Corruption, scandals and Italy’s other pressing priorities

London, UK – Is it really possible that economic plans can so detached from every day life? Put it in a different way: can economic rigour and austerity measures be the only key to solving critical situations in countries like Italy, Greece or Spain? Should Euro-elites instead force weaker EU nations into a deeper restructuring of their political structures and of some inner social practices?

There may, in fact, be evidence that economic plans alone may not be enough to generate long lasting growth if other serious issues are not similarly tackled. Other aspects of national life should be scrutinised too. Italy does represent, again, a key case of this European “saga”.

The last series of political scandals dismantled what was the only presumed quality of Silvio Berlusconi’s former and very close governmental ally, the Northern League – a party until then unscathed by corruption and misuse of public money record. In the end, the party proved not to be as “immune” as it claimed to be.

Public money in their pockets

“Electoral reimbursements” made by the Italian state were already used in an attempt to make the party’s financial investments abroad. In truth, parties should not receive funding from the state. Yet, politicians have been able to (legally) find another way to transfer a huge amount of public money to themselves. There seems to be now a lot of evidence that this public funding to political parties was, and is, often used for personal purposes – as electoral reimbursements usually exceed the current (genuine) expenses of parties.

Italians protest against pension reforms

In a dramatic and somewhat grotesque assembly of the Northern League to vindicate their lost pride, the leaders decided to purge their treasurer and the deputy president of the Higher Chamber of the Italian parliament. Other leading politicians resigned from their positions in the regional government of Lombardy for these corruption related scandals, new allegations are out on the powerful president of the same region and on the “usual” Berlusconi.

All of this happened while the IMF warned that Italy and Spain would suffer a deeper recession. On the one hand, common citizens are asked (and forced) to cope with the crisis, negatively influencing their lives: cuts in pensions, unemployment and so on. On the other hand, Italian political parties receive, and then often spend millions of euros.

Could this money be returned to the taxpayers and re-invested by the state? Has this huge waste of public funding had an impact on the current public debt? It is unclear what the position of European elites or the European Central Bank on this issue is. Furthermore, the Italian technocratic government seems to not have any realistic plan to strongly reduce the overall “costs” of the party system (the famed costi della politica). This is generating a risky anti-political resentment among people (and entrepreneurs too) who have been seriously hit by the economic crisis.

Along with the drama that these recent events caused in the (already troubled) political system, and two decades after the famous Bribesville investigation (on corruption, bribes and politics) which pulverised Italian politics and created a vacuum for the rise of Berlusconi’s political adventure, the newest scandal is only a reminder of how pressing a decisive – but still fundamentally missing – action of Mario Monti’s government on political corruption and its costs.

Not generated from a single issue

Despite the fact that financial markets and international politics seem to focus only on Italy’s need for further financial reforms and job market regulations, one should wonder how it is possible to encourage any economic growth when the role and influence of political parties are so widespread in the economic life of the country. We had already warned that national crises are almost never generated by a single issue – many, for example, believed that Italy was about to change completely after Berlusconi’s dismissal.

While the media tycoon aggravated the “conditions” of a sick country, most of the problems have a long history. Italian newspapers are, in fact, full of stories of managers with a lack of expertise, fake competitions to recruit university professors or state officers, tonnes of money lost in improbable publically-funded projects and current investigations in the links between local politicians and corruption in the national heath system.

There is, unfortunately and in many ways, a sort of “social acceptance” of corruption and politicians’ privileged status. Yet, all of this still seems to be overlooked and not taken seriously while it is undoubtedly one of the reasons stopping foreign investments in many areas of Italy.

“High social inequality… the suffocating presence of organised crime… and the widening economic gap… are as present in foreign investors’ minds as the conditions of the labour markets.“

On April 7, Italy’s prime minister Mario Monti, for example, wrote a letter to the Wall Street Journal defending some changes to his proposed employment laws, after the US newspaper accused the Italian government of surrendering to trade unions.

“Labour reforms are serious and will be effective,” warned the political leader. This reform of the labour market has monopolised the discussion on the necessary interventions to promote Italy’s economic growth, but, as suggested, equally important issues have not been part of the government’s strategy so far. The widespread corruption in the public service alone is a major drawback to development (and an OCSE representative in a recent hearing in the Italian parliament also highlighted this issue).

Corruption and unrestrained influence

Moreover, the high social inequality, the disastrous state of universities, the underfunded R&D national projects and institutions, the suffocating presence of organised crime in southern regions and its “investments” in legal business in Northern Italy and the widening economic gap between different areas of the country are, in fact, as present in foreign investors’ minds as the conditions of the labour markets. Why are these issues still missing in the political agenda? Why don’t Euro elites and markets force Italy to deal with these critical features that strongly influence Italy’s precarious economic conditions?

After various cuts in public spending and the rise of taxes influencing all people’s lives, there is now a wide call from the Italian public opinion to deal with the previously mentioned critical issues and, above all, to act against corruption and the unrestrained influence of politics.

Reforms in this field may be met with a very high level of popularity. It will also show other countries that Italy’s elites are capable of self-reforming for the good of the country. But will they be able (or willing to) do so? According to public opinion, patience towards parties is getting thin, and there is a worrying rise of various forms of “anti-politics”, which may generate a season of social protests and unrest.

It is evident that most of these critical issues are particularly problematic to face by the political parties that currently sustain the technocratic government. This is, in fact, the same political class that has been ineffective for many years. They proved to be unsuccessful dealing with the nation’s decline and in formulating solutions to create growth.

The key to success lies now in setting a new agenda for proper reforms with the right priorities. After the necessary emergency interventions to avoid a Greek-style crisis, a further step is needed – innovation, meritocracy and anti-corruption policies. These are among the core causes of the very large public debt of the Italian state.

Andrea Mammone is a historian at Royal Holloway, University of London, and Giuseppe A. Veltri is a social scientist at the University of East Anglia. They are editors of Italy Today, The Sick Man of Europe (Routledge, 2010) and Un Paese normale? Saggi sull’Italia contemporanea (Dalai editore, 2011).