Brookings: Topics - Elections

Welcome to Iran @ Saban

Suzanne Maloney — Mon, 20 May 2013 08:30:00 -0400

Welcome and khosh amadid!

Welcome to Iran @ Saban, a new blog featuring commentary and analysis on the array of issues related to Iran by scholars at the Brookings Institution. It takes only a quick scan of the headlines each day to appreciate the significance of Iran to American national interests and international security, and the variety and complexity of the issues and actors at stake. Through an intense focus on all things Iran, we hope to advance a better understanding of the internal dynamics of the Islamic Republic and promote effective international strategies for dealing with the challenges its policies pose.

We’ve timed our kick-off to coincide with the upcoming Iranian presidential election, in hopes of enriching the discussion that has already emerged around the ballot. As current president Mahmoud Ahmadinejad prepares to leave office, Iran's internal power struggles will enter a new phase. From now through the vote on June 14^th and presumably well beyond, we’ll closely follow the twists and turns of Iran’s frequently unexpected electoral dynamics and consider what the future may bring for Iran. This discussion will delve into the major issues confronting Tehran today, especially the economic crisis and the impact of sanctions.

Although the electoral interplay will consume a great deal of attention in the next few weeks, the focus of the blog will extend well beyond the events of the election and Iran's domestic dramas. We will be tackling Iran’s approach to the region and the world, its relationship with established and emerging powers, and the strategies and tactics of various players, including the United States, toward Tehran. Inevitably, we’ll spend a lot of time examining the nuclear issue, starting with the prospects for revitalizing the stalled negotiations between Tehran and the international community and discussions around alternative approaches if dialogue fails to produce a diplomatic resolution of Iran's nuclear ambitions. However, the sense of urgency surrounding the nuclear issue has narrowed the American debate on Iran in recent years, problematically in my opinion. For that reason, watch the space for a robust discussion of the range of issues and threats related to Iran, including terrorism, human rights, the peace process and the Syrian civil war, the rise of new regional and global powers, and the impact of technology and changes in energy markets on Iranian politics and the policy options of the international community.

Let me also say a few words about what this blog won’t be: this won’t be a vehicle for lobbying for or against any particular point of view. This blog will be infused with opinions – various and variegated – but in keeping with the Brookings’ mission, our discussions here on the blog will remain grounded in the ideals of intellectual objectivity, rigorous policy-relevant analysis, and civil debate. In that respect, we hope to integrate some of our longer form scholarship into the blog, by featuring previews of forthcoming publications related to Iran and initating conversations surrounding our ongoing research projects.

I also want to underscore that this will not be a solo venture. At the outset, my name may recur disproportionately, as the person charged with wrangling the blog’s content and as one of the few scholars who has the luxury of obsessing almost exclusively about Iran. However, Iran invokes a diverse and thorny set of foreign policy issues and concerns, and many of my Brookings scholars are at the forefront of research and writing on areas relevant to the Iranian challenge. We’ll try to draw in experts on a range of different regions, including China, Europe, and India as well as the scholars in our Doha office, and functional areas of expertise, such as energy, intelligence, and nonproliferation, and the site will feature the work of a fantastic team of Brookings staff providing with research and media support. As visitors to this site will soon appreciate, the whole of Brookings' work on Iran is much greater than the sum of its parts.

I want to close this opening with an overture: we want to extend the debate on Iran beyond the walls of Brookings, and we encourage you to join the conversation via email to IranAtSaban@brookings.edu We’ll also be on Twitter (via, among others, @maloneysuzanne) and engaging through a variety of other media.

Authors

Suzanne Maloney

And They’re Off: The Campaign for a New Iranian President Has Begun

Suzanne Maloney — Mon, 13 May 2013 09:26:00 -0400

The race to replace Iran’s deeply polarizing president, Mahmoud Ahmadinejad, officially opened last week with the registration of prospective candidates, and already the campaign promises an utterly fascinating ride through the unpredictable politics of the Islamic Republic. The shock and awe surrounding the last-minute decision by Iran’s iconic former president, Ali Akbar Hashemi Rafsanjani, to throw his hat into yet another race has only been topped for drama by the latest antics of the current incumbent aimed apparently at elevating a controversial protégé to succeed him. At least at the outset, these sensational developments have overshadowed the emerging shape of the real race among an array of regime functionaries, most notably nuclear negotiator Saeed Jalili.

With 686 would-be candidates and an array of insidious regime mechanisms for influencing the outcome, it is literally impossible to predict today who the ultimate contenders will be, much less who will win the race. However, what is clear is that Iran’s presidential election represents the opening salvo in another historic turning point in the volatile evolution of the revolutionary theocracy.

The application period is a deliberately chaotic process, designed to justify the pretense behind the clerical vetting process and bolster the credibility of the nominees who are ultimately tapped by Iran’s Guardians’ Council, a 12-member unelected clerical oversight body. There is also a keen dimension of political theater, as the prospective candidates seek to gauge their relative prospects and the leadership endeavors to maintain an uneasy balance between galvanizing popular interest in the campaign and inciting the kind of electoral exuberance that has generated instability in the past. Over the course of the next 10 days, the field will be narrowed from several hundred to a mere handful who are assessed to meet the constitutional standards for the office.

This time around, the chaos has been intensified by the lingering memories of the upheaval that ensued in 2009, when an implausibly rapid vote-count and wide margin in favor of Ahmadinejad’s reelection instigated the largest and most sustained protests in Iran’s post-revolutionary history. The ensuing crackdown left Iran’s burgeoning reform movement estranged, imprisoned or scurrying into exile. Predictably, however, no sooner had the conservative wing of the Iranian political spectrum achieved uncontested dominance than deep fissures emerged within them. For the past two years, frictions among Iranian hard-liners have been directed, full bore, at Ahmadinejad himself, which greatly heightens the significance of the current contest to succeed him.

Cue Ahmadinejad’s first electoral adversary, Rafsanjani, whose entrance has sparked an intense debate about his motivations as well as about the competition to come. In a prospective field comprised mostly of second-tier Iranian political figures, mostly former ministers and parliamentarians, he is vastly better known and boasts a political machinery that spans factions and decades. For many within Iran’s dispirited reformist and opposition ranks, the former president offers their best hope of political redemption and national salvation, a hint of their own marginalization given their past differences with him. Rafsanjani’s reputation for pragmatism is well-earned; he was tasked by Ayatollah Khomeini, the revolution’s founder, with ending the futile war with Iraq and later endeavored against stiff opposition to rehabilitate the country and reform its economy. He has carefully navigated fidelity to the system while critiquing both Ahmadinejad and the 2009 election, and his return to the presidency would likely revive now-dormant diplomatic fantasies in Europe and perhaps even Washington.

However, the former president faces powerful impediments that had persuaded many observers that his recent hints about the race were just a tease. Mostly notable is his age – almost 79 – which raises questions of capacity but also may undermine his appeal in a country with a disproportionately young population. More problematic is the unfortunate reality that he appears to have a more effusive constituency in the Western media than in Iran. Among the Iranian establishment, Rafsanjani is widely perceived as wildly corrupt and ideologically untrustworthy, and the population at large rejected his bid for a parliamentary seat in 2000 and favored Ahmadinejad in the 2005 presidential run-off. Now his unexpected entrance has incited a firestorm among the most doctrinaire of the hardliners, who have accused him of conspiring to delegitimize the system by daring the clerical supervisors to reject his candidacy.

Whatever happens, though, the calculations of the politician nicknamed “The Shark” (a reference to his lack of facial hair as well as his wily political skills) have already upended a race expected to rely on a motley array of second-tier Iranian political figures. His close ally, former nuclear negotiator Hassan Ruhani, had previously pledged to quit if Rafsanjani ran; Ruhani is a sharp-elbowed politician who has been an early and consistent critic of Ahmadinejad’s nuclear diplomacy and economic policy. So far that withdrawal has not come, despite much Twitter speculation to the contrary, and other similar pacts among conservative contenders also appear to be fraying under the weight of a suddenly reconfigured competition.

The Rafsanjani wild card is only one novelty in a race replete with interest. The other aspirant whose registration on Saturday has electrified Iranian poll watchers is Esfandiar Rahim Mashaei. Mashaei, a close advisor to Ahmadinejad, has long been the focus of fierce clerical ire as a result of his eclectic religious and political views. He was forced out of a vice presidential slot in 2009 and is routinely scorned as the mastermind of a ‘deviant current’ that has infiltrated the Islamic Republic in an effort to undermine it. Mashaei’s ambitions have been telegraphed over many months through increasingly unsubtle efforts of Ahmadinejad to stack the deck in his favor, culminating in the tandem appearance at Mashaei’s registration. That move prompted a legal complaint against the president – either a quaint nod at legalism in a patently manipulated electoral framework or the first step in a process of silencing the unpredictable Ahmadinejad via intimidation or imprisonment.

The calculations of Rafsanjani, Mashaei and Ahmadinejad are compelling in their own right, and they will no doubt influence Iran’s future. However, the drama associated with them has diverted attention from the likely electoral landscape, which features a less thrilling but still significant roster of contenders. For several months, some speculation has centered on former foreign minister Ali Akbar Velayati, a pediatrician by original training whose entire 32-year political career is the product of patronage by Iran’s supreme leader, Ayatollah Ali Khamenei. Others have long fixated on Tehran mayor Mohammad Baqr Qalibaf, a former Revolutionary Guards commander who has assiduously restyled himself as a moderate, modernist problem-solver. Another dark horse to watch closely Gholamali Haddad Adel, a parliamentary leader and literature professor whose daughter is married to Khamenei’s powerful son Mojtaba.

The real heavyweight in the pack, however, is Jalili, who was virtually unknown beyond a small circle of the Iranian leadership until his appointment as secretary of the Supreme National Security Council in 2009. In leading the contentious negotiations with the international community over Iran’s nuclear program, he has personified Iran’s quixotic mix of defiance with occasional bursts of pragmatism. One of his early forays in the high-stakes talks featured a discursive lecture on the Prophet Mohammad’s diplomacy, the subject of his doctoral dissertation. But Jalili was also responsible for signing onto a Western confidence-building step in 2009 that was quickly disavowed by Tehran. He survived the ensuing outcry among conservatives unscathed, a testament to his primary patron, Khamenei, whose office he directed for four years. Of all the would-be aspirants for the presidency in this round, Jalili appears to benefit from an air of ordination, and already talk has emerged among other conservatives of withdrawing in order to bolster his competitiveness.

Setting aside the personality politics, the most astonishing, and important, dimension of the campaign is simply that we care at all. Four years ago, many observers – including myself – argued the blatant orchestration of Ahmadinejad’s reelection had all but extinguished the relevance of the electoral dimension of Iran’s convoluted governing system. Then-Secretary of State Hillary Clinton and many academics forecast that Iran was descending into a military dictatorship. So many of these predictions now appear off the mark, as external analysts and politicians all too often find when interpreting Iran.

Let’s be clear – the 2013 ballot will be rigged to a greater or lesser extent depending on how the campaign evolves, and the winner will undoubtedly benefit from unabashed assistance from the institutions, including the Guard. However, as the initial maneuvers of the 2013 presidential race underscores, politics in Iran remain competitive, unpredictable, and captivating. So stay tuned, and watch this space. One week from today, Brookings will be launching Iran @ Saban, a new blog that will focus on political and economic developments within Iran as well as the threats posed by its current policies and the strategic responses of the international community. The blog will showcase the deep bench of Brookings scholarship on the Middle East and issues such as proliferation, terrorism and, of course, electoral politics and the future of Iran.

Authors

Suzanne Maloney

Image Source: © Stringer Iran / Reuters

Minority Turnout Determined the 2012 Election

William H. Frey — Fri, 10 May 2013 16:49:00 -0400

While it may seem like the 2012 presidential election has been analyzed to death, the recent release of the Census Bureau’s November election survey points out the key role that minority voter turnout, especially for blacks, played in determining the outcome.

Until now, most of what we knew came from the National Election Pool exit poll which elicited Election Day candidate preferences of voters. The new, larger survey from the Census Bureau permits an examination of the voting-eligible population and the extent to which they turned out to vote. These turnout rates tell us a lot more about the enthusiasm, or lack thereof, among different groups.

Already, the Census Bureau’s report trumpeted the historically noteworthy finding that black turnout rates in 2012 exceeded that of whites for the first time. This, in an election when white turnout declined significantly and Hispanic and Asian turnout inched down modestly from 2008.

The rising black turnout can be viewed, to some degree, as continued strong support for the first black president. The downturn of white turnout might be attributed, in part, to a lack of enthusiasm for either candidate or politics in general during a sluggish economy.

Before the election I made the case that a Democratic win would require a high minority turnout rate to counter what I then thought would be high turnout on the part of an energized Republican-voting white population. According to these new data, I was wrong about the rise in white turnout. But the question still remains: Was high minority turnout necessary for Obama to have won the national vote?

Changing Demographics, Turnout and Voting Margins

To answer this question now and in the future, an examination of the role of turnout in the context of the changing face of America’s electorate and the strong racial and ethnic preferences for Democratic and Republican candidates provides insight.

From purely an accounting perspective, shifts in election outcomes can be viewed as a product of (1) demographic changes in the eligible voter population; (2) changes in the turnout of different groups of eligible voters; and (3) the candidate preferences of those who vote. A look at the patterns for the three previous elections shows a striking move toward the Democrats on each of these dimensions.

With respect to eligible voters, the (typically Republican-leaning) white share of the electorate declined from 75.5 to 71.1 percent between 2004 and 2012 (Figure 1). During this period, the (typically Democratic leaning) combined black and Hispanic electorate rose to approach nearly quarter of eligible voters—a fraction that will rise in the future as more U.S.-born Hispanic children reach age 18.

In contrast to the constant shifts in eligible voter demographics, racial and ethnic trends in turnout and voter margins take a sharper turn after 2004.

White turnout continued to dive after the 2004 election when it was at a post 1992 high (Figure 2). In contrast, minority and especially black turnout moved in the opposite direction. The black turnout rates of 64.7 percent and 66.2 percent in the past two elections were the highest since 1968 when Census surveys began. Hispanic and Asian turnout improved markedly after 2004. For both groups, turnouts for the 2008 and 2012 elections were higher than any year since 1992.

With respect to voting margins, all three minority groups favored Democrats more strongly in the two post 2004 elections (Figure 3). The “tepid” 2004 black Democratic margin of 77 rose to 91 and 87 in the subsequent two elections, the highest margins in 40 years. Hispanic and Asian margins for Democrats also rose markedly for 2008 and 2012

For whites, the 2004 Republican margin was high by historical standards at 17. It declined in 2008 but then rose to an extremely high 20 in 2012—the largest white Republican margin since the 1984 Reagan-Mondale election.

So overall, compared with 2004, minorities showed: higher shares of eligible voters, higher turnout rates, and higher Democratic margins in the two most recent elections. For whites, on the other hand, post-2004 elections showed smaller shares of eligible voters and lower turnout. White voters did vote more strongly Republican in 2012, but this was offset by reduced turnout

The result, of course, was Obama wins in both 2008 and 2012. But how much of this is due to the rise in minority turnout and decline in turnout for whites?

With 2004 Turnout Levels: Republicans win in 2012 but not 2016

To assess the impact of turnout alone on the 2012 election I assumed that the national electorate had the size and racial and ethnic composition of the new Census survey and applied to it the more “Republican favorable” turnout rates of 2004 for each racial and ethnic group, as shown in Figure 2. This of course resulted in more white voters and fewer minority voters than actually occurred in 2012. To these voter populations, I applied the actual 2012 voting margins as shown in Figure 3. The result of this exercise was a small 2012 Romney win of 9,000 votes—a virtual tossup. Thus it might be said that the high minority and low white turnout rates of 2012 were responsible for Obama taking the national vote, irrespective of the changing demography of the electorate.

To see how much difference the higher 2012 turnout of minorities alone made in the final outcome, I conducted the same exercise assuming the “low” 2004 turnout rates for blacks, Hispanics and Asians, but with the actual 2012 white turnout rates. Under this scenario, the 2012 election is close with Obama ahead, but barely. So we might say that the high turnout of minorities, and blacks especially, did make a difference in the outcome of the 2012 election.

As a final exercise, I produced projections for the 2016 and 2020 elections which adjust Census Bureau population projections to estimate eligible voter populations by race and ethnicity in those years. Again, I contrast election outcomes, assuming 2004 “Republican favorable” versus 2012 “Democratic favorable” turnout rates, but in each case applying 2012 voter margins to each racial and ethnic group. This time, the Democratic candidates win under each scenario in each election, though with smaller margins when 2004 turnout rates are assumed.

What this tells me is that turnout will be less important for Democratic victory as demography changes in their favor, though they must maintain their strong voting margins among blacks, Hispanics and Asians. For Republicans, the latter projections show that they cannot count primarily on white support to take the White House. Even assuming high 2004 turnout rates and 2012 Republican voting margins for whites, they cannot win unless they also peel off more votes among minorities. In this regard, demography indeed becomes destiny.

Authors

William H. Frey

Image Source: © Darren Hauck / Reuters

Can Imran Khan Ride to Victory?

Madiha Afzal — Thu, 09 May 2013 17:27:00 -0400

With election day almost upon us, and with Imran Khan certainly enjoying momentum, the outcome of the May 11 election is anybody’s guess. Will Pakistan’s next government be led by the PML-N, by a PPP-led coalition, or a PTI-led coalition? Why do we have no idea what to expect? The main reason is that election campaigns are short and frenzied in Pakistan, with little time for polling (in contrast, the US presidential campaign, for example, lasts nearly two years, including the primaries). In addition, surveys are conducted at the national level, and are, therefore, largely meaningless in predicting outcomes in Pakistan’s parliamentary democracy. Surveys in Pakistan need to be undertaken at the electoral constituency level in order to have predictive power.

In this election, two additional factors have compounded the usual electoral uncertainty. The first is the emergence of the PTI as a serious third-party contender in a country where politics has hitherto been dominated by only two parties, effectively changing the landscape as we know it. Imran Khan has energised a disenchanted voting population, and voter turnout is expected to be higher than in previous elections. The second factor is demographic: specifically, the youth vote. There are 35 million new voters on the rolls in this election, most of them between the ages of 18 and 25.

Having mentioned the unknowns, it is worth better understanding what we do know. It is widely understood that there is a national-level incumbency disadvantage in Pakistani politics, with the PPP and the PML-N’s alternating stints in power in the 1990s. A national level incumbency disadvantage is to be expected this year, with approximately 91 per cent of the population dissatisfied with the way things are currently going in the country. The constituency-level roots of this national effect are not well-known. During the course of my work, using constituency-level election results data from 1988 to 1997, I show that incumbent MNAs who were elected by relatively small margins face a large incumbency disadvantage i.e., they are much less likely to be elected in the next election than candidates who previously lost by a small margin.

What does this empirical fact mean for the 2013 election? The biggest implication is that Mr Khan’s party may have a chance on May 11, since, all else equal, people are really voting against two incumbent parties this year i.e., against the national-level government of the PPP, and against the provincial Punjab government of the PML-N. Discussions with PTI supporters certainly bear out this hypothesis — their vote is as much a vote for Imran as a vote against the other parties. In addition, Mr Khan’s party platform and campaign of a Naya Pakistan is, in a word (or two), anti-status quo. His campaign has also effectively used some pages from US President Barack Obama’s social media strategy during his first electoral campaign, championing ‘change’.

What about the high-ranking and powerful PML-N and PPP candidates, those who are long-standing politicians? They are unlikely to be replaced by a PTI newcomer. On the other hand, any relatively weak candidates from these parties need to be very worried. But, one may counter, Imran Khan’s appeal need not translate to each candidate his party has fielded for election across Pakistan’s electoral constituencies. I would argue that in these constituencies, if the vote is truly a vote against the PPP and the PML-N candidates and a vote for the PTI, candidate identities largely will not matter. This is not unthinkable in a country where party trumps candidate identity at important points (such as when candidates cross party lines to move away from the unpopular incumbent party).

In a country rife with ethnic, sectarian, provincial, class and political conflicts and on a downward spiral, Mr Khan represents the one source of passionate unity for the country — cricket — and a true source of national pride: the leader of the 1992 cricket World Cup victory. Given this, he has truly picked an ingenious party symbol with the bat. He has also run a tireless campaign, culminating in his chilling fall on May 7. Whether or not his efforts will pan out, we will know soon.

There is hope for an Imran Khan victory, and with it, a renewal of lost confidence regarding the power of the vote. There is a palpable energy in the air, similar to Benazir Bhutto’s election to power in 1988. But let’s not forget that a violent and bloody campaign led to this historic election. The attacks against the ANP and the MQM have reshaped the electoral map and restricted the field of candidacy. In fact, we have seen disqualification of candidates similar to the 2002 election with the laws limiting candidacy instituted by General (retd) Pervez Musharraf, except this time, instead of Musharraf, the Taliban are (literally) calling the shots. This is a situation far from ideal and hardly represents a flourishing democracy. But a strong vote for Mr Khan will reassure many that a Naya Pakistan may yet be possible.

It is ironic that the very existence of an incumbency disadvantage that Mr Khan may ride to a victory has harmful consequences. For legislators on the margin, who know they will be voted out in the next election, an incumbency disadvantage is likely to create incentives for extraction and corruption. But this all rides on the politician’s expectation of being voted out. That may no longer exist if Pakistan sees a political sea-change in the election of the PTI.

Authors

Madiha Afzal

Publication: The Express Tribune

Image Source: © Zohra Bensemra / Reuters

Morsi and the Muslims

Shadi Hamid — Wed, 08 May 2013 00:00:00 -0400

Many Americans -- and many Egyptians -- are souring on the Muslim Brotherhood. Some are rather smugly saying, "I told you so." From the American and Arab liberal perspectives, the Brotherhood seems run by hyper-charged Islamists bent on imposing their will on the Egyptian people. Like most things in politics, though, it depends on what exactly you're comparing them to. More than two years into the Arab revolts, Islamists are weighing the virtues of moving more aggressively to implement their agenda versus the benefits of proceeding cautiously in an attempt to placate their critics and opponents.

There is little doubt that the Brotherhood has veered to the right. The real debate within the group is whether they've veered far enough. With Egypt as polarized as ever, the Brotherhood has effectively given up on reaching out to liberals and leftists, focusing instead on closing ranks and rallying its base. During the presidential race, Khairat al-Shater, the Brotherhood's original candidate, chose a Salafi-leaning council of scholars for his first campaign event, where he affirmed that the application of sharia law was his ultimate goal and that he would form a committee of scholars to help parliament achieve that goal. After Shater's disqualification, Mohammed Morsi -- a weaker, less convincing candidate -- doubled down on Shater's back-to-basics message. "Needless to say," Morsi said, "[I am] currently the only contender who offers a clearly Islamic project."

After winning the presidency, Morsi took a brief stab at rising above his partisan origins. But the tragic events of Dec. 4, when anti-Brotherhood protesters and government supporters clashed outside the presidential palace, rendered such efforts moot. The violence of that night -- provoked by the Brotherhood when it called on supporters to confront protesters -- claimed "martyrs" on both sides. For many in the opposition, this was the point of no return -- blood had been spilled.

Read the full article on Foreign Policy »

Authors

Shadi Hamid

Publication: Foreign Policy

Image Source: © Handout . / Reuters

An American Perspective on Malaysia's Elections: Preserving Najib Razak's Gains

Jeffrey A. Bader and Douglas H. Paal — Wed, 01 May 2013 00:00:00 -0400

Malaysian Prime Minister Najib Razak has called national elections for May 5. This date is perilously close to the statutory deadline to hold the elections, suggesting he is concerned that the results may lead to his departure from office. Malaysia, the United States, and much of the world have a stake in the outcome.

The traditionally dominant party, the United Malays National Organization (UMNO), and its partners in the long-ruling Barisan Nasional coalition have experienced internal divisions. Ethnic preferences for Malays in government and the economy have alienated many Chinese, who are a minority (roughly 40 percent of Malaysia’s population) but economically dominant. Najib’s efforts at internal reform have threatened traditionalists associated with former prime minister Mahathir Mohamad. Younger, urban voters seem itching for change.

There is a strong challenge from an opposition coalition headed by former deputy prime minister Anwar Ibrahim. His Pakatan Rakyat coalition includes Chinese and Islamic parties and is close enough in some polls to win outright.

But many longtime observers believe the real election is within UMNO, between old warhorses associated with Mahathir and the reformists surrounding Najib. The argument is that if Najib cannot bring in a result that preserves UMNO’s two-thirds majority and capacity to rewrite the constitution, old-line leaders, possibly current Deputy Prime Minister Muhyiddin Yassin, would displace Najib and stem reforms.

This is where the stakes need to be clearly stated. Under Mahathir, opposition to perceived residual Western colonialism was a rallying cry and a frequent and increasingly anachronistic theme. His successor, Abdullah Badawi, was less shrill but did not move significantly away from Mahathir’s policies. Najib has fundamentally repositioned Malaysia internationally. He has moved away from the old UMNO policy seeking to divide Asia from the United States and has seen the United States as an important partner for Malaysia and ASEAN.

Najib and his top officials have been forthright in speaking about democratic values in international forums such as the ASEAN Regional Forum. They have been critical of states such as North Korea and even Myanmar before reforms commenced there, something that would not have been countenanced in an earlier period when criticism was aimed solely at the West.

Najib has done all this as part of a strategy to retain domestic (Chinese) investment and attract foreign investment in order to accelerate Malaysia’s development. As a demonstration of his commitment to a more open Malaysian economy, he has joined the discussions on the Trans-Pacific Partnership trade agreement with ten other nations.

After economic contraction in 2009, Malaysia’s GDP growth has rebounded to a robust 5 percent, led by double-digit export growth in 2010 and large FDI inflows in 2010 and 2011. Gross investment for 2012 was up 9 percent over the last year, with the fastest growth in private and domestic investment (up 22 percent and 55 percent, respectively). The current account surplus is expected to narrow in the near term, and employment growth is expected mostly in domestic-oriented sectors such as services, in line with Najib’s New Economic Model that aims to create more sustainable, equitable, high-income growth. The Asian Development Bank forecasts that Malaysia’s GDP will grow by 5.3 percent in 2013, accelerating a little to 5.5 percent next year. Malaysia’s strong performance under Najib stands in marked contrast to the ethnic preferences and frequent allegations of corruption and cronyism under Mahathir.

Domestically, Malaysia remains an impressive Muslim-majority nation with a democratic system, pluralism, and generally good standards for human rights protection. Najib has given a number of speeches in international settings denouncing terrorism in the Islamic world and indeed has preached formation of a league of moderate nations to fight terrorism.

Under Najib, Malaysia also has moved to significantly tighten its previously porous export-control system, which had made the country a transit point for shipment and financing of dual-use products going to Iran. Defense cooperation with the United States and others has been normalized, and it has not remained a forum for grandstanding against the West.

Najib has moved to dismantle one of the instruments of repression, the Internal Security Act inherited from the British when Malaysia became independent. Under his guidance the legislature has replaced the law, which provided the basis for lengthy detention without trial.

These are not just achievements for Najib’s leadership, but they are gains for Malaysia, the region, and the world.

As the election campaign unfolds, it will be interesting to see what issues UMNO and its Barisan National coalition and Anwar with his Pakatan Rakyat coalition use against each other (see the table below).

Barisan National (ruling coalition) Coalition head: Najib Razak	Pakatan Rakyat (opposition) Coalition head: Anwar Ibrahim
The Economy
Gradually increase the government’s 1Malaysia People’s Aid (BR1M) handouts to RM1,200 for qualified households and RM600 for qualified singles Enact a more broad-based tax system and gradually reduce personal and corporate tax rates	Maintain BR1M cash assistance if elected Broaden income tax band, raise the income floor for the 26 percent tax rate to RM400,000 from RM250,000
Bumiputera (Ethnic Malays and Indigenous Groups)
Promote and improve Bumiputera policies that favor ethnic Malay businesses Provide RM500 million in seed funding to the Indian community	Equally distribute economic assistance regardless of race Undertake an inclusive development platform that includes all ethnic groups
Transparent Government
Establish additional corruption courts Elevate officers of Malaysian Anti-Corruption Commission to higher level	Introduce corruption elimination policy (DEBARAN) to free anticorruption institutions from political control and improve anticorruption prosecution Undertake electoral reform
Living Standards
Expand transport subsidies, education aid, food and housing assistance, public transportation, and rural infrastructure	Undertake similar populist policies, and raise minimum monthly income to RM4,000 by end of first term
Innovation
Enact the 2020 plan for high-income development based on innovation Attract RM1.3 trillion worth of investments and create 2 million new high-income jobs Channel investment to small and medium enterprises	Raise research and development expenditures to 5 percent of GDP Create a RM500 million national innovation fund Reshuffle tax incentives to give more assistance to small and medium industries
The Environment
Introduce financial incentives for renewable energy investment Voluntarily reduce emissions intensity of GDP by up to 40 percent by 2020 Pass stricter illegal logging laws	Halt work at the Lynas rare earth plant Review the implementation phases of the RAPID petrochemical project in Pengerang Reform logging regulation

Anwar has a mixed record. He earlier stood out as one of Malaysia’s leading progressive political figures and someone who creatively reconciled Islam and Western values. Since his imprisonment by Mahathir in 1998 on allegations of sodomy and a subsequent revival of similar charges in 2008 that was overturned in Malaysia’s courts, he has moved toward a closer alignment with Islamic politics. He has, for example, irritated women voters by suggesting that sharia law could be adopted by tradition-minded Malaysian states. Anwar nonetheless continues to be a strong public advocate of democracy and human rights and criticizes Najib as essentially continuing the more repressive policies of the Mahathir years.

Whether the winner is Najib or Anwar or the conservative forces within UMNO, Malaysians should consider seriously how to preserve the gains of the Najib era.

Authors

Jeffrey A. Bader
Douglas H. Paal

Image Source: © Bazuki Muhammad / Reuters

Europe on a Slippery Slope

Thomas Wright — Wed, 17 Apr 2013 00:00:00 -0400

Editor's note: This article originally appeared in the International Herald Tribune.

Throughout the euro crisis, observers have been asking if the euro zone will disintegrate — as if it is a decision that will be made by its leaders at some point in the future. This holds out the prospect of a great historic choice: Europeans can choose to properly unite and overcome their crisis or they can choose dissolution. We wait with bated breath for the next summit or the latest “most crucial month in the euro’s history,” which now seems to come several times a year.

But, this may be the wrong way of looking at the euro crisis. Integration and disintegration are not just the products of deliberate decisions. They are both processes, set in motion by actions regardless of the stated intentions of leaders. Once underway, each process takes several election cycles — probably a decade or so — to reach completion. Only one will prevail in the end, but it is possible that in the early stages these two processes can coexist even as each vies for supremacy.

Looked at this way, the euro zone is in serious trouble. The events of the past six months are consistent with a process of disintegration, while the process of integration has steadily weakened. The question is no longer, “Will Europe unravel?” We should be asking, “Can European disintegration be reversed?”

The trigger that brought integration to a halt and set disintegration in motion is surprising. In July 2012, the European Central Bank chief, Mario Draghi, declared that he would do whatever it takes to save the euro, and in August he kept his promise by introducing a program of Outright Monetary Transactions to finance troubled member states, thus bringing down the price of sovereign debt. The temporary lull led José Manuel Barroso, president of the European Commission, to confidently declare that “the existential threat against the euro has essentially been overcome.”

But Barroso could not have been more mistaken. The E.C.B.’s actions, while welcome, had a major unintended consequence. European governments became complacent and stopped pushing the policies needed to save the euro. The German government now believes that a quantum leap toward deeper fiscal and political integration through treaty change (the only way it could be done) is no longer necessary. At the December summit meeting, it was taken off the table. Instead, the Germans will push for incremental steps to increase coordination. Banking union has been watered down to the point where it is grossly insufficient. The euro zone is proposing a common supervisory mechanism, but banking debt will remain primarily a national concern.

The optimists say that the small steps the euro zone has taken are the first in a long journey, but this assumes that it will be easier to accomplish extraordinarily difficult goals later. Unfortunately, European politics are becoming polarized in a way that makes further progress unlikely. The core member states have run out of patience with the periphery and do not want to take on new commitments, such as a real banking union. Voters in the periphery are turning toward politicians who will say no to German austerity, as Italians recently demonstrated.

As integration stalled, the euro zone experienced its first major act of disintegration. The spectacularly botched rescue of Cyprus formally created a two-tier euro zone. Deposits are safer in Germany than in the periphery and this has enormous implications. We should expect large-scale capital flight if markets fear that other states will need a bailout. With capital controls in place, Cyprus itself is half in and half out of the single currency.

The next decisive moment may be when a member state on the periphery elects a government with a cast iron mandate to say no to a German government that has a cast iron mandate not to buckle. This almost happened in Greece in June of 2012, and it may yet happen in Italy in a couple of months. This could cause a withdrawal of E.C.B. support and an escalation that will lead to new acts of disintegration.

Winston Churchill once said: “It is not enough that we do our best; sometimes we have to do what’s required.” All European leaders should have this advice engraved onto a plaque and then affix it to their desks. Throughout the euro crisis, they have sought credit for good intentions and effort. They continually point out that the euro zone has moved far further and faster than anyone could have imagined before the crisis.

They are right, but it is completely irrelevant.

There are other forces at work and at the moment they are prevailing. Europe’s leaders need to be honest about the steps necessary to reverse a long spiral of disintegration. If they can’t do that, they need to ask how they can manage the process in the least damaging way possible.

Authors

Thomas Wright

Publication: International Herald Tribune

Image Source: © Kai Pfaffenbach / Reuters

Maduro as President of Venezuela: What to Expect

Diana Villiers Negroponte — Tue, 16 Apr 2013 15:27:00 -0400

On April 15, the Comisión Nacional Electoral (CNE) confirmed Nicolás Maduro as the next president of Venezuela, following the death of Hugo Chavez on March 5 and presidential election on April 14. The Organization of American States and the U.S. government have both asked for a 100-percent recount “necessary to ensure than all Venezuelans have confidence in the results” (as White House Press Secretary Jay Carney explained). However, this is unlikely to occur.

What happens next and what should we expect from President Nicolas Maduro? The opposition, led by Governor of Miranda state Henrique Capriles Radonski, called for a recount and gathered his supporters to bang their pots and pans during the night of Monday April 15 in protest the CNE’s definitive result. The cazerolazos (pot bangers) would let Venezuelans and citizens throughout the hemisphere know of their call for a recount through non-violent protest. Thousands responded, reflective of the 49.07% of Venezuelans who voted for the opposition party, Mesa Unidad Democrática (MUD); they lost by only 262,000 out of 14.9 million votes. There are 3,200 formal claims of electoral fraud, as well as countless claims of intimidation, but they are unlikely to change the CNE’s decision because 4 out of the 5 commissioners were appointed by Hugo Chavez and are members of his political party, the PSUV.

Beyond pot banging, it is unlikely that the opposition’s protest will turn violent or endure. Maduro will be sworn into office on April 19 and will have to confront serious problems. Inflation has increased from 20 percent year-on-year in December 2012 to 23 percent in February 2013. Furthermore, the currency is overvalued, despite a recent 32 percent devaluation and stable oil prices. Consequently, slower economic performance is expected in the 2013-2014 period. Nevertheless, Maduro is expected to continue social spending for housing, education and health in order to demonstrate that Chavismo, the philosophy of the late Hugo Chavez, is not dead. Scotiabank has also warned its customers that interventionist public policies will continue. In the last year these policies resulted in shortages of basic foods and medicines for all Venezuelans.

With oil production down from 3.3 million barrels per day (mbd) to 2.4 mbd and a $42.5 billion debt to the China Development Bank (CDB), Maduro will face a shortage of cash. He can persuade Venezuelans that they should tighten their belts and endure a period of austerity, but that could provoke protest from the very constituency who supported his election. He could approach the multilateral banks, but Chavez rejected these institutions as being tools of the U.S. “empire.”

Maduro’s supporters in Cuba are reliant on the continued provision of 90,000 barrels per day of subsidized oil to the island, preventing him from drawing down that account to sell the oil on the open market. Maduro has two options: seek a further loan from CDB, similar to the $12 billion that Chavez obtained in June 2011, or renegotiate the repayment terms on the current Chinese loans. (Currently 21 percent of Venezuela’s debt goes to Chinese institutions.) The Chinese government response is critical.

Discussions with officials from the Chinese Academy of Social Sciences at the Inter-American Dialogue in Washington in late March revealed that continued Venezuelan oil production and political stability are necessary for the Chinese authorities. Since 2007, the Chinese National Petroleum Corporation (CNPC) and the China Petrochemical Corporation (CPC) have gained large stakes in Venezuela’s oil industry after Exxon Mobil and ConocoPhillips abandoned the country under the threat of nationalization. If continued oil supplies and political stability are important to the Chinese government, its institutions may agree to renegotiate the loan terms. However, extended repayment schedules will probably come with the condition that more effective management be put in place at Venezuela’s national oil company (PDVSA) as well as the housing and agricultural projects financed by CDB. That means additional Chinese personnel operating within Venezuelan projects.

Sun Hongbo from the Chinese Academy of Social Sciences saw great benefit to China from a “strategic partnership based on long term complementarity.” The CNPC relies upon 800,000 bpd which Venezuela promised in 2007 as collateral for its $14 billion loan under the China Venezuela Joint Fund. We should therefore anticipate increased Chinese influence within Venezuela, as well as demands for greater efficiency both within PDVSA and the delivery of social services. However, payment on the Chinese loans implies lesser revenues from oil sales on the open market. Therefore, Maduro may seek to reduce the amount of subsidized oil that Venezuela provides the Caribbean nations and Nicaragua. Cuba will be an exception with its reliance on 90,000 bpd.

Given the reliance on China to keep the Venezuelan economy afloat, what else might we expect? Politically, the poor showing of the PSUV in this April election reflects the diminution of the Chavez’ aura. Maduro waged his campaign as “son of Chavez,” but it was not good enough to ensure a clear victory. He is now alone to run the country, but he has competitors. According to the Venezuelan constitution, the president of the National Assembly, Diosdado Cabello, should have assumed office pending elections when Hugo Chavez failed to assume office on the constitutionally determined date of January 10. The Supreme Court decided in favor of continuity backing Vice President Nicolas Maduro, but Diosdado now claims through his Twitter account that he would have been more successful in last Sunday’s presidential election. The rivalry between the two men will become more evident throughout the six-year term that Maduro begins this week.

What does this mean for Venezuela? Maduro’s authority to lead the country will be contested. Based on the 3,200 claims of electoral fraud, his legitimacy as president has already been challenged. Without the compelling charisma that Hugo Chavez exuded and without plentiful resources, Maduro will come to rely on authoritarian means. Opposition political figures and student leaders may find themselves in pre-trial detention for varying lengths sufficient to scare them from open protest. Current criminal inmates of Venezuelan jails are reputed to be violent, using rape and threats of murder to control the penitentiaries. Most political opponents will probably choose to shut up or seek exile rather than face jail terms.

Under these circumstances, what should the U.S. government do? I anticipate that President Obama will recognize Maduro as president in the near future, and cannot prevent growing Chinese influence. However, Washington should not accept the abuse of human rights and the denial of the rule of law. Together with the democratic countries in the hemisphere, it should use the weight of the Inter-American Commission on Human Rights and its effective court system to protect Venezuelan citizens and prevent the consolidation of authoritarian rule in the hemisphere.

Authors

Diana Villiers Negroponte

Image Source: © Carlos Garcia Rawlins / Reuters

Will a New Constitution Reverse Zimbabwe’s Political and Economic Degeneration?

Mwangi S. Kimenyi and John Omiti — Wed, 20 Mar 2013 12:12:00 -0400

On Saturday March 16, 2013, Zimbabweans overwhelmingly voted in a referendum to approve a new constitution that radically changes the governance institutions of their country. It is reported that over 50 percent of the country’s 5.6 million registered voters took part in the referendum, which was conducted peacefully. More than 2,000 election observers, drawn mainly from Southern African Development Community countries, observed the election. The coalition government of President Robert Mugabe’s Zimbabwe African National Union—Patriotic Front (ZANU–PF) and Morgan Tsivingari’s Movement for Democratic Change—Tsvangirai (MDC-T) supported the proposed constitution. The other two minority parties did not mount any meaningful opposition.

Among the important provisions of the constitution is that it sets a two five-year term limit for the president. Even more significant for Zimbabwe, which has seen a consistent decline in political freedoms, the new constitution provides for a Bill of Rights guaranteeing certain rights, enumerating such rights as the right to life, right to personal liberty, various political rights, rights of arrested and detained persons, freedom from torture, and many others to its citizens. The constitution will also entrench devolution and, much like recently adopted constitutions in Africa, calls for increased representation of women, reserving 60 seats for women in the National Assembly to be elected through a system of proportional representation.

Following the passage of the constitution, a serious contest is expected in about three or four months’ time when the new constitution will provide the basis for the next elections. According to some observers, it is not clear whether President Mugabe will offer himself for re-election under the new constitution although he is eligible. Even at 89 years of age, some Zimbabweans fear that Robert Mugabe will argue that this is the beginning of his new term as president. This situation is much like in the case of Kenya, wherein former President Daniel Arap Moi also contested afresh under a new constitution despite having ruled for more than 10 years.

Zimbabwe politics seem to revolve around land reform. President Mugabe’s ZANU-PF has played his politics around land reform since independence in 1980. The importance of land became even more profound in the last seven or so years when the economy nearly collapsed, experiencing the worst inflation in the world’s history. Peasants resorted to subsistence farming to eke out a living under such miserable conditions. Many Zimbabweans emigrated to neighboring countries, especially South Africa. The Zimbabwe currency collapsed. Zimbabwe now uses the U.S. dollar as its official currency, together with the South African rand.

Thus, one of the dilemmas facing policymakers in Zimbabwe is how to manage to introduce a new Zimbabwe currency without hurting recent economic recovery. The use of the U.S. dollar has reduced inflation greatly, although many people lost their savings when the country adopted the U.S. dollar. The economy is slowly recovering, notably in the tobacco sector. And, by a stroke of good luck, Zimbabwe discovered huge mineral deposits, especially diamonds. Zimbabwe now has about 25 percent of the world’s diamonds.

The July 2013 elections are likely to see a major contest between ZANU-PF and MDC-T. Even if President Mugabe gives in, it is expected that ZANU-PF lieutenants will wage a thorough campaign to hold on to the leadership mantle. Political pundits expect ZANU-PF to lay a thorough electioneering machine to maintain leadership using land reform and mineral policy as major bargaining strategies.

Thus, questions still linger as to whether the new constitution will change the country’s political landscape. The major problem with Zimbabwe’s politics to date has been the concentration of power in the presidency. The new constitution has, in many ways, reduced the powers of the president while expanding the rights of the citizenry. However, to realize the full benefits promised by the constitution, it is not just enough to enact the constitution. For a country that has seen years of erosion of the rule of law, the real challenge is inculcating a culture of constitutionalism in society.

Authors

Mwangi S. Kimenyi
John Omiti

Kenya’s Uhuru Kenyatta Deserves Support of the International Community

Mwangi S. Kimenyi — Mon, 11 Mar 2013 09:46:00 -0400

The people of Kenya have elected Uhuru Muigai Kenyatta as their president and William Ruto as the deputy president. This was the first election under a new constitution and also the first presidential election after the 2007 post-election violence. Although there were technical challenges with the electronic system that was meant to transmit results from the polling stations to the national tallying center, the election was largely free, fair and credible. Contrary to widespread predictions that the race would end in a runoff, Kenyatta was able to receive over 50 percent of the votes cast in the first round as required by the constitution for a candidate to be declared president.

The electoral process was managed by an electoral commission that is independent, and one that has conducted its business in an open and transparent manner. The commission set various eligibility requirements for the candidates to run for the presidency and other elected positions. The commission has also followed the election regulations guiding its operations. The reformed judiciary properly adjudicated the eligibility of the candidates. Thus, by all standards and provisions of Kenya’s new constitution, Uhuru Kenyatta has been duly elected the fourth president of the Republic of Kenya.

The election was conducted under intense international oversight of a large contingency of international observers. The general verdict of the observers is that the election was free and fair. Thus, the election of Kenyatta and Ruto is a true reflection of the will of the people of Kenya and is therefore an advancement of democracy in Kenya and Africa.

Kenyatta and Ruto’s win has not come easy. The two have been indicted by the International Criminal Court (ICC) for alleged involvement in the 2007 post-election violence. The ICC intervention in Kenya has, however, been seen by Kenyans as largely a political, rather than a judicial, process. A large fraction of Kenyans have come to regard the ICC intervention as an attempt to remove the two from political contention rather than seek justice for the victims of the violence. This view was given credence by statements by European and U.S. officials warning Kenyans of dire consequences if they elected Kenyatta and Ruto. These statements came just when polls showed that the race for presidency was tightening. Therefore, many Kenyans considered the statements an attempt by the United States and Europe to impose leaders on them: To an extent, Uhuru’s win represents a rejection of what Kenyans consider neo-colonial intervention. Even with intimidation over sanctions, Kenyans have made their choice, and this choice should be respected by all those who genuinely stand for democracy and freedom.

The election of the two should also be seen as repudiation of the ICC. As I have observed over the last year, the ICC intervention in Kenya has had the very adverse effect of exacerbating ethnic divisions in the country. To some extent, the rejection of Prime Minister Raila Odinga is because of his real or perceived collaboration with the ICC to selectively have his key competitors accused. While this perception of his motives may be unfair, it has gained traction and was a key factor in bringing Ruto and Kenyatta together into the winning coalition. In essence, the credibility of the ICC in Kenya and, indeed, in Africa is severely damaged. As such, the international community’s engagement with Kenya should not be informed by the ICC process. Already the cases are falling apart and the Court has in fact referred one of the cases back to the pre-trial chamber to reconsider the confirmation of charges. There are indications that the charges should be withdrawn as witnesses have recanted their statements, which were pivotal in confirming the charges. It is therefore irrational and shortsighted for foreign governments to base their relations with a democratically elected government on the basis of what Kenyans have come to rightfully consider a highly political ICC process.

The head of state and his deputy face a challenging task ahead of them. The new leadership must focus on the issues surrounding the post-election violence, including historical grievances, such as land ownership and access to economic opportunities, that were the real cause of the violence. They must also focus on regional inequalities and youth unemployment, both of which have the potential to destabilize the country. Finally, the new leadership has inherited a country that is severely divided along ethnic lines, especially because of the ICC intervention. Kenya cannot become the great nation that it aspires to be with such a fractionalized society. The success of the Kenyatta administration will therefore largely depend on how well it succeeds in unifying Kenyans.

For the Kenyatta administration to succeed in steering Kenya towards a path of economic transformation, it must strengthen Kenya’s relations with her neighbors in East Africa and Africa at large. The administration must also deepen and diversify the country’s strategic relations with the wider international community, especially in respect to development cooperation, trade and investment. However, such relationships should not be at the expense of ceding Kenya’s sovereignty. This is the clear and resounding message that Kenyans sent in voting for Kenyatta and Ruto.

A few weeks before the election, President Barack Obama delivered a pointed message to the people of Kenya in which he made it clear that the United States was not supporting any particular candidate and that his government would work with the leaders that Kenyans elect in a free and fair election. The Kenyans have made this choice and have done so guided by a new constitution that has largely overhauled the country’s institutions. To advance the course of peace and stability in Kenya, it is crucial that the international community, led by President Obama, support Kenyatta and his government as he takes over the leadership of the country. This support should start with an explicit message congratulating the president-elect.

President Obama can demonstrate his commitment to the advancement of democracy in Africa by making an official visit to Kenya as soon as possible. It will be great day for Kenya and Africa when the democratically elected President Kenyatta hosts the leader of the free world in the country of his father’s birth.

Authors

Mwangi S. Kimenyi

Image Source: © Thomas Mukoya / Reuters

Chavez's Death and a Forthcoming Political Battle in Venezuela

Diana Villiers Negroponte — Wed, 06 Mar 2013 00:00:00 -0500

Hugo Chavez's supporters poured into the streets, crying and mourning the loss of a man whom many considered a saint. They may explain the shortages in the stores, the soaring inflation and the failure to deliver government services to Chavez's illness, but the cause of the economic woes began long before December 2012 when Chavez left Venezuela for a hospital in Cuba.

Nicolás Maduro is the chosen heir. As vice president, the constitution empowers him to run the country while elections are organized and held within 30 days. This timeline may well be adjusted; shortening the time to capitalize on the emotional outpouring or lengthening the time due to "turbulencia" (unrest) in the country. Whichever, the opposition party that gathered together for presidential elections in October 2012 will have a hard time winning this election.

Governor Enrique Capriles Radonski is the leader of a coalition, known as MUD (mesa de la unidad democratica). The government's political tactics of last October—limited access to the nationally controlled airways, overwhelming distribution of public goods—will probably be repeated in this forthcoming election. The MUD faces an uphill campaign, and is unlikely to succeed.

However, the economy is in shambles and the blame will be posted firmly on the government's door. Whoever wins the forthcoming presidential election will have to confront an overvalued currency, despite the most recent 32 percent devaluation, the need to reinvest revenues from the state-owned oil company, PDVSA, in maintenance and parts, and 20% inflation. Once the election is over, economic austerity will have to begin. Venezuela's president will have to undertake unpopular, but necessary economic policies. Fortunately, oil continues to flow but much of it is already committed to pay off international creditors. Venezuela may now need the help of the multilateral institutions. Contemptuously treated over the last few years, they are the bankers of last resort.

Authors

Diana Villiers Negroponte

Image Source: Reuters

Chavez Is Dead. Chavismo Lives On.

Ted Piccone — Wed, 06 Mar 2013 00:00:00 -0500

The death of Hugo Chavez will have little short-term impact on Venezuela's current trajectory of "Boliviarian socialism" or on its relations with the United States. His long illness and resounding re-election victory last October gave his cohorts both the time and the legitimacy to project an image of continuity and stability. This, combined with the ongoing social welfare benefits meted out to Chavez's core followers, will ensure a victory for Chavez's anointed successor, Vice President Nicolás Maduro, in snap elections to be held next month. Maduro will have some serious economic challenges to tackle, including rising food prices, the highest inflation rate in the hemisphere and mounting debt. The recent decision to devalue its currency, however, demonstrates that the Chavistas are willing to make some hard decisions. Those are likely to be put on hold, however, until after the next round of elections.

In foreign policy, Maduro is unlikely to veer from Chavez's tested formula of demonizing the United States, at least rhetorically, a tactic he has already deployed in accusing Washington of somehow instigating Chavez's illness and expelling two U.S. military attachés.

The longstanding close relationship between Chavez and the Castros in Havana is likely to continue under new leadership in Venezuela, at least for the short to medium term. Cuba has carefully inserted itself into the transition planning process in Caracas and both sides benefit from continuity in terms of oil subsidies, medical and education services, security and intelligence cooperation and ideological and anti-U.S. solidarity.

Washington should bide its time and quietly wait out what should be a relatively smooth transition to a post-Chavez leadership and then remount its earlier efforts to turn a page away from the antagonism of the Chavez era toward a more pragmatic relationship of mutual interests. If Maduro concludes, however, that he has more to gain parroting the Chavez line of virulent anti-Americanism, it will be difficult to turn the other cheek for another six years.

Authors

Ted Piccone

Image Source: © Carlos Garcia Rawlins / Reuters

Beppe Grillo: Part of the Problem or Part of the Solution for Italy’s Democratic Party?

Ruth H. Santini — Mon, 04 Mar 2013 00:00:00 -0500

Many aspects of the recent Italian general elections surprised observers and commentators, from the extent to which established political parties such as the center-left Democratic Party and the center-right People of Freedom Party lost consensus across the country (receiving respectively 3.5 million and 6.2 million of votes less than in the previous elections), to the unforeseen success of Beppe Grillo’s Five Star Movement. Given the dearth of information and media coverage in the run up to the elections of the Five Star Movement, perhaps most surprising was its success. This movement, which is not a party, was only created at the end of 2009 and, running for the first time at the national level, gathered 8 Million votes, equaling one quarter of the electorate. The Five Star Movement is now the largest single group in the lower house.

The Italian establishment as a whole, from the political class, to the main media groups and the economic lobbies, had disregarded Grillo, and often depicted him as a populist, demagogue, enraged and dangerous political figure, without lending him any credibility. Yet the former comedian has in the past few years effectively transformed himself into a media-savvy political entrepreneur. The refusal to engage with Grillo on the personal level has translated into the inability to engage with the issues his movement has consistently waged for: formulating a law against corruption, reducing the costs of the political establishment, adopting models of environmentally sustainable development, defending public goods, creating a more transparent and more efficient public administration. More than anything else, the movement has battled for the moralization of political and economic life and for the primacy of politics vis-à-vis economics. However, rather than recognizing, both instrumentally but also existentially, the issues where convergence would be desirable in the interest of real reforms, the Democratic Party has often demonized Grillo and refrained from distinguishing him from the movement and its campaigns. The strategy of ignoring the wave of discontent, even when it came coupled with pragmatic proposals to deal with public affairs, has backfired and the Democratic Party is, once again, now in a difficult soul-searching phase.

Rather than seeing in such a protest movement (an anti-establishment, albeit not an anti-political movement) an antidote for post-democracy and its illnesses, the Democratic Party has retrenched. It failed to run an electoral campaign, falsely self-confident that the fear of a Berlusconi come-back or a renewal of painful austerity measures by Mario Monti would suffice to scare voters towards its ranks. The party failed to build any kind of narrative articulating the challenges Italy faces as well as pointing out what the light at the end of the tunnel might look like. It likely did so because it assumed that there is no autonomy for politics vis-à-vis economics and its constraints. The Democratic Party fell in the trap of believing that economic imperatives will dictate the pace of changes and reforms and that Italian political decisions will continue be taken elsewhere, be it Brussels or international financial markets.

In voting for Grillo, a quarter of the electorate has chosen a different approach. One where communication is simple, where proposals are advanced, where new ideas are tested, and where getting people involved, in some embryonic form of liquid democracy, is encouraged. Grillo’s voters feel that sovereignty should be exercised independently from Brussels and financial markets. Their starting point is the necessity to react to the rapid shrinking of the middle class which has accelerated since the global financial crisis hit Italy, exacerbating a stagnating political and economic system. The Five Star Movement aims for a resurgence of conscience and will to engage in political activities, at all levels. And therefore it should be an inspiration for traditional political parties, given its effective style of communication, innovative and truly interactive use of social media, the way in which it selects political personnel from civil society, and the issues it chooses to prioritize, emanating from local demands directly affecting civic and public life.

Grillo’s voters, like many other Italians, point to a desire for ”more” and not less politics, closer to them, which is able to listen rather than preach and lecture. They believe that professional politicians need to earn popular respect on the basis of what they deliver, a somehow revolutionary message in 2013 Italy.

Of course, one should not be fooled and forget that having a non-elected leader of a movement whose non-statute was written by only two people and never put to a vote is also not ideal. Yet while the Five Star logo is the property of Grillo and not the movement itself, one should not confuse the founder with its members.

The Five Star Movement has its contradictions, many of which remain to be discovered and brought to life. But much could be learned from the movement which could help revitalize the way in which politics is conducted in Italy. Italy’s traditional parties should embrace the Five Star Movement’s vitality, accepting and endorsing the idea and practice of citizens regularly expressing their dissent, and using protest and pressures to encourage change from within the party system.

Now the Five Star Movement’s “citizen-deputies” will be torn between two opposing objectives, the desire to realize some of the most pressing issues within their platform, and their goal of serving as an “outsider” watchdog designed to denounce the mistakes and corruption of the existing political elites. It is the tension between these two goals that will test the truly democratic nature of the Movement, and the autonomy of its elected representatives vis-à-vis their non-elected leader, Beppe Grillo.

Authors

Ruth H. Santini

Publication: Transatlantic Academy

The Forecast for Egyptian Politics: Overcast

H.A. Hellyer — Mon, 04 Mar 2013 15:33:00 -0500

Editor's Note: In this article, first published in the Middle East Institute of the National University of Singapore's Insight series, H.A. Hellyer examines Egypt's political landscape in advance of the country's upcoming parliamentary elections.

As Egypt’s April parliamentary elections draw closer, many analysts are being asked for their outlook and predictions for the future of this critical Arab country. Initial observations from the more seasoned of Egypt watchers point to overcast skies. The state of being overcast, as defined by the World Meteorological Organization, occurs when clouds obscure all of the heavens. As commentators attempt to make sense of the murky current political situation, it is appropriate to first speak of the sky before the clouds began to cover it.

The sky was clearest at the beginning of Egypt’s new phase. Those first 18 days in Tahrir Square beginning on 25 January 2011 were astounding, particularly in regard to how individual citizens and groups of citizens materialized and changed the course of political history. One of the most famous figures of the uprisings was Emad Effat, a scholar from al-Azhar, who is known for having said, “The first time I walked into Tahrir Square was the first time I saw Egypt.” The possibility of a united Egypt is what brought the crowds to Tahrir day after day, rather than Mubarak per se.

Yet that possibility of unification, now two years on, seems a naïve wish. Many forces who were in Tahrir, as well as those who did not come, have broken off from one another.

The most organized political body was—and is—the Muslim Brotherhood. Soon after Mubarak was forced out of power in February 2011, it looked as if the group would be judicious in how it played the political game. It would not run for more than a minority of the parliamentary seats, it said, and it would not propose a presidential candidate. Essentially, it would continue along a path of gradual change as opposed to a power grab.

It must be said that the Brotherhood enjoyed a great deal of goodwill from the populace after a long history of persecution by the Mubarak regime. But it then decided to run for not 30 percent but 50 percent of parliament, and it separated from other forces that had initially supported the overthrow of Mubarak, instead establishing its own special relationship with the military. It ran not one, but two, presidential candidates. One, Muhammad Morsi, who went up against Ahmed Shafik, Mubarak’s last prime minister, barely won.

In November 2012, Morsi managed to destroy any goodwill that remained outside of close Brotherhood allies via his constitutional declaration, which placed presidential decisions beyond judicial review. His rush through the constitution—a document whose flaws were criticized by many observers inside and outside of Egypt —also did not go unmissed.

The Brotherhood knows that voter turnout for the upcoming parliamentary elections is likely to be low. Indeed, it was incredibly low for the December 2012 constitutional referendum—less than a third of registered voters. For the parliamentary elections, the turnout is likely to be around the same amount, if not less. Such a situation will benefit the Brotherhood because the group’s core supporters are likely to vote.

However, a narrow victory does not mean success for the Brotherhood overall. Morsi has the mandate of someone who only barely won against a member of the old regime. This position, which lacks the consensus that would expand his mandate, creates difficulty for him as he seeks to change the institutions of the state. While Morsi may hold his presidency together, and while the Brotherhood’s political wing, the Freedom and Justice Party, may control parliament, the power they have will be less than what they need to make any real changes to the system.

As for the military, it is clear that it is not interested in ruling Egypt. On the contrary, the reason Muhammad Tantawi and Sami Annan were forced out in August 2012 is likely due precisely to the military’s broad desire not to be bogged down with governance issues (unlike Tantawi and Annan). And the military doesn’t need to rule, as it by and large received everything it desired in the last constitutional arrangement, including independence from oversight of its budget, its own courts, and control over defense and war. The military will only intervene if it feels that its interests are threatened by instability in the country—such as what occurred with the downfall of Mubarak. If it feels that such a situation is again taking place, it will probably act. However, with a Brotherhood government in charge, intervention could come at quite a cost, as it would likely be met with a forceful and perhaps violent rebuttal from the forces that support the government.

In the parliamentary elections of 2012, the major Salafi political party, Hizb al-Nour, performed well, achieving a fifth of the seats. It is doubtful that al-Nour will repeat such success. The party’s leadership is now split; in fact, most of its leadership departed and started another party, al-Watan. There are also a myriad of Salafi parties now, so the vote will be split even further among them. Finally, the Brotherhood will likely fight even harder than before for seats at the expense of the Salafi parties.

The other parliamentary political force is not particularly well defined but is generally described as the “liberals” or the “left.” Regardless of these labels—which are labels of identity rather than ideas—this group performed rather poorly in the previous parliamentary elections. These players are now generally described as the “political opposition” and are identified with the National Salvation Front (NSF), headed by Muhammad ElBaradei—though there are still key opposition forces, such as Abdel Moneim Aboul Fotouh’s Strong Egypt Party, that are not part of the NSF.

The National Salvation Front has become the group that misses no opportunity to miss an opportunity. The forces that comprise it could have chosen a single candidate in the presidential elections and would likely have won against Morsi and Shafik. They did not; they split the vote between Aboul Fotouh, Hamdeen Sabahi, and Amr Moussa. When the constitutional referendum came about, they could have organized immediately for a no vote. They did not; rather, they only officially pushed for a no vote approximately 48 hours beforehand. They also could have used the huge protests and disaffection against the constitution to deepen their base across the country; they did not. To this day, the NSF is still unknown, or is not trusted, by a majority of Egyptians.

Hence, while it is clear that the country has lost a great deal of respect for the Muslim Brotherhood, it is equally clear that most Egyptians have a lack of regard for the NSF. Indeed, as mentioned, neither the Brotherhood nor the NSF could mobilize a majority of the population for or against the constitutional referendum. The NSF’s latest move, in which it called for the downfall of the regime and trials for Morsi and his interior minister, was a politically bizarre but also embarrassing move—because virtually no one paid any attention to it at all. The NSF has declared that it will boycott the upcoming elections, potentially rendering the group even more marginal.

This discussion now leaves us with three other political forces to consider. The first are the revolutionaries, for lack of a better word; they are those that regardless of their political affiliation have been agitating for the success of the revolution’s goals of social justice, freedom, and dignity. They themselves have become divided into different groups, as while many have pushed for deep engagement with the political arena, others have become disillusioned. A number of these revolutionaries ironically operate within the second level of leadership in many political forces, such as the Dostour Party; as such, we may see their agendas come to fruition in the future. But for the moment, they are not a political force to be reckoned with.

The second force consists of the “remnants” of the Mubarak regime, which the Brotherhood often casts as the enemy that is holding it back from progress. While the deep state is not strong in terms of political organization, within the institutions of the state there are forces that still remain aligned in thought, if not in leadership, with the former regime. Many—not simply the Brotherhood—are concerned. The reality is that these remnants can only be dealt with through a consensus of political forces that provides the government with a mandate to enact serious restructuring and reform; otherwise, they will continue.

The third force is everyone else. People describe this group as “Hizb al-Kanaba,” or “The Party of the Couch.” Up until relatively recently, this portion of the country, which is probably the majority, was not deeply politicized one way or the other. These citizens were cautious about the revolution but supported the overthrow of Mubarak. Many of them are still at home, though some have opted to go into the streets as they have grown more concerned about the dominance of the Brotherhood. Will they decide to come out for the parliamentary elections, and will that make a difference? No one knows yet for sure—but if they do, they could cause quite an upset.

Thus Egypt’s political future is very uncertain, and too many have tried to predict it to no avail. The reality is that we are still very much in a time of transition and flux. What is clear, nevertheless, is that Egypt remains incredibly important and that the region’s—as well as the world’s—powers cannot afford to let it slip. In the meantime, the situation is likely to get more difficult. We must wait to see where and when the clouds will part.

Authors

H.A. Hellyer

Publication: Middle East Institute, National University of Singapore

Why Europe Should Not Worry About Italy

Ruth H. Santini and Francesco Giumelli — Mon, 04 Mar 2013 14:54:00 -0500

Contrary to what many think, the sick man of Europe is Europe itself, not Italy.

While seemingly a threat to EU stability and at the heart of possible contagion, Italy is historically used to navigating through uncertainty, short-lived governments and catastrophic economic forecasts.

Yet, the world continues to wonder where the Belpaese is heading to with a divided center-left, a never ending dawn of Berlusconi’s political influence, and with the impressive rise of the protest-driven party of a former comedian.

Undoubtedly, Italy’s elections have produced an uncertain political situation, but the world should be aware by now that uncertainty is the norm, not the exception for Italy.

Italy’s case has time and again struck foreign observers. How is it possible that such a dysfunctional system, ineffective institutions, widespread corruption and generalised limited care for rules would allow the country to become the eighth economy worldwide?

Italy has developed in a constant state of emergency, short-term planning and flexible interpretation of laws. However inexplicable, this is the way it works in the peninsula.

There are three elements that should reassure the markets and the international community that Italy will emerge from this crisis once again.

The first element is the strength of two key characteristic, which allow for the continuity of the country, namely its bureaucracy and its small and medium enterprises. Let’s try to understand why.

Ironically, Italy’s national bureaucracy has ensured the continuity of the country’s central authority in the past 60 years.

With a new government every 11 months, bureaucracy has helped to maintain the system together by ensuring that the high political turnover did not affect the institutional continuity of government. Moreover, despite being harshly struck by the economic crisis, Italy’s small and medium enterprises, which account for 70 percent of Italian GDP, continue to represent the backbone of the Italian economic and social structure.

Second, the political rise of Beppe Grillo, the comedian-politician-entrepreneur who has shaken Europe’s economic and political certainties, should not be considered as a more destabilising political figure - if not in his personal style - than French leader Francois Hollande or British PM David Cameron.

Grillo’s political programme is composed of several common sense points, many of which have been advanced by other political parties as well and would only help to strengthen the bond between the citizens and the state.

Other points are tailored to address popular concerns fueled by the growing inequalities and resentment towards EU policies. Grillo calls for an increase of taxes on the wealthy and has questioned, under the current circumstances and EU obligations, Italy's membership of the euro.

He nevertheless re-affirmed the importance of building a truly united European Union and sees the future of Italy firmly anchored within a fairer and more democratic Europe.

To what extent is this different from Hollande’s 75 percent wealth tax or Cameron’s proposal to have a referendum on whether the UK should remain in the EU?

Grillo’s agenda is not scarier than theirs, and his 25 percent of the votes does not grant him with the majority.

Finally, despite enormous limits in their leadership and their shared responsibility for lack of reforms in the past years, the Democratic Party (PD) and the People of Freedom Party (PdL) reacted to the deadlock reached by the country in late 2011 and jointly supported Mario Monti’s technocratic government.

This experience, mainly aimed at reassuring international financial markets about the solidity of Italy’s budget and institutions, could be repeated if conditions in the eurozone require it.

Italy indeed is a difficult beast to understand – let alone tame - for the other European countries, but it is an anchor, not an iceberg, for the European integration process.

Obviously, Italy’s economic troubles should not be underestimated, but they should not raise greater concerns than those in Spain and France.

Italy will deal with its domestic uncertainties. Europeans should be more concerned about the lack of progress, beyond a useful and yet scarcely revolutionary banking union, of an EU austerity package which has failed to be coupled with the necessary social and economic growth measures necessary to jumpstart renewed trust in European institutions. The greatest dangers for the EU come from this, not Italian party politics.

Authors

Ruth H. Santini
Francesco Giumelli

Publication: EUobserver

Italy’s Post-Election Chaos Isn’t What You Think

Carlo Bastasin — Fri, 01 Mar 2013 00:00:00 -0500

No parliament, no government, no president of the republic. And now not even a pope. The situation in Italy resembles a house of cards in a perfect storm.

It’s not just a matter of politicians, scenarios and furniture flying all over the place until the storm subsides. The problem is deeper than that. The new Italian Parliament has three minorities that are unable to form a majority. It is a power game in which Pier Luigi Bersani, the electoral winner, is the political loser, and the electoral losers, former Prime Minister Silvio Berlusconi and ex-comic Beppe Grillo, are the political winners.

Consider this. Almost half of those Italians who cast their ballots for one of the traditional parties switched their vote this time. You think Americans are fed up with Congress? In Italy, trust in the government stands at 5 percent, and trust in Parliament at 8 percent. The rate of abstentions is high. The party holding the majority of seats in the Chamber of Deputies -- 54 percent, as required by law -- won the support of just 20 percent of the electorate.

On top of all this, the timeline to form a new government is tight. The Parliament convenes for the first time March 15. Amid all the confusion, the parties must agree within 10 days on the leaders of the Chamber of Deputies and the Senate. Then they have to nominate a prime minister, who must form a government and take an oath in front of the president of the republic. All this before April 15, when the Parliament meets to elect a new president of the republic.

Against Everything

So I can sympathize with those who despair and say Italy has chosen nihilism, or who say, in effect, that Italians voted against everything -- including Europe and austerity, which they had come to believe in before the debt crisis. I understand why people are saying Italy could bring down the whole euro project. But I disagree with them.

Italians remain pro-European, and fewer people than you would suppose are seriously thinking of relinquishing either the euro or the economic-policy commitments that come with it.

Discontent is focused, above all, on taxes. They are among the highest in the euro area. Taxes on business are the highest of any euro member, and they are severely hurting a weakened economy. Italians see excessive taxes mainly as the consequence of bad political management. It’s not that they object to Europe and austerity. Rather, they are angry about the tax increases introduced under the banner of Europe and austerity.

If austerity means fiscal discipline, Italians actually want more of it. This is why New York Times columnist Paul Krugman is wrong to say Italians shunned an intelligent and credible man such as Prime Minister Mario Monti because he was “the proconsul installed by Germany to enforce fiscal austerity on an already ailing economy.”

In Italy’s case, however, the argument about fiscal stimulus just misses the point. A bigger budget deficit wouldn’t do much to stimulate demand, because the real problem is the breakdown in Italy’s supply of credit. From the beginning of the euro crisis three years ago, Italy has seen a faster shrinkage in total credit supply than most euro-area countries, as foreign banks have repatriated their loans. This widespread lack of credit has crushed the private economy. Businesses and households can’t get loans and are cutting investments and consumption at an unprecedented rate.

Effective Answers

Reviving the market for credit is the first job. This would be far more effective than delivering a new fiscal stimulus. In fact, continued budget discipline is vital in ending the credit crunch. The new government must negotiate a deal with the European Union and with the European Central Bank, so that the ECB can support the Italian banks. But this can’t happen unless the ECB is sure that it has a reliable partner in the Italian state and that Italy will remain as fiscally stable as possible.

Italians understand this, and so the political crisis may be a little easier to resolve than many think. Under the pressure of markets, Italian parties are likely to close ranks behind another technical prime minister, just as they did in November 2011 behind Monti. They will nominate someone familiar with financial issues -- some high official at the Bank of Italy, or maybe even Monti himself. They will call it an “institutional government” and ask it to make the political system more honest and functional, reining in the anger and recrimination of the citizens.

It’s a strange way to run a country -- but don’t write off Italy.

Authors

Carlo Bastasin

Publication: Bloomberg

Italy's Election and the Euro Crisis

Domenico Lombardi — Wed, 27 Feb 2013 00:00:00 -0500

Italy’s election on Monday left the country in political chaos with no clear solution for managing its crippling fiscal crisis. Center-left party leader Pier Luigi Bersani is claiming the top post but will lack majority control in Parliament. Without the legislative body’s full support, Bersani’s push for continued austerity measures could falter. Senior Fellow Domenico Lombardi say this uncertainty is deeply troubling for the EU leadership.

Video

Italy's Election and the Euro Crisis

Authors

Domenico Lombardi

Italy’s Election Results Are Bad News for All of Us

Douglas J. Elliott — Tue, 26 Feb 2013 09:30:00 -0500

Let me be blunt. The Italian election result is a triumph for fantasy and irresponsibility. It is quite bad news and no one knows what will happen next. It is possible to lay out several potential outcomes, with various degrees of damage to Italy, Europe, and the U.S. We can even handicap the odds of the outcomes, but we simply cannot know what will happen in this unprecedented situation.

The best outcome would have been a majority in the Chamber of Deputies for the Democratic Party and the partners in its electoral coalition and a majority in the Senate when their seats were combined with those of the party built around the out-going Prime Minister, Mario Monti. Both groupings have real flaws, but they are at least serious about proposing solutions for Italy that might actually work and are in line with the advice of their key European partners and, in most cases, with the advice of academics and neutral analysts.

Instead, Italians predominantly voted against pain and austerity, while ignoring the lack of reality, and sometimes outright irresponsibility, of the parties they supported. It is hard to know whether to be more worried by the quarter of the vote that went to a new protest party formed by an Italian comic turned politician named Beppe Grillo, with its incoherent policies and lack of serious answers, or by the resurgence of Silvio Berlusconi. Berlusconi is at least a smart politician with a history as a leader, but he became a laughing stock in his disastrous last term as prime minister and he campaigned with promises of magic solutions that are clearly not realistic. He is held in contempt by many of the European leaders with whom the Italian government will have to work, which is crucial given the clear necessity of continued support from the stronger European nations.

The result of the election is that the Democratic party and its electoral coalition have a working majority in the Chamber of Deputies, but only because the current election law awards a bonus to guarantee 54% of the seats to the winner of the most votes, even if they receive less than a third of the actual votes, as was the case last night. The problem is that the law works differently for the Senate, which has co-equal powers with the Chamber. Here the result was a disaster. No one came close to a majority in the Senate. It would take a post-election coalition of two of the three major groupings to produce a majority and all of those potential coalitions are problematic. So what are the possibilities?

A grand coalition of the Democratic Party and Berlusconi. The likeliest result is probably that Berlusconi cuts a deal with the Democratic Party to form an unstable coalition government. (Monti’s group might be added, but its votes would not be needed and Berlusconi may not allow its inclusion.) It would be unstable despite holding a clear majority of seats in both houses, because the views and interests of Berlusconi and the Center-Left only partially overlap. Further, the Democratic Party is fairly committed to continuing on the economic path agreed with its European partners, while Berlusconi campaigned on the idea of rejecting that path. Finding a set of policies that both groups could support and that would not trigger a rupture with Germany and Brussels, spooking the markets, will be difficult. It will not be forgotten in Germany, which is facing its own election in the autumn, that Berlusconi demonized Merkel and Germany.

I nonetheless think this is the likeliest outcome because it could be less bad than the other choices and Berlusconi and the other politicians are pragmatists. For Berlusconi, it would be the opportunity to be back as part of the government, representing a triumphant resurgence for a man who was written off as dead politically. More importantly, it puts him in a position to protect his business and personal interests from the threat of further attack, including the ongoing criminal investigations. Berlusconi is very vulnerable when out of power, so being back has great attractions for him beyond all the usual reasons that politicians want power. It should be noted that he would not even have to take an office, but could operate behind the scenes through other members of his coalition.

For the Democratic party, it would let them stave off dangerous new elections and ensure that their leader, Bersani, would be prime minister. Their hope would be that surviving as a government for a year or so might allow enough time for tempers to cool among the protest voters and for the economic outlook to turn at least a little cheerier, improving their chances in any subsequent election. They might be able to obtain the agreement of Berlusconi to their key policy goals, as he has a very strong pragmatic streak.

New elections in a few months. On the other hand, the gaps in views between Berlusconi and the Democratic party may prove too great to bridge. The chances of a different coalition being able to form a government are very low, so an inability to form a Berlusconi-Democratic party coalition would very likely force new elections in the near term. It is also possible that one side or the other believes that a new election would work to their advantage and therefore would force one. The President of the Republic, a largely non-political figure in the Italian system, would arrange an interim government to hold the country together for a few months until a new election takes place. There would be attempts to change the election law to improve the chances of a stable government the next time around. It is unclear whether it would be possible to gain a broad enough consensus to pull this off, however, so something close to the current system might stay in place.

Scenario A. If we are lucky, we might get a kind of repeat of the experience of last year’s Greek elections, where the second election produced a somewhat stable government of relatively responsible parties. The reactions of the markets and the rest of the world to Italy’s election may be sufficient to scare some sense back into the country. Enough of those who did not vote, or voted out of anger, may switch and vote for the Democratic party or for Monti’s group, giving a coalition of those two groupings a majority in both houses of parliament. This would likely still not produce a strong government, but it could be good enough to get by for a critical year or two. A couple of percentage point swing in the Senate votes could produce this relatively benign result.

Scenario B. The nightmare is that Grillo’s party could be bolstered by the failure of the traditional politicians to pull together a coalition. Enough Italians may be ready for a radical change, and a rejection of European pressure, that Grillo would get the nod the second time around. This seems to me to be a less likely result, as it requires a significant further swing to an untested party, combined with a fairly even breakdown of the vote between Berlusconi, the Democratic party, and Monti’s grouping that gives neither Berlusconi nor a Democratic party-Monti coalition enough votes. It is quite possible that Monti would withdraw and implicitly or explicitly throw his support behind the Democratic party coalition, as the lesser of the evils. This could ensure a plurality for that grouping, even if only half of his voters followed his lead.

However, it is easily conceivable that Grillo could win a plurality in the Chamber of Deputies and thereby 54% of the seats, even if he is far from a majority of seats in the Senate. This would produce an even more chaotic outcome than yesterday’s results, with the possibility of a third election to follow.

Scenario C. It is also conceivable that Berlusconi would ride back to power in a new election, although this is the least likely of the outcomes. He could combine the political advantages of his attacks on European-imposed austerity with an image as the one politician strong enough to pull together a working government. However, he is not likely to pick up many Grillo voters, who seem quite disgusted with the existing politicians, nor many of those who voted for the Democratic party. He might pick up some Monti voters who are not comfortable voting for the Center-Left, however, and he might pick up some of the abstainers. Berlusconi came close to winning a plurality of votes for the Chamber, so it is certainly possible that Italy’s greatest living campaigner might pull off an even bigger victory next time.

A coalition with Grillo. A coalition of Grillo with the Democratic party grouping would have a majority of seats in the Chamber and the Senate. This might appear plausible, since Grillo seems to have gained most of his support from the left of the political spectrum. However, Grillo’s support is for a rejection of the traditional politicians, including the Democratic party, and for a rejection of the accomodations being made to the rest of Europe, and even for a potential withdrawal from the Euro.

Further, Grillo has come close enough to victory to taste it and is more likely to prefer to gamble on another round of elections rather than risk losing much of his support by being part of a government that will inevitably disappoint many of his followers. Protest parties often lose much of their base if they join in an actual government and thereby take on responsibility for real world decisions.

The prospects for a Berlusconi-Grillo government do not appear much better. Grillo’s voters are not natural allies of Berlusconi. For his part, Berlusconi would find it very hard to fit Grillo’s party into a government that he led. He would either have to follow through on rhetoric that would immediately pit him against the rest of Europe and against the markets, likely bringing his government down in short order, or would face a risk of losing Grillo’s support in the near-term.

Conclusions

In the end, we know we are facing a period of serious uncertainty for Italy, for Europe, and in consequence, for the U.S. Europe will very likely hold together, but an increased probability of a truly bad outcome could depress economic activity across the world, as businesses and families hold off on investments in the future and on spending while they wait for the uncertainty to be worked through.

Authors

Douglas J. Elliott