Italy Is Back as Renzi’s Elite Attack Yields Record Vote

Photographer: Alessia Pierdomenico/Bloomberg

Matteo Renzi’s instructions undercut allies and turned the deadlock into a landslide vote to strip Francantonio Genovese of his parliamentary protection. Close

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Photographer: Alessia Pierdomenico/Bloomberg

Matteo Renzi’s instructions undercut allies and turned the deadlock into a landslide vote to strip Francantonio Genovese of his parliamentary protection.

Matteo Renzi stayed above the fray for two days this month as Italian lawmakers debated the merits of shielding one of their own from arrest on corruption charges.

When he finally spoke, Renzi’s instructions undercut allies and turned the deadlock into a landslide vote to strip Francantonio Genovese of his parliamentary protection. Hours later, one of the biggest vote-getters in Renzi’s own party was behind bars, and the 39-year-old prime minister had demonstrated his command of a parliament that overthrew each of the last four premiers.

The show of force is emblematic of Renzi’s leap from mayor of Florence to youngest-ever Italian premier and illustrates his potential in taking on the inertia and corruption scandals that have tainted Rome. Italians endorsed his approach in a European vote on May 25, handing him the country’s biggest electoral win in more than half a century to at once strengthen his hand at home and signal Italy’s return as a force in Europe.

“The demolition can now begin,” Renzi told reporters in Rome on May 26 after the results came in. As he spoke, investors were delivering their own verdict on his achievement: Italian stocks surged and government bonds rose the most in almost a year. Italy’s 10-year bond yields touched a record low of 2.885 percent this month.

Renzi makes no secret of his relish for conflict, and after seven governments and no economic growth since the start of the century eroded the country’s international standing, Italians are embracing the disruption.

Axing Senators' Salaries

Arguments with party bosses and union leaders fueled Renzi’s rise through the ranks, but his arrival in February at Rome’s Palazzo Chigi demanded a much bigger target. Two days after taking power through an internal party struggle, Renzi walked into the Senate and told the 320 members he planned to abolish their 125,000-euro-a-year ($170,000) salaries and do away with most of their powers.

Roman intrigue aside, Renzi kept up the pressure on established powers. He picked a fight with CGIL union leader Susanna Camusso, whose 5.7 million members had made her king maker in his Democratic Party, or PD. Renzi won that battle by appealing directly to her constituents with a tax cut for low income workers as labor advocates complained of being shut out of the executive’s decision making.

“The unions have to understand the music has changed,” he told Silvio Berlusconi’s TG5 television station. Renzi then eased labor market rules to give employers more hiring and firing flexibility.

Former Boy Scout

“He is waging multiple wars simultaneously, which is part of his heroic persona,” said Francesco Galietti, founder of research firm Policy Sonar in Rome. “Like Mussolini said, ‘The more numerous the enemies, the greater the honor.’”

Renzi’s blitz may be Italy’s best chance of fixing an economy that missed out on the boom during the first years of the euro, only to be swept up in the crash that followed. Italy’s gross domestic product is still 9 percent lower than it was at the beginning of the crisis.

Renzi, a former boy scout, came to power as the leaders of the previous generation were fading. Once-rival Pier Luigi Bersani, 62, is a spent force after losing to Beppe Grillo’s populist movement in last year’s general election, and 77 year-old Berlusconi, who has dominated Italian politics since 1994, is hobbled by legal troubles. The ex-premier is serving a one-year community service sentence for tax fraud and appealing convictions for abuse of power and paying a minor for sex.

Electoral Law

To complete his victory, Renzi must purge the 950-strong legislature assembled by Berlusconi and Bersani under the Italian system giving party leaders control over electoral lists. Many lawmakers, including those in the PD, suspect they won’t keep their seats if the conflict ends in snap elections.

“It’s Renzi against his own party in parliament,” said Sergio Fabbrini, director of the school of government at Luiss University in Rome.

Yet Renzi is also reluctant to go to an early vote. First he wants to re-write the electoral law to make it easier for winners to secure majorities that can’t be held hostage to the demands of small parties. A run-off ballot or a higher barrier to entry could help one party take more than 50 percent of the seats even if voting continues to be fragmented.

Since World War II, no party has won more than 49 percent of the vote. The PD took 41 percent in the European Parliament election, the highest single-party total since 1958 and 20 percentage points ahead of second-place Grillo.

Wheel of Fortune

“Everyone is saying he has a loaded gun now in threatening early elections,” said Federico Santi, an analyst with Eurasia Group in London. But among voters at large, “he still doesn’t have 50 percent, and that means he would be stuck in a coalition” if Italy votes under current rules, Santi said.

Renzi made his national media debut at 19, far from the political arena, appearing in a coat and tie as a contestant on Wheel of Fortune on one of Berlusconi’s television networks. The video on YouTube.com shows a gregarious Renzi, smiling and bespectacled, confidently solving one puzzle and pantomiming disappointment when erring on another. Not just a showman, he was a winner, pocketing 48 million lire ($33,000).

The son of a marketing consultant, Renzi began his career as a student canvassing for Romano Prodi, the ex-premier who twice beat Berlusconi at the ballot box. Prodi was linked at the time to groups composed of remnants of the Christian Democrat Party, which had collapsed in scandal in 1992. These were eventually folded into the PD Renzi now leads.

Tuscan Vineyards

In a political system used to conducting business behind closed doors, Renzi’s affinity with voters and mass media set him apart.

After winning his post as president of the Province of Florence in 2004, a job roughly equivalent to county commissioner in the U.S., Renzi built a following by going on political talk shows, publishing books and writing a weekly blog, years before other politicians joined Twitter.

The province stretches south from the city of Florence into the Chianti wine region through a swath of Tuscany’s sloping vineyards, cypress trees and medieval hamlets. The area, remembered for palace coups and assassinations in the Renaissance, was a focus for resistance fighters during World War II and became known as “Red Tuscany” for its politics. Today, it is dominated by Renzi’s PD.

By 2008, the future premier was ready to move on from provincial government. But his party wasn’t ready to let him.

Medici Fortress

PD superiors told Renzi to stay another term at the province to allow a more senior member to become mayor, according to biographers Alberto Ferrarese and Silvia Ognibene. Renzi instead made and won a primary challenge and went on to take office as mayor in Palazzo Vecchio, the medieval fortress that had been home to the Medici clan.

He embraced the business community as he set about modernizing the city, privatizing transport services and closing the iconic Ponte Vecchio bridge one evening for a dinner hosted by Ferrari SpA.

“He’s someone I like,” Berlusconi, the PD’s perennial foe, said last year. “In public, he’s ironic and funny, in contrast to how the other leaders of the Left normally act.”

Renzi’s path to national power was cleared when Grillo rode his home-made party to victory over Bersani last year. Bersani’s deputy Enrico Letta limped on at the head of a coalition until Renzi ousted him in February.

New Opera House

Speaking in Brussels late on May 27 after a summit of fellow European Union leaders, Renzi signaled that Italy, with consumer confidence at a four-year high, is ready to press its case again.

“Italy has a little more responsibility,” he told reporters, citing his “truly significant” election victory.

Still, his fight at home for electoral reform and a Senate remake will require patience, a trait that Renzi showed on at least one occasion, in his own way.

While mayor of Florence, he backed the building of a new opera house and, in 2011, with construction still under way and financing in doubt, he held an opening-night concert featuring Beethoven’s Ode to Joy, the EU’s anthem. The opera house closed again weeks later to allow work to continue -- until this month, when it opened for good with Renzi again in attendance.

“The theater was opened to show people that it was there and it was beautiful,” Gaetano Aiello, a professor at the University of Florence, said in a telephone interview. “We wouldn’t have it now if he hadn’t moved forward.”

To contact the reporter on this story: Andrew Frye in Rome at afrye@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Ben Sills

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