Masterful Renzi emerges as Merkel’s only EU rival

Opinion: As Italy takes on the EU presidency, its prime minister has rallied support for budgetary flexibility

While the slow-motion motorway pile-up of British prime minister David Cameron’s attempt to block the nomination of Jean-Claude Juncker as European Commission president drove the headlines ahead of yesterday’s summit in Brussels, another prime minister was offering an object lesson in how to win at politics in the European Union. As Cameron became ever more isolated in recent weeks, Italy’s Matteo Renzi was rallying centre-left leaders across the EU as he leveraged his support for Juncker to win agreement on a more flexible implementation of the budgetary rules in the Stability and Growth Pact.

The rules themselves will not change, but Brussels may in the future distinguish between investment and day-to-day spending when setting member states’ deficit and debt targets, offering more scope for policies aimed at boosting economic growth and employment.

It is an important concession for states such as Italy and France, where measures to stimulate growth risk breaking the budget rules, and it could help Ireland in the future, even if the Taoiseach has ruled out any easing of the fiscal position here this year.

Just as important, however, is the manner in which the deal was secured and the 39-year-old Renzi’s emergence as the first serious rival in years to German chancellor Angela Merkel’s dominant position among EU leaders. Alone among EU leaders, Renzi triumphed in last month’s European elections, winning more than 11 million votes for his Democratic Party – more than any other party in the EU – and reversing the advance of Beppe Grillo’s populist Five Star movement. Four months after he took power in a palace coup against his party colleague Enrico Letta, his personal approval rating stands at 74 per cent, making him the envy of the other leaders gathered at the Justus Lipsius building in Brussels yesterday.


Guile and ruthlessness

A former mayor of Florence, Renzi has been in politics all his adult life and although he rose to prominence railing against the older generation in Italian politics, he has displayed throughout his career all the guile and ruthlessness of a Bettino Craxi, Giulio Andreotti or Silvio Berlusconi. Indeed Berlusconi claims to see a youthful version of himself in Renzi and the two have co-operated both before and after Renzi became prime minister.

Renzi has given himself 1,000 days to reform Italy and has already introduced business-friendly reforms of the labour market, tax cuts for lower-paid workers and a shake-up of civil service appointments. His reform drive has won plaudits from Brussels and Berlin and part of Renzi’s strength in the EU lies in the fact that everyone from the European Central Bank to the leaders of France and Germany wants him to succeed domestically.

As the third biggest economy in the euro zone, Italy is crucial to the fortunes of the single currency and the European economy more broadly. After the failure of Mario Monti, the ultimate European insider, to win Italians over to the doctrine of austerity, Brussels and Berlin are backing Renzi’s combination of structural reforms and pro-growth policies.

Unlike Cameron, who flatly ruled out supporting Juncker’s appointment under any circumstances, Renzi initially withheld his endorsement, declaring that although Juncker was one possibility there were others. Only later did he make explicit the condition for his support. As he built his transnational alliances in recent weeks, Renzi has shown a sure grasp of the subtleties of European politics, most notably in his courtship of Germany’s Social Democratic vice-chancellor Sigmar Gabriel. Although he is in coalition with Merkel, Gabriel has an eye on taking her job in 2018 and he likes to cut an independent profile. In backing Renzi’s push to ease the EU’s fiscal regime, Gabriel undermined Merkel’s opposition to it, while remaining just on the right side of the charge that he was selling out German interests.

French president François Hollande’s weakness has until now prevented him from offering effective resistance to Merkel’s relentless pursuit of austerity policies but the emergence of a strong centre-left alliance has tilted the balance. Meanwhile, in the European Parliament, where the centre-right European People’s Party and the centre-left Socialists have formed a kind of grand coalition, Renzi ally Roberto Gualtieri has won the chairmanship of the influential Economic and Monetary Affairs Committee.

‘Submerged by numbers’

Italy’s six-month EU presidency, which starts next Tuesday, offers Renzi a further opportunity to deepen alliances and influence European policy and he has already declared open season on “the high priests and prophets of austerity”, adding that he was tired of hearing the European Commission going on like “a nagging old aunt”. In a speech to the Italian parliament this week, he said that a single currency was not enough to carry the European project. “Today Europe is boredom . . . it is submerged by numbers and without soul,” he said.

He identified the treatment of migrants from North Africa who risk their lives attempting to cross the Mediterranean as a rebuke to the EU’s image of itself, arguing that Brussels takes a greater interest in the fish swimming in the sea than in humans floating in it. “A Europe that tells the Calabrian fisherman that he must use a certain technique to catch tuna but then turns its back when there are dead bodies in the sea cannot call itself civilised,” he said.

Renzi’s rhetoric in addressing European issues is fresh, but his effectiveness may lie in the way he exploits the new political reality in the EU, where transnational political groups and alliances have an unprecedented influence but the balance between the European institutions remains contested.

Denis Staunton is Deputy Editor