillo, a blogging comedian.

Despite the success of M5S, the lower house will be controlled by a centre-left coalition, while a rival group of centre-right parties has barely won the upper house. Legislative deadlock looms.

Overall M5S won a quarter of votes cast, on a platform focused mainly on disgust with corruption and the old order. The party's views on finance and economics are alarming, if sketchy: Mr Grillo wants a freeze on interest payments on the national debt, for example.

Voters preferred that kind of thinking to Mr Monti's sober austerity. His party won barely 10 per cent of the vote, a blunt rejection of his work towards balancing the budget and reassuring the markets.

What comes next? Some speak of a "grand coalition" of left and right, but that is highly improbable while Silvio Berlusconi, the polarising 76-year-old former prime minister, continues his comeback on the right. New elections, already being discussed, would not necessarily improve anything, so prolonged uncertainty seems inevitable. No wonder the euro and most stock markets slumped, as interest rates on Italian bonds began to rise. Nobody can have wanted this costly confusion.

In a way, the voters' rejection of Mr Monti can be understood: with no electoral mandate of his own, he has raised taxes and cut services. Accustomed to getting something for nothing from government, voters have not enjoyed the new era of responsible budgeting.

Mr Monti's cabinet of capable administrators was approved by parliament, but such a government always lacks a degree of democratic legitimacy; ministers should normally be members of parliament.

Voter sentiment, however, is a poor compass for economic policy. Without the Monti reforms of the last three months, Italy's borrowing costs might well have buried the country under an economic landslide by now, with unmeasurable effects for the EU and in turn for the world economy.

For all their storied corruption and self-interest, Italy's established parties have a duty to avoid that. They must now heed the alarm clock, rouse themselves and find a way to protect their economy. Reforms may be unpalatable but the alternative would be far worse.