March 25, 2023

Little Clarity in Italian Vote, Aside from Anger

In an election marked by voter anger and low turnout, the center-left Democratic Party appeared to be leading in the Lower House with a third of the votes counted and in the Senate with two-thirds of the votes counted by 8 p.m. local time. But the results were not a clear victory, because the center-right People of Liberty Party of former Prime Minister Silvio Berlusconi was leading in several populous regions that carry more Senate seats, raising the prospect of political gridlock.

Even without a final result, the election was a victory for the Five Star Movement of the former comedian Beppe Grillo, which in its first-ever national elections appeared, at this stage of the count, to win 25 percent of the vote in the Lower House. Italians from both right and left — and the wealthier north and poorer south — were drawn to Mr. Grillo’s opposition of austerity measures and cries to oust the existing political order.

And it was a stinging defeat for the caretaker prime minister, Mario Monti, a newly minted politician whose lackluster civic movement appeared to win around 10 percent in both houses. “Grillo had a devastating success; the rest of the situation is very unclear,” said Stefano Folli, a political columnist for the business daily Il Sole 24 Ore.

Either the center-left and center-right “will form a grand coalition committed to reforms and changing the electoral law, which would be very difficult, or Italy will be ungovernable,” Mr. Folli added.

The results would appear to make it difficult for any party to form a governing coalition strong enough to prevail for long, let alone to manage an economy with rising unemployment and a credit crunch, or push through structural changes to the ossified economy.

“Italy remains a question mark,” said Nicolas Véron, an economist and a senior fellow at Bruegel, a Brussels-based research institute. Regardless of who ultimately controls the levers of government, he said, “The key question is whether we can have serious structural reform.”

“It was a work in progress before the elections,” Mr. Véron said, “and I think investors understand that it will remain a work in progress for some time.”

When he came to power in November 2011, after Mr. Berlusconi stepped down amid intense market turmoil, Mr. Monti was praised for restoring international confidence in Italy. Although he won plaudits from European leaders and President Obama, Italians remember him for raising the retirement age and taxes.

“Taxes, taxes and more taxes, that’s what voters remember the most from Monti,” said Stefano Sacchi, a professor of political science at the University of Milan. “When he stopped being a technocrat and became a politician, he came under fire for the same issues Italians blame other politicians for.”

While Mr. Monti said repeatedly that if Italy managed to make its economy more competitive, taxes could eventually be lowered, his message was drowned out in the final days of a chaotic campaign by Mr. Grillo’s anti-austerity message, as well as by Mr. Berlusconi’s ploys.

The former prime minister told voters that he would reimburse them for an unpopular property tax and sent campaign literature in envelopes that read “2012 Tax Refund” in the same typeface used by Italy’s tax collection agency.

Although his limping party took far fewer votes than ever before, it was able to win in the powerful Lombardy region, after forming an alliance with the Northern League party. That will affect the Senate, where seats are partially assigned regionally. Thus Mr. Berlusconi managed to guarantee that his party, now in the opposition, would have significant veto power.

But the most startling result of the election was the success of the Five Star Movement, which triumphed after Mr. Grillo campaigned tirelessly while leading a powerful Web-based initiative that drew young people and first-time voters, as well as former supporters of Mr. Berlusconi, all united more by their anger at the current system than by any shared ideology.

The Five Star Movement drew votes that might have gone to the Democratic Party, especially after the Democrats’ leader, Pier Luigi Bersani, a former industry minister who grew up in the Communist Party, defeated Matteo Renzi, the charismatic 38-year-old mayor of Florence, in a party primary.

Davide Barillari, the Five Star Movement candidate for president of the Lazio Region, said in a television interview that the so-called “Grillini” would not ally with any coalition, but would vote according to their own views on individual laws. “People want to send them all home,” he said of the current Parliament. “Old politics is over.”

Mr. Grillo, who has a conviction for manslaughter after a car accident in which three people died, cannot serve in Parliament under his self-imposed rule that no one with a conviction can be elected. Political analysts wondered how the likely 100 or more members of Parliament from the Five Star Movement, most of them first-time politicians, would vote.

“The risk is a block in policy activities, a Parliament incapable of making decisions, a stalemate,” Mr. Sacchi said.

Gaia Pianigiani contributed reporting from Rome and Nicola Clark from Paris.

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Greece Tax Scandal Shifts Focus From Collection Problem

Mr. Papaconstantinou, in turn, hinted darkly that he was the victim of a plot masking malfeasance at higher levels.

While the firestorm may have made for political theater of a sort, it has diverted attention from a much bigger problem: Greece, its foreign lenders say, has fallen woefully short of its tax collection targets and is still not moving hard enough to tackle widespread tax evasion — long tolerated, particularly among the country’s richest citizens.

Greek officials agreed to the targets as part of an international lending pact last year, but there is no penalty for missing them. In recent weeks, however, two reports by Greece’s foreign lenders have found that Athens pulled in less than half of the additional tax income that it expected last year and performed fewer than half of the expected audits.

One report said that Athens had brought in a little less than $1.3 billion in additional taxes of the $2.6 billion it had hoped to collect in 2012. Only 88 major taxpayers, including corporations, were the subject of full-scope audits, well below a target of 300, the report said, while just 467 audits of high-wealth individuals were completed, compared with a goal of 1,300.

The fragile, three-party coalition government of Prime Minister Antonis Samaras continues to vow it will crack down on corruption and tax evasion, but a blunt assessment last month by a task force of Greece’s foreign lenders said, “These changes have not yet been reflected in results in terms of improved tax inspection and collection.” Analysts say the failure to pursue tax evaders aggressively is deepening social tensions. “It’s a weak government with very difficult work to do, and this is very, very bad for the morale of the people,” said Nikos Xydakis, a political columnist for Kathimerini, a daily newspaper. “This year will be hell for the middle-class people. And the rich people are untouchable. This is very bad.”

In a separate report, the European Union and the International Monetary Fund said they were concerned that the “authorities are falling idle and that the drive to fight tax evasion by the very wealthy and the free professions is at risk of weakening.”

The report added that total unpaid taxes amounted to nearly $70 billion, about 25 percent of Greece’s gross domestic product. But only about 15 percent to 20 percent of the amount is actually collectible, either because the statute of limitations has run out or the scofflaws do not have the money.

It pressed Greece to focus on the cases most likely to produce real revenues, especially in vocations where tax evasion has become pernicious. “Doctors and lawyers are a good place to start,” it said.

Critics, especially the leftist party Syriza, which leads in opinion polls, say the government has not done enough to stop corruption because its members are tied to the country’s business elite and do not want to jeopardize their political careers.

“The problem is not simply tax evasion among the rich,” said Zoe Konstantopoulou, a member of Parliament from Syriza who serves on a panel investigating the so-called Lagarde list, a compilation of more than 2,000 Greeks with accounts in a Swiss branch of HSBC that had been sent to Mr. Papaconstantinou in 2010 by Christine Lagarde, then the finance minister of France. “The problem is tax evasion among the rich with the complicity and the aiding and abetting of those who govern.”

While Greece received a badly needed $45 billion in aid last month to help it avoid defaulting on its debts, critics say that unless Athens can more forcefully tap the billions it is owed in taxes, it will never pay off its debts, even if its moribund economy eventually starts to recover.

A dysfunctional bureaucracy weakened by budget cuts, two destabilizing rounds of elections last spring and an economy decimated by austerity have hampered tax collections further. But a thicket of regulations and a culture of resistance also fuel a shadow economy that includes an estimated 25 percent of economic activity.

Liz Alderman reported from Paris, and Rachel Donadio from Rome. Niki Kitsantonis contributed reporting from Athens.

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