The allegations against Monsignor Nunzio Scarano, an accountant in the Vatican’s internal accounting administration, are – albeit tangentially – the latest in a litany of scandals to affect the Vatican bank. Over the last three years, the 71-year-old Institute of Religious Works, as the bank is officially called, has been tainted by claims of money-laundering, corruption and incompetence.
The crisis began in September 2010 when it came under investigation by Italian authorities who had frozen €23m the bank was trying to transfer to accounts in Italy and Germany without releasing full details of the intended beneficiaries. The bank denied any wrongdoing. The funds were released but the investigation continues.
The Vatican responded with striking rapidity to the bank’s top two officials, Ettore Gotti Tedeschi and Paolo Cipriani, being placed under investigation; Father Frederico Lombardi, the chief spokesman, even wrote to the FT defending the two men. Read more
It takes a little more than 15 minutes to cover the mile-long distance that separates the Bank of Italy from the ministry of the economy and finance in central Rome. But the upper echelons of the two institutions dominating the commanding heights of Italy’s economy have traditionally been closely linked by a revolving door. Read more
Margaret Thatcher and Giulio Andreotti – they didn't always see eye to eye
Tuesday’s FT contained a wonderful obituary of Giulio Andreotti, a man who managed to be prime minister of Italy no fewer than seven times – as well as serving as foreign minister for much of the 1980s. Yet, as the FT obituary notes, Andreotti’s life ended in semi-disgrace, with the former PM preferring to to travel to “those parts of the world where he was still treated with respect: notably Libya, Syria and Iran.”
The Andreotti story is not simply an Italian curiosity. For the former Italian PM was also a pivotal figure in the construction of Europe and in the debates that led to the formation of the European single currency. As such, he crops up quite frequently in Margaret Thatcher‘s autobiography – in ways that cast a revealing light on today’s debates and dilemmas. Read more
Prospects for a new Italian government
The political chaos in Rome seems to be about to come to an end as the bickering parties prepare to form a broad coalition government led by Enrico Letta of the centre-left Democrats. Will the coalition be able to rise to the challenges facing Italy, including an economy now entering its eighth consecutive quarter of contraction. Ferdinando Giugliano, FT leader writer, and Guy Dinmore, Rome correspondent, join Ben Hall to discuss.
Beppe Grillo on the campaign trail
Two months ago Beppe Grillo came out as the big winner of Italy’s general elections. His Five Star Movement, which was created only in 2009, came within a whisker of becoming Italy’s single largest political force. His vote tally in the Lower House was an extraordinary 8.7m, more than Silvio Berlusconi’s People of Liberty party and only a few hundred thousand votes less than the centre-left Democratic Party. Read more
(Photo by Christof Stache/AFP/Getty)
The former Italian prime minister Giuliano Amato once compared the powers of Italy’s president to an accordion. Just as the box-shaped musical instrument can expand and contract, the same is true for the influence of Italy’s head of state: what the president can or cannot do largely depends on the strength of the political parties.
On Thursday, Italy’s 949 MPs and 58 representatives from the 20 regions will convene to elect the successor to President Giorgio Napolitano. Amato himself is a candidate, alongside former prime minister Romano Prodi, former European commissioner Emma Bonino, and others.
The political stalemate following February’s inconclusive election means that the new president will have to be picked on the basis of a last-minute deal between the centre-left, (the largest alliance in Parliament) and at least one of the other three significant forces – the centre-right coalition of the People of Liberty and the Northern League, Beppe Grillo’s Five Star Movement and Mario Monti’s Civic Choice. There are no clear favourites for the job. Yet, this election will matter a great deal for Italy and for those who are interested in a solution to its political crisis.
For decades, the President’s job was seen as largely ceremonial. True, the President is the head of the judiciary and of the armed forces. But he doesn’t have anything like the kind of executive powers held by the French or American presidents (though he can veto any law if he believes it is against the constitution). Read more
In the week of Margaret Thatcher’s funeral – and with the euro-crisis bubbling along – it is interesting to take a look back at what Thatcher had to say about the single currency. Much of the commentary since her death has portrayed Thatcher’s views on Europe as irrational and backward-looking. For example, Anne-Marie Slaughter in the FT, wrote that “her attitude to Europe was a throwback to the 19th century”. For good measure, Prof Slaughter adds that Thatcher’s views were “deeply anachronistic and dangerous”. Of course, there was a strong element of emotion in Thatcher’s views of Europe. So what? It is more interesting to note that she also made some quite precise criticisms of the European single currency that look increasingly prescient, as time wears on. Read more
The Italian dog that did not bark is one of the great untold market stories of the past month. The yield on Rome’s 10-year bonds is around 4.3 per cent, a level not seen since the end of January.
Chart: Italy’s 10-year bond yield (black line) over the past five years; blue line shows the yield on the German 10-year bund
(Chart courtesy Reuters)
The spread with the Bund, which has obsessed Italians since the market panic at the end of 2011, has narrowed to just above 300 basis points. It almost looks as if February’s inconclusive election and the accompanying political uncertainty do not matter. This is puzzling, so here are a few tentative explanations:
1) Mario Draghi’s magic. The pledge by the president of the European Central Bank last summer to do “whatever it takes” to save the euro is the single most important explanation for the relative quiet on Italy’s bond market. The Outright Monetary Transactions scheme, whereby the ECB will purchase unlimited quantities of debt of countries in difficulty, has so far proven a remarkably resilient firewall. Read more
Situation vacant? Mario Monti (Getty)
There were two big job vacancies in Rome last month. The Catholic Church began looking for a new pope after the shock resignation of Benedict XVI. Meanwhile, Italians went about the business of picking a new head of government who would end Mario Monti’s technocratic interlude.
The Vatican is not exactly known for its speedy decision-making. Yet it only took the conclave of cardinals a couple of days to elect Jorge Mario Bergoglio as the new head of the church. Pope Francis – as he is now – is already making headlines with his new message centred on the need for a humbler and more austere church.
On the other side of the Tiber, Italian politicians are still struggling to choose a new prime minister. Today and tomorrow, President Giorgio Napolitano is meeting party leaders and other institutional figures to talk about what to do next. But Italy-watchers do not expect white smoke to come out of the presidential palace any time soon.
Last month’s inconclusive elections have produced a three-way deadlock in the Senate between Pier Luigi Bersani’s centre-left coalition, Silvio Berlusconi’s centre-right alliance, and Beppe Grillo’s Five Star Movement. The only solution to the impasse is a government that is backed by at least two of these forces. But this trilemma has no easy solution. Read more
When Cardinal Jorge Mario Bergoglio decided he would be called Francis in his new life as Pope, he knew people would understand that his choice was charged with symbolism.
As some of the cardinals present at the conclave have confirmed, the new pontiff’s choice is in honour of St Francis of Assisi, who lived and preached in Italy between the end of the 12th and beginning of the 13th century. Francis was the son of a wealthy merchant who abandoned his well-off lifestyle to live in poverty. The monastic order he set up, the “Lesser Friars” (who became known as Franciscans after his death), has absolute poverty as a rule. This applies both individually and to the monastic communities.
St Francis is one of the most venerated figures in the Catholic world thanks to his mysticism and rectitude. Yet no pope had ever dared to pick his name. This is in sharp contrast to the number of times Gregory (16), Leo (13) and Pius (12) have been chosen. Read more
By Gideon Rachman
Some months ago, I was discussing the euro crisis with a high-ranking US diplomat. “It’s back to the 1930s, isn’t it?” said my companion with a mixture of gloom and relish. “The extremists are on the rise.”
Instability rules in Italy
Italian national elections have ended in chaos and the voters’ message is that they are tired of austerity and the political elite. The country faces a hung parliament after votes were split between a former comedian, an ex-prime minister who faces corruption charges, and the centre-left, who won narrowly in the lower house. Mario Monti, the technocratic prime minister who was appointed 15 months ago, came a distant fourth place. In this podcast, Guy Dinmore, Rome correspondent, Peter Spiegel, Brussels bureau chief, and Ferdinando Giugliano, leader writer, join world news editor Shawn Donnan to discuss the unfolding drama, which could take weeks to resolve.
Beppe Grillo, the big winner of Italy’s 2013 election, first rose to fame in the 1970s as an irreverent, foul-mouthed comedian with corruption of all kinds in his sights. Read more
Two interesting trends that have shown up in the data from Italy’s election today.
1) The preliminary election results among the nearly 3.5 million Italian voters living abroad show a very different picture from the results within Italy.
The austerity measures and market-friendly stance of the ex-Prime Minister Mario Monti managed to convinced over 27 per cent of the votes of Italians living in Europe and in North and Central America, where his movement came in second after Pier Luigi Bersani’s Democratic Party (PD). Within Italy, fewer than one in ten Italians voted for him.
Meanwhile, the comedian-turned-political leader Beppe Grillo successfully won over Italians in the plazas where he held numerous rallies, but it appears that his anti-establishment message was not heard so sympathetically by Italians around the world. Read more
Italy ‘s parliamentary elections ended in political deadlock on Monday night with little hope of a clear majority. Join the FT as it covers the unfolding political and economic drama. By Lina Saigol.
Making sure the world gets the message – Graffiti on a wall in Livorno, Italy
Political deadlock and impending chaos, a rejection of EU-driven austerity, and market uncertainty are the main three themes in the media commentary on the Italian election that had yet to be declared on Tuesday morning.
“The reality is that Italy today is almost ungovernable,” writes Fabrizio Goria on Linkiesta, a news website. “And it will not take long for the markets to react.”
The headline in La Repubblica , the leading centre-left daily, doesn’t really need translating:
Italia ingovernabile: Senato spaccato, Grillo primo partito
“An ungovernable country,” concludes Massimo Razzi inside. “Politically, but also technically. With few ways out given the almost unworkable or numerically insufficient alliances.” Read more
Mario Monti exits a voting booth on February 24 (AFP/Getty)
Paul Krugman has got in early to comment on the political demise of Mario Monti – who now seems certain to trail in fourth in the Italian elections. According to Krugman, Monti’s reputation for wisdom is wildly overblown. On the contrary, he more or less deserves his fate because he was “in effect, the proconsul installed by Germany.”
Worse, according to Krugman, Monti’s policies did not even work. As in the rest of southern Europe, the economy has shrunk and so debt-to-GDP ratios have risen. There was only one “piece of good news” in the Monti era – that “bond markets have calmed down.” However, Monti cannot claim the credit even for this, because it is “largely thanks to the stated willingness of the ECB to step in and buy government debt when necessary.”
As ever, with Krugman, the argument is forcefully made. But it misses out a crucial stage in the argument and therefore unfairly denigrates the role of Monti in stabilising the Italian economy. Remember, when Monti came to power, the steady rise in the interest rates that Italy was having to pay to finance its debt was eating up more and more of the Italian budget. There was a real prospect that Italy might simply be unable to finance itself through the bond markets – and that might have sparked a terminal crisis in the euro. Read more
Italians cast their ballots in a tight election, with Brussels, Berlin and the markets looking on. By Tom Burgis, Lina Saigol, Ben Fenton and Shannon Bond with contributions from FT correspondents across Italy and beyond. All times are GMT.
On this, the final day of polling in Italy’s 2013 election, we thought it would be worth highlighting five blog posts from the FT that will help provide the context you need to understand the results when they eventually emerge…