Thursday 31 May 2018

The Italian Job.

The Ring-In: Italy's supposedly apolitical President, Sergio Mattarella, objecting to the victorious populist coalition’s choice of the eurosceptic, Paolo Savona, as Finance Minister, collapsed the government-formation process. Undaunted, Mattarella appointed an interim Prime Minister of his own choosing: a former high official of the International Monetary Fund, Carlo Cottarelli (above). Italy’s repudiation of the Euro, and even its departure from the European Union, cannot now be discounted.

RECENT EVENTS IN ITALY raise some disturbing questions about the possibility of executing radical policy reversals in this country. While New Zealand’s constitution is a considerably looser affair than Italy’s, it is still worth pondering what might happen here if a newly-elected, about-to-be-sworn-in government was promising to roll back the gains of neoliberalism. Before attempting an answer, however, it is worth re-capping what has happened in Italy.

Back in March, Italian voters went to the polls to elect a new legislature. The results of that election were reasonably clear: the traditional parties of both the left and the right suffered major losses and the two leading populist parties, the Internet-based Five-Star Movement and the anti-immigrant La Lega (The League) made significant gains. After several weeks of intense negotiation, the two populist parties presented a ministry led by Giuseppe Conte to the supposedly apolitical President of the Italian Republic, Sergio Mattarella, so that he could swear them into office.

Rather than bestow his formal blessing on the new government, however, the President objected to the populist coalition’s choice of Paolo Savona as Finance Minister. Savona was an outspoken critic of the European Union’s rigid economic policies and Mattarella was unwilling to entrust such a person with Italy’s economic management. Not surprisingly, Conte refused to comply and the coalition parties withdrew from the government-formation process altogether.

Undaunted, Mattarella appointed an interim Prime Minister of his own choosing: a former high official of the International Monetary Fund, Carlo Cottarelli. Mattarella’s decision to ignore the will of the Italian people and appoint a notorious neoliberal technocrat as their prime minister has sparked both a political and a financial crisis. Italy’s repudiation of the Euro, and even its departure from the European Union, cannot now be discounted.

Could such a blatant attack on democracy occur here? Does our lack of a written constitution protect us from a similar intervention by the executive arm of government?

The short answer, unfortunately, is – No.

The German jurist, Carl Schmitt (1888-1985) summed up the fraught issues associated with a democratic system in crisis (he was writing about the doomed Weimar Republic of the early-1930s) by posing a key question. Who has the authority to identify the presence of a crisis, or emergency situation, serious enough for the executive power to declare an Ausnahmezustand, a “state of exception” in which the normal functioning of democracy is suspended lest its continuance put at jeopardy the security and/or survival of the legally constituted order? “Sovereign is he who decides on the exception”, declared Schmitt.

In the New Zealand context, Schmitt’s formulation would encourage the view that if a situation ever arose where the political and financial security of the realm were about to be put at risk by a yet-to-be-sworn-in government committed to implementing policies inimical to that security, then the Governor-General would be justified in wielding her reserve powers to prevent such a government taking office. As the sovereign’s representative, she would be entitled to decide that the election result had precipitated circumstances of such exceptional severity that a temporary suspension of New Zealand’s democratic norms was justified.

The Governor-General would not, of course, be making such critical constitutional decisions in a political vacuum. The moment it became clear that a government of transformational radicalism was in the offing, and that its leaders were absolutely determined to carry out their reform programme, the principal defenders of the status quo would mobilise all their resources to stop them.

The first to act would be the major financial institutions. These would set in motion a rapid devaluation of the Kiwi dollar and instigate a precipitate drop in share prices on the NZ stock exchange. These real-world effects would provide the mainstream news media with all the excuse it needed for a no-holds-barred assault on the parties readying themselves for government.

Very soon after the media began campaigning, surrogate voices speaking on behalf of the major right-wing parties would raise the possibility of vice-regal intervention. They would be joined in this effort by spokespersons from all the major right-wing interest groups: Federated Farmers, the Employers and Manufacturers Association, Chambers of Commerce.

Simultaneously, conservative youth organisations would unleash a whole series of social-media campaigns full of hair-raising disinformation about the reform parties’ intentions so as to arouse maximum public anxiety. Mass street demonstrations would follow which, if answered by the followers of the reform parties, would be marred by widespread violence and property destruction. If the reform parties declined to rise to the bait, then agent provocateurs could be hired to do the job.

Finally, the various agencies of national security would intervene with “hard evidence” of the reformers’ subversive intentions. Real or not, these revelations would lift the intensity of right-wing opposition to a whole new level. However reluctantly, all “responsible” opinion would now be urging the Governor-General to act.

Anxious that the ongoing political and financial crises not be allowed to deepen, the Governor-General would, with equal reluctance, agree to exercise her reserve powers. The “caretaker” Prime Minister from the previous government would be invited to remain in office pending new elections.

Needless to say, the much-maligned, misrepresented and now deeply unpopular reform parties would suffer decisive electoral defeats. The “state of exception” could then, with great solemnity, be declared over.

All of which leads to the inescapable conclusion that if Grant Robertson didn’t already exist, Jacinda would have to invent him. It’s one thing to promise “transformation” when none of the powers-that-be believe you; quite another when they do.

Just ask the Italians.

This essay was originally posted on The Daily Blog of Thursday, 31 May 2018.


Polly. said...

Great piece;
lets never forget that Gough Whitlam, Australian PM was dumped by the GG of Australia Sir John Kerr (1975).
There's more to come on the "Italian Job".
The knot in the woodpile is that the European Common Market government who want to place illegal migrants across its dictates.
The Brits are "anti" and want out.
The British government/ people are being "White Anted" by the traitors in the House of Lords.
I believe many Italians want to enjoin the Brits but the "pro EC Marketers" are treachously stymying.
Europe has large pockets of people across different countries smoldering about these illegals.
The Russians are actively attentive.
The Americans want absolutely nothing to do with the mess, basically saying to the Europeans, problems? "wait till we call you".

Anonymous said...

Actually, no.

The Governor-General wouldn't be involved - the Establishment would just wreck the economy to ensure the Government lost the following election.

A Governor-General who did that to a Government that had not been sworn in yet would precipitate a republic. At least Sir John Kerr in 1975 had the excuse of Senate supply for sacking Gough Whitlam - there would be no such legal figleaf here.

David Stone said...

The EU booted out Berlusconi's government in 2011 didn't they. And put a technocrat totally unelected government in place. So they have had that experience before. Perhaps it never really changed. Perhaps all democracies are an illusion now. So long as the great unwashed think they can influence how they are governed an in who's interests farcical elections can take place. But if they interfere with the interests of the rich and powerful they can't be accepted. Not until a new election can be constructed to deliver the correct result anyway.
But it seems to be expected that this play in Italy is going to enhance the support for the anti establishment parties rather than discredit them.
Popcorn anyone?

Nick J said...

A likely scenario. One problem here, what happens next? Reality aka actual truth drives events. Denying that reality by over riding it does not mean it is not real. The elephant remains in the room and maybe sits on somebody or walks through the wall.

Wayne Mapp said...

I don't believe you are correct about how the Governor General would act. What you are suggesting goes far beyond her reserve powers. The GG could not usurp a clear democratic victory.

In short New Zealand is not Italy. In any event the President's actions will almost certainly increase the vote of 5 Star and the Norther Alliance at the upcoming election. And the President may be gone pretty soon

Coming back to NZ, no matter how much the losing side mobilised it would not be enough to sway the GG. And in any event I presume the winning side supporters would have their campaign to support their government.

You have postulated that this revolutionary govt would be overthrowing neo-liberalism. Presumably you mean far more than that if the GG was actually to act.

For the GG's reserve powers to kick in, the new govt would have to be doing something profoundly undemocratic. Such as nationalising all farmland, perhaps with minimal compensation. The compulsory purchase of all shares on the sharemarket using the NZ Super Fund and ACC funds at maybe at 50% of the listed price.

What I would call the normal reversal of "neoliberalism" such as withdrawal from CPTPP, buy back of Air New Zealand, BNZ, huge capitalisation of Kiwibank, immediate imposition of ETS on farmers, top tax rate of say 60%, lifting the size of govt from the current 30% to say 40% (which would be $25 billion extra govt spending per year) would be accepted in the sense of the new govt taking office. Withdrawing from WTO and CER so tariffs and import licensing could be introduced might also be part of the agenda, though obviously this is more radical.

The opposition would obviously be wanting votes of no confidence as soon as possible and would campaign furiously to win the next election.

But in truth I don't se any prospect of the left having such a radical programme, even the "normal reversal of neo-liberalism" and actually getting elected. Not unless NZ was already in a deep economic depression and the incumbent govt being obviously complete wallies.

AB said...

That is why no radical government declares their full intentions before getting elected. Roger Douglas knew that perfectly well.
Though one suspects that the antidemocratic machinery you so neatly describe was probably cheering Douglas and would not have been inclined to stop him even if they had known!

peteswriteplace said...

NZ is not Italy. AB is right, you don't give out the recipe before the meal.

Anonymous said...

For the GG's reserve powers to kick in, the new govt would have to be doing something profoundly undemocratic. Such as nationalising all farmland, perhaps with minimal compensation. The compulsory purchase of all shares on the sharemarket using the NZ Super Fund and ACC funds at maybe at 50% of the listed price.

None of which is undemocratic, and certainly none of which justifies the Governor-General getting involved.

The only justification for the Governor-General getting involved would be in the face of an impending coup.

Robert M said...

The reason the Australian GG , Kerr was encouraged into action to sack Whitlam , was not due to extreme left wing economic policies or anything of the sort. Generally in the economic area the Whitlam government moved in the opposite direction of the liberal social reforms. Substantial economic reform of the Rogernomics sort occurred during the Whitlam period under Treasury secretary John Stone who reduced tarrifs, removed most import licensing etc and allowed Australians to use there money freely globally.


however it also meant mass deindustralisation, which did have quite a lot of benefits in efficiency and the end of terrible working conditions and mass unemployment. That was Fraser and the Country parties complaint whose Politics differed much less than imagined from R.D. Muldoon.
The complaint of Kerr and those who backed him was the ALP Government was a National embarassment dogged by financial, sexual and other scandals that it was riddled by active communists and those so alligned and in many ways it threatened the most serious security interests of the United States and the West. Whitlams A-G Murphy has signed warrants to raid ASIOs offices ( Australian security Offices) . Australais intelligence services could not bug or film the Soviet Embassy or the ANU University in Canberra both it was claimed probably with justification housed a number of Russian and local GRU spymasters and operatives engaged in active recuritment of Australains and who knows even New Zeaalnders. Most serious the US Government feared for the security of its most important bases at North Cape ( communications base for the US sub fleet including the nuclear powered and strategic ones) and Pine Gap and Nurrangar ground stations for satellite surveillance. This was at the time of Watergate and the US 'mcGovernite' Congress passing such legislation as the War Powers Act . With this legislation and Nixon and Kissinger being driven out of office, the space was given for the North Vietnamese to move south with force and take Saigon and in combination with the revolution against the Salazar regime in Portugal a Marxist alligned regime captured Angloa and its mineral industry and white bastion city of Luanda the Rio and San Paulo on the other side of the Atlantic. The South African Voster regime not being up to or brace enough to invade the space. The ZA Buccaneer pilots not being prepared to go in low to do real damage, against even the risk of the relatively privative 37mm AA and portable SAMS of the rebels.
it would have to be seen in the CIA world view of the time and Nixon and probably Kissinger , that NZ, australian and the Southern Cone Nations of Latin America were all on the same left leaning and worse slide, but New Zealand was viewed as too insignificant to notice and populated by a left that was largely clueless and dint have a clue about the real nature of communism, defence or any of the ridiculous extreme left regime and causes they supported. The Australians were viewed as having the knowledge and intent and strategic relevance to force a government out of office with a word to Kerr and a dollar to the right wing unions. NZ the NZLP government of Kirk and Rowling and that less than genuine supporter of the Yanks, the two faced MFAT regime led by Frank Corner who in reality was just as outspoken an opponent of Suez, linebanker and the lack of recipriocity in the Anzus relations ship as Cairns as Whitlam and anyone the Austrlalian foreign service if not their academic community did. Australia like Iceland at the time was seen as failing to meet its defence and intelligence obligations to the USA a far more critical issue. Chile was more a matter of strategic minerals and confiscation of farms andUS assets. Plus the obligation to Chiles high tech middle class defence forces the most western thing in Latin America. That time NZ got away with pleeding ignorance. or rather it was pleeded on their behalf

Anonymous said...

Wayne Mapp can speculate about how the Governor-General would act, but the probability that a Governor-General would follow democratic convention should not be confused with the hard facts of the constitution. The Queen is sovereign, and in a crisis the machinery of state (armed forces, police, judiciary and security-intelligence services) in New Zealand would follow the constitution as they almost invariably have in the past, by taking direction from the Queen’s representative. The Governor-General could legally “usurp a clear democratic victory”, although it is reasonable to assume that she would not, even if only for pragmatic reasons.
However I don’t think Chris was talking about a “clear democratic victory”, but rather about a close fought contest between bitterly opposed factions followed by a political or economic crisis, whether contrived or spontaneous. Wayne says that the exercise of reserve powers would have to follow “something profoundly undemocratic. Such as nationalising all farmland”. We need to recognise that while such a policy of nationalization might be imprudent, misguided or counter-productive, it would actually be democratic if carried out by a government with a clear mandate to do exactly that. So when it comes down to it Chris and Wayne both accept that in extraordinary circumstances the Governor-General could over-ride the democratic process.
We then have to look at what constitutional safeguards exist to prevent the curtailing of democracy and the short answer is that there are none. The Queen appoints the Governor-General, by convention on the advice of the Prime Minister. At a time of political change the Governor-General then appoints a new Prime Minister, who by convention only must have the confidence of parliament. Once in place the monarch cannot be constitutionally removed, and only the monarch can remove the Governor-General once appointed. So ultimately everything turns on the character and political principles of the monarch in the first instance and of the Governor-General in the second. Normally Governors-General are worthy individuals who have broad cross party support, but there are exceptions. The elevation of Sir Paul Reeves raised some eyebrows on the right, but more seriously the appointment of Sir Jerry Mateparae, with his “deep state” connections put New Zealand democracy, such as it is, at considerable risk.
Wayne then goes on to write “I don't see any prospect of the left having such a radical programme” (as nationalization of property) the implication being that the question of the exercise of reserve powers is purely academic.
He has a point. The immediate threat to democracy, such as exists in New Zealand, does not come from the reserve powers of the monarch, but from the way in which political class is subordinated to foreign and domestic capital. The two are connected of course, which is why all Members of Parliament are required to pledge allegiance to the sovereign. The few elected representatives who have attempted to buck the system by declaring allegiance to our own people have quite lawfully been slapped down by the Speaker. The law is the law, and the constitution is the constitution. It is not at all democratic and that is the crux of the problem. When push came to shove, no New Zealand politician has had the courage to take a stand for democracy. It is that which makes Chris’ scenario both improbable, as Wayne argues (no New Zealand politician will take radical populist policies from the hustings into government) and at the same time quite plausible (the state apparatus will not tolerate any politician who presumes to adopt such radical policies) . One way or another the current undemocratic constitution will produce undemocratic outcomes.
Geoff Fischer

Wayne Mapp said...

The reason why I said nationalisation of farmland without compensation is profoundly undemocratic is that it could only occur as a gross invasion of the rights of the people. It could never gain consent from those it is applied against, and could only be achieved by the most draconian use of state power. Mass arrests and mass incarceration. A large number of people would perceive the government as their enemy.

I can't actually imagine such a measure happening in a modern democratic society, but I used it as an illustration of the limits of law making. A government might pass such a law, but could it be enforced in anything even remotely approaching a democratic fashion? So far such laws have only existed in non democratic states for pretty obvious reasons.

So I think in such an instance, a Governor General could consider that such a government had grossly deviated from the norms of democracy so as to be anti-democratic. Which is not just getting enough votes, but also recognising the fundamental rights of the minority.

The point I was making is that the GG at least in some sense is a protector of the most fundamental elements of democracy. But short of that the GG can't and won't act.

So in my view a government could roll back neo-ilberalism and not run the least prospect of GG intervention. The legislative actions to roll back neo-liberalism simply do not cross the threshold of being profoundly anti-democratic.

Anonymous said...

Wayne Mapp:
You are suggesting that socialism is undemocratic by definition, and therefore would be resisted by the reserve powers of the monarch, which implies that in a "democracy" on the New Zealand model socialists can only achieve their political objectives by revolutionary means.
I suggest that it would be wiser to allow socialists a lawful means to their goal, even if you were to place major constitutional obstacles in their path. For example you could have a constitution which protects private property, and requires, say, a two-thirds majority for revocation. That would have the effect of entrenching capitalism constitutionally, without having to rely on the use of the monarch's reserve powers to block radical change.
"nationalisation of farmland without compensation is profoundly undemocratic is that it could only occur as a gross invasion of the rights of the people. It could never gain consent from those it is applied against, and could only be achieved by the most draconian use of state power."
Ten years ago I and my whanau faced exactly this prospect. I then advised the Crown that I would meet force with force if any attempt was made to take my land without negotiation or compensation. Mr Tucker took me at my word, and the rest is history. So yes, any "draconian use of state power" will be resisted, and no state should ever become so arrogant or complacent as to forget that.
Geoff Fischer

greywarbler said...

For those still following the Italian job or theme.

This is part of a series looking at global finances and where they are taking us, what route or are we rooted? This one has some detail on a parallel currency idea that Italy has pulled out of its desperation to move somehow whether left or right a little doesn't matter I think.