09/09/2014 02:44 pm ET Updated Nov 09, 2014

Matteo Renzi Makes Reform Popular in Italy


CERNOBBIO, Italy -- Entertainment is never lacking on the shores of the Como Lake in the beginning of September, when the Italian and European intelligentsia gathers at the Ambrosetti Forum, a sort of Davos that is more European but equally obsessed with participant status. So much so that I counted at least five different entrance colors, each one with strict do's and don'ts. Look under 40 at your own risk.

The focus this year was, unsurprisingly, structural reform in Europe. And as usual, this immediately implies an admiration for Germany and derision for Italy. It is sadly usual fare to see in Cernobbio the incongruence of the lake's beauty with the complaints of Italian businessmen. In that sense, this year was no exception; and yet, there were some subtle but important changes.

Spain is swiftly turning into "the new Germany"; for Europeans from Berlin to Rome it has become the best example of how to reform a crisis nation. The latest employment and growth data confirm this view, in spite of the still sky-high general unemployment numbers. It is a welcome change for an elite that spent five years only looking at Berlin.

But perhaps what was most striking thing this year was who decided not to make an appearance at Como: Italian Prime Minister Matteo Renzi. Although some of his key ministers were there, Renzi did not show. "In Cernobbio there is chiacchiera -- an all too Italian term that means gossip without end," he was quoted as saying while opening a factory. "Here we do [end]."

Cheekily, the Italian premier complained about the "gossip rather than work" in Cernobbio. The conference, he said, welcomed Alexis Tsipras, leader of the Greek extreme left, and Gianroberto Casaleggio, the dark monk in Beppe Grillo's anti-everything Five Star Movement. While Tsipras did what he could to sound more reasonable than his policies actually are, Casalleggio's presence betrays a sense of desperation within Grillo's authoritarian ranks. So the extreme politicians show up to the establishment gathering, but the prime minister did not.

What the hard left would like to do is be more like Renzi who -- there is little doubt left -- is the most talented politician in Italy today, perhaps in all of Europe. The left may have some youth, but it does not have a viable and positive vision of the future to sell. There is no lasting politics without that.

Although Renzi has never led his party in national elections, his 41 percent of the vote in May's European elections guaranteed the High Representative for Foreign Affairs position for his foreign minister, Federica Mogherini. Let us hope that she is joined by another "Southern" voice, we would hope, at the Eurogroup. Not since the political revolution of Silvio Berlusconi in the early 1990s has anyone in Italy gotten those kinds of support numbers.

So even if it hurt egos in Como, the strategy of missing the party made good politics: it brings the prime minister closer to the Italian electorate, which supports him by a staggering 65 percent. It also moves his government away from the idea of the "salotto" -- another very Italian term that refers to the closed-door gatherings where key decisions are made undemocratically. This matters most because this is a government set on passing painful reforms, which necessitate legitimacy to take hold.

The Italian political reform that will greatly simplify the parliamentary process has already begun. There is now a hopeful judicial reform on the table, a key issue to improve Italy's standing as a place to do business. If it takes a 1,000 days to enforce a contract, who would ever set up shop in Italy if they had a choice? Judicial inefficiency is the stuff of dreams of those who believe Italy belongs only in the past -- but change is coming.

Europe today stands between the Scylla of deflation and the Charybdis of a populism filled with rancor but devoid of content and proposals. Italian reform is coming at its own pace, but reforms are there and, even more importantly, they have popular backing. The same cannot be said of France, Berlin's perennial preoccupation.

As the new French Prime Minister Manuel Valls appears to understand, Renzi's strategy is about pushing reforms from political power rather than "impositions" from Brussels or the Troika (IMF, Commission, and ECB as observer), an organization perhaps more hated in Italy than in those countries where it was deployed to oversee bailouts.

There is a need to sell the change Europe needs -- not the talk, but the real legal and social change -- from the perspective of social justice and pro-European sustainability. Only then can we advance to a more federal European future. And the central bank is already leading the way: as of last week Mario Draghi, European Central Bank president, confirmed he will be conducting quantitative easing of private sector assets, which effectively amounts to mutualization and paves the way for Eurobonds eventually.

So the conclusion is simple: missing the gathering of the intelligentsia is not the worst nightmare of those who attended this year, but rather of those populists that seek to destroy the European future that is our best hope forward. So perhaps it is better to worry a bit less and enjoy the beauties by the lake.