Politics of Austerity in Italy and Greece

Italy formed a rare unity government last weekend, which was confirmed by both houses of Parliament this week. Today in an unsigned editorial, "Italy's New Government," the New York Times weighs in skeptically about Prime Minister Enrico Letta's possibility for success:

Given the muddled election results in February and the unwillingness of the third-place finisher, Beppe Grillo’s Five Star Movement, to make any coalition deals, Mr. Letta has assembled the only possible majority. But it may not hold together long enough to enact the ambitious 18-month program Mr. Letta proposed this week. 

That agenda itself pulls in different, and often conflicting, directions. It calls for tax relief and an easing of austerity, but it also pledges continued commitment to severe European Union budget targets. It calls for economic reforms, which will be difficult to carry out in a time of recession and high unemployment, especially since Mr. Letta’s governing coalition depends on the votes of political parties that have blocked such reforms in the past. And it calls for electoral and political changes, but it must depend on the beneficiaries of the old, unreformed system to make them law. To pull Italy out of its economic and political crisis, Mr. Letta will have to change minds in Rome as well as Berlin.

In Greece, which has the highest unemployment in the EU at 27%, there was a general strike on May Day. Niki Kitsantonis and Alan Cowell report today in "Greeks Strike Against Austerity as World Observes Labor Day" that

The strike came just a few days after officials in the euro zone approved the release of 2.8 billion euros, or $3.7 billion, in rescue financing for Greece after Parliament ratified a new raft of economic reforms, including a politically contentious decision to lay off 15,000 civil servants by the end of next year. 

The financing had been due in March but was delayed after talks between the government and officials of Greece’s troika of foreign lenders — the European Commission, the European Central Bank and the International Monetary Fund — broke down over the troika’s demands for the civil service cuts. 

The country’s governing coalition, which has come under strain as it pushes its painful austerity agenda, must now enforce agreed-upon measures, laying off 2,000 civil servants by the end of June and pushing forward a stalled project to privatize state assets. It faces strong opposition by its main political rival, the leftist party Syriza, which wants Greece to renege on its loan agreement with the troika and is neck and neck in opinion polls with the conservative New Democracy, the head of the shaky three-party coalition. 

The European Union and the International Monetary Fund have extended to Greece two foreign bailouts worth $317 billion over the past three years, meting out the aid in installments in exchange for austerity measures and overhauls.

Greece is further along in its destructive obeisance to austerity than Italy but the two countries have much in common: unity governments clinging for survival to the wreckage of a discredited status quo while a dissenting political formation -- Syriza in Greece; Five Star Movement in Italy -- gathers force. The Times Editorial Board's skepticism is well placed.