Italy’s New Government: Business as Usual

Journal of Political Risk, Vol. 11, No. 1, January 2023

Lorenzo Ammirati

Poster of Giorgia Meloni, leader of the Brothers of Italy Party, 2022. Source: Duncan Cumming via Flickr.

Nationalist identarian right-wing party Fratelli d’Italia (“Brothers of Italy”) was the only major Italian party to oppose former European Central Bank President Mario Draghi’s “national unity” coalition government which governed Italy between February 2021 and September 2022. Among the key campaign promises made by Fratelli d’Italia’s leader and current Italian Prime Minister Giorgia Meloni during the electoral campaign of September 2022 was a break with the economic policies of the Draghi government. However, the first Italian female Prime Minister has thus far demonstrated the opposite orientation.

In fact, Meloni’s sphere of decision making on economic policy is severely limited. Italy’s extremely high levels of public debt (above 150% of GDP) coupled with weak trust from financial markets and the European Union’s tight fiscal rules make it very costly (both financially and reputationally) for any Italian government to finance new public policies. Additionally, investments are currently mainly being made through the European Union’s Recovery Instrument, an ad-hoc fund created after the COVID-19 pandemic which lends money for EU approved projects, greatly constraining the power of the Italian government.

The war in Ukraine and the consequent energy crisis are further restricting the scope for economic changes. Together with Germany, Italy is the European country most dependent on Russian gas imports, and the current government (like the previous one) is committing much of its resources towards shielding businesses and families from the price increases. In the Italian 2022/2023 budget law, two-thirds of the financial resources were allocated to fighting these price increases and mitigating the additional economic consequences of the war. These measures were ‘copy-pasted’ from the budget law drafted under the Draghi government.

The remaining third of the 2022/2023 budget law funds were allocated to policies benefiting those groups that supported Meloni and her right-wing coalition government allies. These symbolic policies included an increase in the minimum state pensions of roughly 20 euros per month for people over the age of 75 in 2023, tax breaks for some very restricted categories of self-employed workers, and a 5% VAT reduction on baby products.

These policies too were pushed forward inside the previous government by the two current coalition parties of Meloni, Forza Italia (led by former Italian Prime Minister Silvio Berlusconi) and Lega, which were also part of the coalition government led by Draghi, together with the center-left Partito Democratico and the populist Movimento Cinque Stelle.

Though little has changed on the economic front, something has indeed changed since Meloni’s government took power. The government’s approach towards migrants (especially sub-Saharan Africans) became tougher, public prosecutors and the justice system are facing increased pressure, and anti-abortion groups hope for the government to introduce restrictive measures in the near future. It is no coincidence that the common feature of these changes is that they require no government expenditure.

Both for structural and contingent reasons, Meloni’s government could not overturn the previous Italian government’s economic policies, despite campaigning on a platform of great discontinuity. It is yet to be seen what the Fratelli d’Italia-led coalition government will do once its hands are free from the energy crisis and the Ukrainian war. But thus far, governmental power has rendered far-right nationalist Meloni’s economic policies almost identical to the ones of a former European Central Banker, and there are few reasons to believe this will change in the future.


Lorenzo Ammirati holds a BA in Political Science from the University of Bologna, and an MA in International Relations from SOAS, University of London. He has worked in institutions, public affairs, and political risk consulting. Currently he works alongside an Italian MP.


 

Political Risk to the Mining Sector in South Africa

Journal of Political Risk, Vol. 10, No. 8, August 2022

Randfontein Mine, Johannesburg, November 2014. Source: Paul Raad via Flickr.

Ndzalama Cleopatra Mathebula 
Institute of Risk Management South Africa

Generally defined, political risk is the expected cost or loss incurred by a business due to political decisions, events, and actions. With the evolution of the discipline, it is not only government or organizations that can generate  political risks, but also labour unions and civil society that can emanate risks. The South African mining sector includes abundant political risk yet is an attractive investment destination given its large platinum, gold, and coal reserves.

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Modelling the Country Risk of Zambia

Journal of Political Risk, Vol. 10, No. 3, March 2022

Simon Muwando
University of Lusaka

Victor Gumbo
University of Botswana

Gelson Tembo
University of Zambia

Abstract

The world has experienced a dramatic increase in the flow of transnational investments following increased internationalization and globalization of firms in the previous decade. Country risk exposure is a cause for concern for all the institutions that are engaged in multinational trade and finance. The main objective of this study is modelling Zambia’s country risk. A mixed method with concurrent research design was employed. Personal interviews were the main instrument for collection of primary data and snowball sampling was used to select the interviewees. Secondary data was collected from the Lusaka Stock Exchange (LSE), Ministry of Finance, Bank of Zambia and Central Statistical Office. An autoregressive distributed lag technique was employed on annual data for the 1994 to 2018 period. This approach was chosen as it works best for small samples. The findings of the study revealed that the short run drivers for country risk of Zambia are beta, current account balance, political risk, unemployment rate and weighted short term interest rates. Current account balance was found to positively affect country risk while beta, political stability, and weighted short term interest rates negatively influence it.  The study findings established that the long run determinants of country risk of Zambia are current account balance, betas, political risk, and unemployment rate. From the study findings, current account balance positively influences country risk of Zambia whereas beta, and political stability negatively influence country risk of Zambia. The study concluded that the major determinant of country risk of Zambia in the short run and long run is current account balance as it has significant positive influence. Effective policies need to be implemented by authorities to manage or reduce persistent current account deficits and political risk, in order to manage country risk.

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Defeating China: Five Strategies

Journal of Political Risk, Vol. 8, No. 4, April 2020

Fighter jets of the U.S. Navy Blue Angels demonstration squadron fly over the Lincoln Memorial during the Fourth of July Celebration ‘Salute to America’ event in Washington, D.C., U.S., on Thursday, July 4, 2019. Source: Official White House Photo by Joyce N. Boghosian.

By Anders Corr, Ph.D.
Publisher of the Journal of Political Risk

Since 1989, when China massacred thousands of its own people in Tiananmen Square to stop a pro-democracy protest, the country has arguably grown into the world’s most powerful and centralized state. China’s GDP by purchasing power parity (PPP) is approximately $25.4 trillion, while the U.S. GDP PPP is only about $20.5 trillion.[1] One man, Chinese President Xi Jinping, has almost total control of China’s economy and a leadership position for life. China’s authoritarian system, most recently, allowed the COVID-19 virus to become a pandemic. By the time it is controlled, it may have killed up to millions of people.

Compared to Xi Jinping, political leaders in democracies have comparatively little economic power. U.S. President Donald Trump, for example, has only partial control of the smaller (by purchasing power parity when compared to China) U.S. economy, and must be reelected in 2020 to continue his tenure for a maximum of an additional four years.

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Beyond the Camps: Beijing’s Long-Term Scheme of Coercive Labor, Poverty Alleviation and Social Control in Xinjiang

Journal of Political Risk, Vol. 7, No. 12, December 2019

442 rural surplus laborers from Kashgar and Hotan, Xinjiang China, are sent off to work in an industrial park in Korla in a “centralized fashion”.

Adrian Zenz, Ph.D.
Senior Fellow in China Studies
Victims of Communism Memorial Foundation

1.0 Introduction

After recruiting a hundred or more thousand police forces, installing massive surveillance systems, and interning vast numbers of predominantly Turkic minority population members, many have been wondering about Beijing’s next step in its so-called “war on Terror” in Xinjiang. Since the second half of 2018, limited but apparently growing numbers of detainees have been released into different forms of forced labor. In this report it is argued based on government documents that the state’s long-term stability maintenance strategy in Xinjiang is predicated upon a perverse and extremely intrusive combination of forced or at least involuntary training and labor, intergenerational separation and social control over family units. Much of this is being implemented under the heading and guise of “poverty alleviation”.

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