BERLIN, 12 April 2006 — Italian elections produce a wafer-thin majority for opposition leader Romano Prodi. The French government caves in to mass protests and withdraws a key labor reform bill. The leader of Germany’s Social Democrats who rules with Chancellor Angela Merkel resigns after a nervous breakdown.
Italy, France and Germany — the eurozone’s three heavyweights and members of the G-8 club of industrial nations — have in past days lurched into political troubles mirroring their long-standing economic woes. In Rome, election results showed opposition leader Romano Prodi’s center-left bloc winning the narrowest of possible margins over Prime Minister Silvio Berlusconi’s conservatives.
But any new Prodi government would have to hold together up to nine parties in an awkward coalition ranging from Christian Democrats to revamped communists. There could also be instability due to his slim majority in the Senate upper house. Whatever the final result, Italy’s next government will likely lack a clear mandate for reforms aimed at healing the economy of the country dubbed by The Economist magazine as “the real sick man of Europe.” Italian growth has averaged at a grim 0.6 percent since 2001. The worst performer in the eurozone, both Rome’s overall state debt and budget deficits have repeatedly violated the single-currency bloc’s rules. Eberhard Sandschneider, head of the German Council on Foreign Relations (DGAP), said Italy’s election results and the developments in France would make it far tougher for Germany to take any bold steps next year when Berlin holds both the European Union and G8 presidencies. “Reforms will be difficult if all countries are preoccupied with domestic politics,” said Sandschneider in comments to Deutsche Presse-Agentur. Germany has big ambitions for its EU presidency which, it hopes, will spearhead attempts to revive the bloc’s constitution which was rejected last year by voters in France and the Netherlands.
Regarding France, Sandschneider said there were two ways to look at the country’s problems following French President Jacques Chirac’s caving in at the weekend to millions of street protesters over a bill to liberalize the French labor market. On the one hand, little will take place before France’s 2007 presidential elections, said Sandschneider, adding: “But on the other hand, France will likely have a more stable government next year.” Other German commentators were less sanguine: “France’s disaster” was how the conservative daily Die Welt termed the decision to withdraw the law. The Frankfurter Allgemeine said France was “crippled.”
In Germany, the impact of Matthias Platzeck’s resignation as SPD chairman on Monday is of a far lesser magnitude than developments in either Italy or France, stressed Sandschneider. Platzeck, who had only been in office five months, stunned the nation by tearfully announcing he was standing down after a series of health problems, including a nervous breakdown in February which had been kept secret.
Platzeck’s departure looks set to further weaken the SPD which could force it to pick fights within the Merkel-led government in a bid to sharpen its profile and boosting sagging poll ratings. “The resignation of Platzeck has rocked the SPD,” said the center-left Berliner Zeitung newspaper which warned that while the development was unlikely to damage Merkel’s government in the short term, continued decline of the SPD could ultimately pose a threat to the coalition. In any case, an SPD seeking to win back traditional left-leaning voters is likely to be even less willing than before to agree any painful reforms.
