Italy’s tragedy could become a litmus test for how populists deal with the private sector

In a more civilised world, a tragedy as heartbreaking as the collapse of Italy’s Morandi Bridge – which at the time of writing has claimed the lives of 43 people – would not be politicised. After the disaster occurred, the focus would be on rigorously investigating the root causes behind the bridge’s collapse, penalising the guilty and making sure such a disaster would never happen again.

But we don’t live in that world. We live in a world where populists are either at the gate or, in Italy’s case, have already walked in. And in our increasingly populist world, a tragedy like the Morandi Bridge collapse is ripe for weaponisation. So, it should come as little surprise that that’s exactly what the new Italian government has done.

With the investigation into the collapse in its first few hours, Deputy Prime Minister Luigi Di Maio and Transport Minister Danilo Toninelli set the tone on Facebook by declaring the culprit: concessionaire Autostrade per l’Italia, and by extension the entire private sector. On Friday, Prime Minister Giuseppe Conte underlined that message, writing on the social network:

“From now on, all concessionaires will be bound to reinvest most of their profits in modernising the infrastructure they [manage], they will have to comply very stringently with their maintenance obligations and, more generally, they will have to understand that infrastructure is not a financial income, but a public good.”

At the time of publication, the government had started the procedure to revoke the A10 concession that covers the collapsed Morandi Bridge, with lots of radio chatter on whether Autostrade will lose the rest of its concessions, amounting to about 50 percent of the country’s motorways.

To be clear, we are a publication for private investment in infrastructure, but if it turns out concessionaire Autostrade holds the lion’s share of the guilt for this tragedy then it should be penalised to the fullest extent of the law. Whatever price it ends up paying will pale in comparison to the ultimate sacrifice paid by the 43 people who perished crossing the bridge.

But we’d be surprised if this story of abject failure won’t end up having many fathers – both public and private – especially as concerns about the bridge’s safety seem to have been circulating for years (concerns allegedly dismissed as a “fairy tale” by the ruling Five Star Movement in 2013).

Populists, however, don’t do complexity. What they do very well, though, is scapegoating, and in that sense the Morandi Bridge collapse might end up being a litmus test for how they deal with the private sector.

Following the government’s first unilateral threat to revoke Autostrade’s concession, parent company Atlantia issued a statement invoking the rule of law and warning that unilateral termination would trigger compensation equal to the residual value of the firm’s concessions, plus whatever penalties might be due.

We’ve seen similar statements issued in the UK, following the opposition Labour Party’s nationalisation threats, but the problem is those statements require populists to play by the rules. Breaking news: they don’t. And while we’re not suggesting the rule of law will collapse overnight in Italy, it’s not a stretch to say that a populist government, backed by righteous public anger, has the capacity to do considerable damage.

Political risk has always been the X-factor in infrastructure investing. The difference now is that we are entering a populist era in which the balance of power might tip dramatically away from the private sector.

When it comes to the private sector, up until now, populists have mostly talked the talk – former UK foreign minister Boris Johnson’s ‘F**k business’ Brexit outburst being a recent example of that. In Italy, we will soon find out if they also walk the walk.

Write to the author at bruno.a@peimedia.com