Enrico Letta's task domestically is not an easy one - and he faces the danger that his government will be short-lived
Angela Merkel, whose austerity-driven stewardship of the debt crisis in the eurozone sealed the fate of two centre-left leaders in Europe – José Luís Rodríguez Zapatero and George Papandreou – wished Enrico Letta, the new boy on the European block, a "truly lucky hand". He will need it. Italy's latest prime minister went to Berlin on Tuesday with a heartfelt message: that Europe faced a crisis of legitimacy at the very moment when its citizens needed it the most.
No one looking at the latest opinion polls could disagree with him, but the German chancellor stuck to the script that budget cuts and growth were not contradictory. She should heed Letta's plea to give Italy room for manoeuvre to deliver growth. By this he could mean a relaxation of the deficit targets, which are just under the 3% of GDP ceiling. Size alone dictates respect. Being the eurozone's third-largest economy, Italy has got more chance of being listened to than Greece or Spain. Mr Letta's task domestically is not an easy one. He heads what the Germans would call a grand coalition, dominated by Italy's two biggest mainstream parties – Pier Luigi Bersani's Democratic party (PD) and Silvio Berlusconi's People of Freedom (PdL) – and Mario Monti's Civic Choice. Left and right do not exert equal pressure on a centre-left premier.
If Mr Letta calculates he can make concessions on his own party's agenda, the same is not true about the compromises he will demand from the PdL. He knows that Mr Berlusconi, who is not in cabinet but exerts a big influence over it, will pull the plug on the government as soon as he knows he has the votes. Mr Letta should at least be well-informed of Mr Berlusconi's intentions. His uncle, Gianni Letta, is one of Mr Berlusconi's trusted advisers.
Mr Letta has started well – in Mr Berlusconi's eyes – by suspending a planned increase in sales tax and a housing levy. But unlike Mr Berlusconi, he knows that growth will not be stimulated by tax cuts alone. And so he has to find other means, while filling a budget hole between €10bn and €12bn. Both left and right have a vested interest in blocking reforms, such as streamlining Italy's parliamentary model and abolishing the provinces. Much depends on how disciplined his own party is. Splits in it could feed Mr Berlusconi's own calculations on when next to strike.
Mr Letta starts with some advantages. Borrowing costs have fallen to their lowest levels in three years. But France, the second stop on his European tour, is an object lesson in what to avoid. Mr Hollande is suffering now from the wildly optimistic growth assumptions he made before his election. Mr Letta will have to have his feet more firmly on the ground. The danger remains that, through no fault of his own, his government is short-lived.
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