Italy’s Woes Show Ungovernable Europe Is the New Standard

(Bloomberg) -- As the ruling coalition in Rome collapses and Italy heads for its fourth government in as many years, the nation that boasts the third largest economy on the continent is looking less like Europe’s outlier and more like the trendsetter.

Parliaments in Spain and Belgium are hung, Chancellor Angela Merkel’s coalition hangs by a thread in Berlin, and the U.K.’s new prime minister, Boris Johnson, governs with the narrowest of majorities -- a single seat. All of them potentially face snap elections in coming months.

Winning a clear majority in a national assembly and holding on to it is an increasingly difficult task. One of the main reasons is that electorates have become more diverse, which is reflected in additional political parties and an increasingly fragmented political landscape. The left-right divide of the Cold War has given way to an ideological free-for-all; economic growth of 3% or 4% in the 1970s and 1980s has shriveled; massive waves of immigration have ruffled traditional notions of identity; while climate change went from threat to reality.

The emergence of so many new political groups to address those issues, be they green or anti-migration parties, has made the slice of the electoral pie smaller for all participants. The pendulum-like alternation between center-right and center-left parties that marked much of Western Europe has become scarce.

Political Disruption

Take the case of Austria where the two dominant parties -- the Christian Democrats and the Social Democrats -- until 1983 together had 91% of the vote. In the last election they got 58%, while the number of parties in Parliament jumped to five from three. Prime Minister Sebastian Kurz was ousted in a no-confidence vote in May that prompted snap elections.

The situation in much of Western Europe isn’t much different. Either there are more parties or voter preferences have become more evenly divided, or both. In Belgium the number of political parties that were able to garner more than 10% of voter support plummeted to 3 in 2014 from 6 in 2007. Since elections in late May, parties in Brussels have failed to forge a ruling coalition.

“What we’re seeing is a change in the political map that has guided the West since the end of World War II,” Erik Brattberg, director of the Europe Program and a fellow at the Carnegie Endowment for International Peace in Washington, said in a telephone interview. “That makes forming governments more difficult.”

Business is feeling the effects. Spanish infrastructure group Ferrovial SA blamed a slight slowdown in its domestic sales in part on the “uncertain political environment.”

Permanent Revolution

“It would be a brave person to suggest that we won’t be seeing fluid party politics for coming years,” said Tim Haughton, professor of European politics at the University of Birmingham. “It’s unlikely that we will move back to very certain politics in the short term.”

With immigration and climate change topping the list of voter concerns, according to a recent Eurobarometer survey, it’s not surprising that parties that focus on those issues have surged in much of Europe.

In Germany, Europe’s biggest economy, the rise of the Greens and the right-wing, anti-migration AfD parties have undermined the governing coalition of Social Democrats and Merkel’s Christian Democratic-led bloc. A weak performance in regional elections this fall could prompt the SPD to jump ship, potentially forcing an early election.

Even France’s presidential system is no safeguard. While Emmanuel Macron defeated ailing establishment parties to win the post in 2017, his political movement failed to occupy the vacant space and now shares it with a mix of anti-immigrant, far-left and environmentalist parties.

In Italy, voters could be heading back to the polls as soon as this fall with Prime Minister Giuseppe Conte and his deputy, Matteo Salvini, wrangling about when the government should be dissolved. The conflict has roiled markets with bonds in Italy suffering their largest sell-off this year and the FTSE MIB index, which tracks the 40 most liquid stocks on the Borsa Italiana, down 8% from this year’s high.

“Parties are so hollowed out, institutions are so weak, voters so voluble that the only one who can win is someone who is capable of remaining constantly the focus of attention by taking one initiative after the other,” Giovanni Orsina, head of the School of Government at Luiss University in Rome, said in Italy’s La Stampa. “The historical conditions to build even an unstable legitimacy are no longer there and it’s only the ‘revolutionaries’ that prevail. Like Salvini.”

--With assistance from Zoe Schneeweiss and Alessandro Speciale.

To contact the reporter on this story: Raymond Colitt in Berlin at rcolitt@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Richard Bravo, Tony Czuczka

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