Five Star Poster Boy Must Convince Italy He Won’t Trash Economy

 

 

(www.bloomberg.com)

 

Luigi Di Maio sits straight as a board and glances down at his notes as he aims to convince some 400 business leaders that he should become Italy’s youngest ever prime minister.

The leader of the anti-establishment Five Star Movement is in Milan to convince the local elite that he can fix Italy’s troubled economy. And, just maybe, to win an election.
 

At 31, Di Maio is probably the youngest person in the room, which is a short walk from the gothic cathedral, and he’s out of his natural environment. Five Star’s eight-year surge to prominence has been based on support in the poorer south of the country, but the new leader needs to broaden its reach.

“If Di Maio wants Five Star to be Italy’s biggest party, he must make an impact in the north,” said Roberto D’Alimonte, a political science professor at Rome’s Luiss University. “But the challenge for him is credibility.”

Di Maio told the audience in Milan he’ll cut corporate taxes, make it cheaper to hire people and abolish “400 useless laws.” He said he’s worried German Chancellor Angela Merkel’s plans to reform the European Union may hurt Italy’s small- and medium-sized companies.“Di Maio made lots of promises, but will he have the resources to pay for them?” said 52-year-old Massimo Giovanardi, who runs his own engineering firm. “My company is doing better after the crisis, we can’t afford to put the fragile recovery at risk.”

But in fact, most Italian voters are ready to gamble on March 4 and officials and investors across Europe, as well as local executives, are on tenterhooks to see if they’ll go through with it.

The center-left Democratic Party which, under various leaders, has governed since 2013 has slipped to 23 percent in the polls compared with 41 percent in the EU elections of 2014. Five Star has climbed to 27 percent from 21 percent over that time. Former premier Silvio Berlusconi’s center-right alliance could eclipse them both if it holds together, combining four parties with 38 percent support.

Few case studies illustrate the real-world limitations of the economics profession quite like Italy. Policy has been run by a succession of academic economists and International Monetary Fund officials since Berlusconi was pushed out in 2011 at the height of the European debt crisis.

In that time, Spain, Portugal and Ireland have completed bailout programs and put the crisis behind them. Italy’s output is barely higher than it was at the turn of the millennium and three years of modest growth haven’t persuaded voters to stick with the PD.

Di Maio brings none of the expertise of the current government—he studied engineering then law without ever obtaining a degree, worked briefly as a webmaster and ran unsuccessfully as a Five Star candidate for his local town council near Naples in 2010. Three years later he became deputy-speaker of the lower house of parliament.

He brushes aside doubts about his background by pointing to the track record of the establishment.

“Go and see what those who had more experience did,” he said in an interview.

Yet Di Maio still has to establish his legitimacy. That effort took him to London at the end of January where he met 30 or so investors from the U.S., the U.K., France and Switzerland.

“The total they manage amounts to the entire Italian debt,” he said afterward. That’s about 2 trillion euros ($2.5 trillion). Or less than half of BlackRock Inc.’s assets.

Did he learn anything from the meeting?

“No,” he said. Then he went on, “They’ve got problems dealing with the Italian state. When they contact a state authority, they’re told to try somewhere else.”

Di Maio’s outreach effort makes him stand out from the rest of his party. While he chooses a suit and tie, most other Five Star leaders prefer jeans.

“He’s the institutional face of Five Star, a moderate who is trying to broaden its appeal,” said Fabio Bordignon, a political sciences professor at the University of Urbino who has studied the party’s rise. “The challenge for Di Maio is holding the different parts of Five Star together.”

Voters on the left are attracted by its web-based direct democracy and plans for a universal citizen’s income. Conservatives like its push for immigration curbs and euro-skepticism. But without the industrialized north, that isn’t enough to govern. That’s where the party is projected to win the fewest seats, according to an Ipsos survey released Jan. 19.

So Di Maio has criss-crossed the region from Turin to Udine for weeks, seeking converts.

“Di Maio wants to cut taxes and make workers more productive, he said trade unions need a reality-check,” said Modesto Volpe, the 61-year-old chief executive officer of the solar-power firm VT Energy. A former Berlusconi voter who turned up to hear Di Maio in Milan, Volpe said he likes to vote for Five Star candidates online.

“I’ve backed Five Star since they were founded,” he said.