Mario Monti’s Nordic Dream

ROME – Mario Monti, Italy’s prime minister, is a self-styled German among Italian economists. As the European Union’s top competition official a decade ago, he was regarded as a very Anglo-Saxon regulator. Today, he is the most Nordic prime minister that Italy has ever had.

At the outset of his premiership six months ago, Monti declared himself to be an admirer of all things Danish – the country’s “society, economy, and civility.” The measures that he has introduced since coming to power – from pension reform to combating tax evasion – have displayed the rigor and transparency that one associates with northern European countries.

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Likewise, Monti has repeatedly said that he is inspired by Scandinavia’s labor-market and social-protection arrangements. The Swedish home-furniture giant Ikea’s recent announcement that it will open two new plants in northwest Italy suggests that Scandinavians are taking note of Monti’s Nordic tastes.

But Monti would readily agree that Italy is not a northern European society. Sounding the alarm on inequality, the Bank of Italy calculates that the combined wealth of the ten richest Italians equals that of three million of their poorest countrymen. Moreover, a wave of corruption allegations is shaking Italy to an extent not seen since the Mani Pulite (“Clean Hands”) inquiry that swept away the country’s political establishment two decades ago. A dysfunctional justice system and a jungle of red tape are a perennial curse for investors. As the leading daily newspaper La Repubblica recently put it, “Transplanting the Danish model to Italy does not seem easy at all.”

This applies particularly to reform of the country’s calcified labor-market rules. The ongoing negotiations over reform confirm that Italy remains a prisoner of political polarization. Business leaders believe that the government’s proposals for easing redundancy rules are not bold enough, while trade unions view the reforms as being underfunded. Given this dissonance, the financial markets are responding with renewed upward pressure on Italian borrowing costs.

Admittedly, Italy does not possess the consensus culture that characterizes Europe’s north. But a key northern European quality speaks to one of Monti’s principal concerns: trust. The wild swings of Silvio Berlusconi’s tenure only worsened Italy’s longstanding reputation for unpredictability. Monti wants to change that by changing Italians’ “mentality,” as he puts it – a gargantuan task, but also a political opportunity that he has yet to fully seize.

The relationship between Monti, a former university professor, and Italy’s politicians and political culture is a complex affair. While the credibility of his government of technocrats rests on impartiality, all policy measures are inherently political to the extent that they reflect a vision about the organization of society. To be both neutral and right is a logical impossibility in politics. Rising tension over Monti’s proposed reforms is a sign that his government has effectively become politicized. 

Fortunately, Monti has not shied away from the political game. A visceral attachment to the European project makes him the most pro-EU head of government in Europe today. In an ironic reversal of the continent’s north-south divide, his views are influencing German Chancellor Angela Merkel’s position on the need to stimulate growth in Europe. Italian government officials speak openly about the need for “political synchronization” with Berlin.

Monti now has the unique opportunity to take another page out of the Nordic playbook by turning his set of centrist policies into a collective narrative of political responsibility. To be sure, he is constantly treading a fine line between jittery markets, EU demands, and partisan maneuvering ahead of national elections in less than a year. But his opponents’ dismal approval ratings grant him the power of brinkmanship, and the growth and competitiveness agenda that Italy and Europe crave require him to command political center-stage for whatever time he has left in office.

Keeping politics out of government as much as possible is a risky strategy. After all, Monti is not the only one who can play that game. Indeed, support for “anti-political” movements, such as comedian/activist Beppe Grillo’s Movimento 5 Stelle (Five-Star Movement), hover around 8% in some polls. Grillo regularly calls the premier “Rigor Montis,” and has depicted him lying in a coffin. In a country where left-wing extremists gunned down the last labor-market reformers a decade ago, the joke carries ominous undertones.

This kind of virulent populism thrives in Europe’s political vacuum. The fact that Monti’s government is unelected should not prevent him from filling that vacuum with a determined, reform-minded program. His ability to make the most of his brief, exceptional power will test the maturity of Italian democracy. Grillo titled a recent entry in his hugely popular blog “Dreaming about Denmark.” That vision, however remote, is much safer in Monti’s hands.

Read more from our "Italian Ice" Focal Point.