Berlusconi Is Ineligible

In an article in Sole-24 Ore of Sunday 26 May 2013 (Ineleggibilità e Democrazia dei Partiti: Le ragioni legali che i saggi non svelano) Giuliano Amato adds his voice to those such as Valerio Onida, Luciano Violante, and now no less than the new leader of the PD, Gugliemo Epifani, who oppose the notion of Silvio Berlusconi's non-elegibility to Parliament, alleged by many on the ground of his conflict of interest as beneficiary of economically significant TV concessions by the State. 

The eminent jurist and statesman rejects the argument used by others that, since the relevant legislation has not been invoked for twenty years, it cannot begin to be applied now. It would be like arguing, he writes, that, if a serial killer has not been condemned for his first six murders, he should be acquitted once he is caught for his seventh murder. The trouble, Amato argues, is that the Electoral law of 1957, which is still in force, is not as clear-cut as the law on murder.  That law declares ineligible, among others, "those who on their own account [in proprio] or as legal representatives of companies or enterprises are involved with the State by concessions or administrative authorisations of considerable economic significance [in qualità di rappresentanti legali di società o di imprese risultino vincolati con lo Stato per concessioni o autorizzazioni amministrative di notevole entità economica]...".  Berlusconi, argues Amato - as has Valerio Onida, a former President of the Constitutional Court and one of Napolitano's "wise Men" - is neither the legal representative of such a company, nor a direct concessionary, even though he is the uncontested main shareholder, the "boss, l`ideatore e il regista".  According to the Italian Constitution, norms that limit any rights cannot be interpreted extensively, for in that case the hostility towards laws ad personam would be replaced by a peculiar predilection for interpretations ad personam.  Therefore, Amato concludes, Parliament was right in applying , on purely legal and not on political grounds, a literal interpretation of the law. If main shareholders of concessionary companies were intended to be ineligible an amendment to that effect should have been approved beforehand; many such amendments were presented over the years but, for better or worse, were never approved. 

Amato explains that in his approach he is giving voice to his own "jurist's soul".  By the same token, let me voice my own "economist's soul" on this matter. 

A shareholder holding a 100% share in a company that is granted an economically significant State concession is literally undistinguishable to all intents and purposes from a person holding such a concession on his own account.  The application of inelegibility to a 100% shareholder in such a company would not violate either the spirit or the letter of the law.

At the other end of the range of conflicts of interest specified by the law, a legal representative of a company that enjoys the same state concession will have a significantly reduced interest in that concession, with respect to a 100% shareholder, and therefore a reduced conflict of interest.  In fact such a legal representative would benefit from the concession only if, and to the extent that, his compensation is enhanced by the company profitability contributed by the concession. This could happen, for instance, through bonuses related to company performance, or through the allocation of company shares and/or options on favourable terms.  Let us say that the legal representative has a conflict of interest with the State equivalent to that of a shareholder holding x% of company shares, where that x% can and normally does represent a minor shareholding fraction in the company in question.

The position of a major shareholder in a company that is granted a significant State concession is clearly intermediate between that of a concessionary on his own account (or of a 100% shareholder in a concessionary company) and that of a legal representative whose benefit is a small fraction of the concession profitability.  Therefore the ineligibility of a major shareholder in a concessionary company is not in any sense an "extensive interpretation" of a rule to a different category of subjects for which that rule was originally intended, violating the Constitution, but simply an "inclusive interpretation" that applies the same rule not only to the extreme cases contemplated by the law but also to cases intermediate between the extremes. As if the law punishing serial murder and maiming by shooting was also applied to serial murder by strangulation.

Some might regard my argument as casuistic, indeed jesuitical. Anybody who might think so should consider that the same contention could be raised against a literal interpretation of the rule that glosses over the macroscopic conflict of interest that Silvio Berlusconi has enjoyed for the last twenty years.

The European Hermaphrodite

In an interview to Repubblica‘s financial supplement of 15 February Giuliano Amato proposes to “turn the current European crisis into an opportunity – by founding a European Monetary Fund”. Giuliano Amato was twice Italian Premier in 1992-93 and 2000-01, four times Treasury Minister, once Minister for Institutional Reform and Minister of the Interior; he is a distinguished academic, Professor of Constitutional Law, and has just been appointed Senior Advisor for Italy by Deutsche Bank. His generous proposal has vision and must be taken seriously.

Regional solutions are a step forward when global solutions are not there, but conditional financial assistance to governments experiencing imbalances in their external accounts or public finances is already being provided by the IMF. All EU and EMU members are both shareholders and clients of the IMF in any case. Giuliano Amato says “Those who are keen on the europeanisation of economies feel that something is lost if we are not capable of resolving our own problems ourselves”. Why does he endorse these views? If we set up a European Monetary Fund, should we then want to set up a European Health Organisation next to the WHO, a European Trade Organisation next to the WTO, a Bank of European Settlements next to the BIS?

Giuliano Amato does not regard the European Union as simply another regional organization, albeit of considerable scale. More than once he has defined the EU as a “hermaphrodite”, combining lasting traits of international organization with traits that used to belong exclusively to states. Therefore he believes that it was a mistake to build the single currency with a mere coordination of national economic and fiscal policy. A European Monetary Fund would give the single currency the instruments necessary to offset asymmetric shocks within the European Union. However, even someone sharing his hermaphrodite characterization of the Union might draw from it the diametrically opposite conclusion - that it should evolve more in the direction of a federal or unitary state than in that of a regional grouping (with its own regional Monetary Fund).

Apart from this, the proposal for a European Monetary Fund presumes that the operational criteria of this Fund would be different from those of the IMF, otherwise why bother? But if the EMF criteria were more severe than those of the IMF the Union cannot prevent its own members from applying for IMF assistance; if EMF conditions were less severe the Union might first try and negotiate with the IMF less stringent conditionality in general at least for its own members. It would only be worth setting up an EMF if, say, its conditions were more grounded in social and political consensus, more geared to what is left of the European Social Model, less US-centered and US-inspired.

Except that, in the financial crisis of 2008-2009 the IMF has been capable of providing the necessary leadership for implementing a global fiscal and monetary intervention against the crisis, while European institutions limped behind their various deflationary regional rules and traditional constraints.

Imagine a small group of tennis players (Giuliano Amato is a very fine tennis player), all fee-paying members and shareholders of a tennis club that works satisfactorily, who propose to found a second, exclusive club for the provision of tennis facilities identical to those already provided by the pre-existing club, simply to be able to call it their own. There would be no point - unless the game was played under different rules, but this possibility has not yet been illustrated.