The Real Doom of the Eurozone Is Italy

Silvio Berlusconi, leader of centre-right People of Freedom party, and Angelino Alfano, PdL’s general secretary, wave on stage at the end of a meeting on March 23, 2013 at the Piazza del Popolo in Rome.


After a fun week of Cypriot depositors, Russian tax dodges, and inept Dutch finance ministers attention is back on the real problem with the eurozone. Italy. Specifically Italian politics where Democratic Party leader Pier Luigi Bersani confirmed that there’s no coalition that can secure majority support in the upper house of parliament. Not only does that mean political deadlock, it’s far from clear that a new election will fix it. The basic issue is that Bersani’s Democrats, Silvio Berlusconi’s People of Freedom, and Beppe Grillo’s Five Star Movement all have large bases of support and none of those parties wants to work with any of the others. If Italy had a different electoral system, whoever won a plurality would govern. If Italy had a different political culture, a coalition would govern.

Once upon a time the European Central Bank seemed to think it could directly target the Italian political culture. The idea was to take out Berlusconi and install Mario Monti as the head of a “normal” center-right political movement that would advocate for small government policies, not be headed by a criminal, and have some possibility of collaborating with the more liberal elements of the Italian center-left rather than with the creepy and racist Lega Nord.

It didn’t work.