“Democracy is messy, and it’s hard. It’s never easy.” Robert Kennedy Jr.’s observation could hardly ring truer after a tumultuous week of political wrangling in Southern Europe. Nevertheless, the outcome of the discord in Spain and Italy should be viewed as a triumph for democracy. It may have been a difficult and dramatic process, but in the end, Spain and Italy have two new governments whose formation respects both the will of the people and each country’s democratic constitution.
For the first time since Spain’s constitution was adopted 40 years ago, a prime minister has been removed through a no-confidence vote. On Friday, the government, led by Mariano Rajoy, was defeated in a motion called for two days earlier by Pedro Sánchez, leader of Spain’s socialist party (PSOE). According to the Spanish constitution, the party that initiates a no-confidence vote is required to form a government if their motion is successful. As a result, Spain now has a new minority government led by a party with only a quarter of the seats in parliament.
Markets and pundits should cheer this historic outcome in Spain. The vote came on the heels of one of the largest ever prosecutions of political corruption in Spain, known as the Gürtel case. While Mr. Rajoy was not implicated in the scandal, 29 members of his party were found guilty of participating in a wide-reaching kick-back scheme. The fact that Mr. Rajoy as leader of the party was held to account and removed through a legitimate, democratic process is a testament to Spain’s willingness to crack down on graft. Yes, markets were temporarily unnerved, but they have since recovered.
So what’s next for Spain? Sánchez has stated that he will uphold the People’s Party’s budget that was passed by parliament just a week earlier. This does limit the extent to which he will be able to introduce additional spending initiatives. Furthermore, with just 25% of parliamentary seats, Sánchez will need the support of other political parties in order to pass new legislation. While six other parties supported Sánchez’s vote of no-confidence, it is not yet clear the extent to which they will be willing to cooperate with the new government. This has led some observers to bet that a fresh round of elections could be held by the end of the year.
Friday also saw the formation of a new government in Italy. Two of Italy’s populist parties, the League and Five Star Movement, managed to garner more than 50% of the vote and a majority in both houses of parliament in March. However, this political marriage has proved uneasy and coalition negotiations had been on-going for three months.
Tension peaked last week when Italy’s president, Sergio Mattarella, rejected the coalition’s proposed cabinet due to the inclusion of a Eurosceptic finance minister. Instead, Mattarella announced that he would appoint an interim government under the leadership of Carlo Cottarelli, a former economist at the International Monetary Fund. This lead to a tussle over the constitutionality of Mattarella’s decision and calls for his impeachment by Luigi Di Maio, leader of Five Start Movement (M5S).
In the end, a compromise was struck and a constitutional confrontation avoided in Italy. The new government will be headed by Giovanni Conte, a former professor without formal ties to either the League or M5S. While there are reasons to remain weary about Italy’s new government, its construction is slightly less radical than some expected. Indeed, other academic technocrats have been given the top posts including the foreign and finance ministries.
One area where the new government will almost certainly receive some push back is in its proposed spending plans. The parties campaigned on the introduction of a universal basic income and broad tax cuts. If these policies are enacted, there’s a good chance that Italy will break the EU budget rules. However, there is no reason to believe that a tenser relationship with the EU will contribute to Italy’s exit from the bloc. More than 70% of Italians are in favour of EU membership and both the League and M5S have eschewed hard-lined Euroscepticism. Italy’s interaction with the EU will change under its new government, but it is unlikely to result in a wholesale rejection of that relationship.
Some observers have described last week’s events as a political earthquake but a mild tremor would be a more apt comparison. Yes, unconventional governments have formed in both Spain and Italy, but it was the result of democratic processes. True democracy is based on the rule of law, not the rule of specific individuals. Recent events serve as evidence that democracy is alive and well in Southern Europe.
