GODEGA di SANT’URBANO, Italy (CI ITALY) — Veneto Regional Governor Luca Zaia is increasingly becoming the likely — and possibly the only — candidate to become Italy’s next Prime Minister after the victory by anti-European protest party Movimento 5 Stelle (M5S) on March 4 2018.

[Veneto Region Governor Luca Zaia speaks to Capitol Intelligence using CI Glass on whether he will be proposed as Italian Prime Minister following national general elections on March 4, 2018. Zaia was speaking to reporters at the Antica Fiera Godega Sant’Urbano, Italy. March 5, 2018]

Zaia is both a member of the Northern League,  whose party came first in the Center-Right coalition led by media tycoon and former Prime Minister Silvio Berlusconi; and an effective regional governor whose popularity transcends party and geographic boundaries.

In an interview with Capitol Intelligence at a regional agriculture trade show Antica Fiera Godega Sant’Urbano near Treviso, Zaia said he has no other ambitions but to serve the “Venetian people” as their elected governor.

While Zaia says he supports the candidacy of his party leader, Matteo Salvini, to form a new government — the anti-immigrant Salvini will face difficulty reaching a consensus among his own center-right allies, much less convince those outside the center-right coalition to join forces to create a working parliamentary majority.

[Veneto Governor Luca Zaia filmed by Capitol Intelligence/CI Italy using CI Glass speaking to reporters at Antica Fiera Godega Sant’Urbano near Treviso following Italian General Elections on March 4, 2018]

Not expecting to be overtaken (“sorpasso”) by his once junior partner, Berlusconi said the party with the most votes within the coalition would name the candidate for Premier. The Northern League won 17.6% of the vote compared to 14.4% by Berlusconi’s Forza Italia.

In fact, Berlusconi himself has touted Zaia as a potential candidate for Prime Minister before and after the March 4 general election.

Notwithstanding Zaia’s apparent humility, the Veneto governor is visibly excited over the possibility of implementing two of the Northern League’s cherished reforms: Fiscal autonomy for Italian regions and the institution of a flat tax.

Just ahead of the elections, the outgoing Prime Minister Paolo Gentiloni along with Veneto’s Zaia, Lombardy Governor Roberto Maroni and Center-Left Governor of Emilia-Romagna Stefano Bonaccini signed a general framework agreement to establish regional autonomy in tax collections and expenditures.

[Lombardy Governor Roberto Maroni speaks to Capitol Intelligence/CI MENA using CI Glass on regional autonomy with Emilia Romagna Government Assesor Emma Petiti in Italy at Round Table on Autonomy at the Lombardy Regional Government building in Milan, Italy. November 11, 2017]

The signing ceremony at Palazzo Chigi (the Prime Minister Office) in Rome was an extremely rare demonstration of bipartisan agreement between the Northern League of Zaia and Maroni and the center-left Partito Democratico of PM Gentiloni and Renzi.

In fact, the outgoing governor of Lombardy and close Zaia ally, Roberto Maroni, began the process of opening the debate of greater regional autonomy with fellow regional governors on the left such as a Bonaccini and others.

Zaia and Maroni were only able to cross the political divide as the regions of Lombardy and Veneto are both showing strong economic growth and optimism while the rest of Italy remain stagnant or in recession, with youth unemployment up to staggering 60% or more in the south.

The Veneto region is marked by the strength of small to medium size companies led by local entrepreneurs coupled with global giants such as the Agordo (Belluno) Veneto-based Luxottica Group (BIT:LUX) and the Benetton family empire that is becoming the European leader in highway and airport infrastructure through the takeover of Barcelona-based Abertis (MBE:ABE) by its listed infrastructure firm, Atlantia (BIT: ATL).

[Benetton founder Luciano Benetton speaks Capitol Intelligence using CI Glass at Art Basel Miami]

Zaia is a unique political figure in Italy as he has strong grass-roots support among constituents and at the same time the trust and confidence of Veneto regions biggest employers such as Luxottica founder and owner Leonardo Del Vecchio and Benetton family patriarchs, Luciano and Gilberto Benetton.

Veneto is also home to local global players such as Verona-based Calzedonia Holding SpA, a EUR 2bn group in the femine pantyhouse, shorts and beachwear sectors founded by local entrepreneur Sandro Veronesi.

Calzedonia is a typical example of a local champion was forced to expand in the new markets of Eastern Europe to maintain sales growth and profit margins against slipping sales and rising costs in the Italian market.

In fact, Calzedonia is aggressively expanding both in the United States and Africa. Calzedonia is the first major Italian clothing company (apart from Benetton in Sousse, Tunisia) that has opened a major manufacturing plant in Africa, the Calzedonia plant in  Addis Ababa, Ethiopia,

[Fairfax Africa Fund Global Chairman Zemedeneh Negatu speaks to Capitol Intelligence/CI Africa using CI Glass on private equity fund investments in Ethiopia and Italy’s Calzedonia first manufacturing in Africa at Corporate Council on Africa U.S.-Africa Business Summit in Washington, DC. June 15, 2017]

The aggressive expansion in the United States, combined with its decision to open an manufacturing plant in East Africa, now makes Calzedonia the most attractive buyout target for major private equity firms such as Washington, DC-based The Carlyle Group led in Milan by former TIM CEO Marco De Benedetti, Milan-based M&A lawyers told Capitol Intelligence.

The Veneto region itself is a model of how a new flat tax in Italy would work. Already, a large percentage of Veneto factory workers opt to be paid by a Partita IVA (a form of LLC) at a rate of 17%-19% rather than take a salary with its increased tax burden (circa 60%) and illusory “job for life” guarantees.

The Partita Iva, and record number of business owners in Veneto, also makes Zaia’s Veneto model ideal to increase employment among Italian youth and at the same time promote near US style labor mobility.

“The Italian system became a system where the entitled created a monopoly so they would not face competition from others,” said one Milan banker.  “However, the monopoly was not able to compete with foreign markets so the system has collapsed under its own inefficiency.

Italian success stories are almost exclusively when a new venture uses creative means to get around the State and its local politicians such as Milan stock exchange listed H-Farm start-up incubator located in the countryside between Treviso and Venice.

[H (Human)- Farm Executive Chairman Paolo Cuniberti speaks to Capitol Intelligence using Google Glass at H-Farm IPO press conference in Roncade (Treviso), Italy. October 15, 2015]

The incubator — financially backed by Diesel clothing founder Renzo Rossi – fundamentally disrupts the consultancy market place of Ernst & Young, PWC, Deloitte and Accenture by working directly with major companies such as Luxottica, Deutsche Bank and Allianz to brainstorm innovation and new business strategy.

The outcome of the Italian elections left no political party or coalition with a majority.  The M5S protest party — founded and dictated by anti-European Union ideologue Beppe Grillo — came first with some 32% and a near monopoly over Italy’s economically depressed and organized crime infested southern Italy (Mezzogiorno) while the center-left Partito Democratico (PD) of former Prime Minster Matteo Renzi came in last with a little under 20% of the vote.

The complete debacle of Italy’s former elites such as Berlusconi and Renzi opens up the field for new political leadership in the form of Luca Zaia who is also respected abroad when he served as Minister of Agriculture from 2008 to 2010 under Prime Minister Silvio Berlusconi.

“You see how Zaia is a superstar at this local fair (Godega Sant’Urbano) but it was the same when he went a big agriculture fair in Berlin and he was mobbed by European politicians and farmers, Corriere del Veneto political editor Alessandro Zuin said.

The only agreement by the Center-Right of Berlusconi and the Center-Left of Renzi is an agreement not to join forces with the Movimento 5 Stelle led by Luigi di Maio ahead of consultations with Italian President Sergio Mattarella over who can, or is able, to form a majority government.

Zaia and other political leaders also claim they have little appetite to appoint a technical government alla Mario Monti or head back to new elections. The only person who would find overwhelming public support to head a technical government remains European Central Bank (ECB) President Mario Draghi, whose term at the ECB ends later in 2019.  

There is already movement in Italy to draft Draghi as a national unity candidate led by so-called Draghi made up of the top business, legal and political minds of Italy.

So it Is up to Berlusconi to rustle up some two dozen deputies either through (motivated) defections from M5S and at the time win support in principle from the PD.

While Salvini’s and Beppe Grillo’s anti-immigrant and anti-Euro politics are anathema to the vast majority of Italians who are pro-European, Luca Zaia remains the attractive, and possibly the only choice, for Italy’s next leader.

By PK Semler in Godega Sant’Urbano near Treviso, Italy

For more information please call +1-202-549-3399 or email: pks@capitolintelgroup.com

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