Europe

Briefing: Italy’s new government explained

BY Maggie Pagano   /  16 May 2018

Italy’s new coalition government is a curious cocktail of the Five Star Movement (MS5) and the radical far-right, The League. Both are eurosceptic and anti-EU, but it would be a mistake to view either party through the prism of mainstream European politics.

The coalition is an unexpected outcome of the general election which took place two months ago. And everyone has questions. Here are the answers to a few of them.

Who are the main players? 

The 31-year-old Luigi Di Maio leads the M5S, a movement (they don’t like the word party) which was founded by the comedian and writer Beppe Grillo nine years ago.

M5S won the biggest share of votes at the election with 32%. M5S’s astonishing success can be explained by its relentless criticism of Italy’s endemic corruption and nepotism – which are blamed for the country’s economic crisis. See this stinging letter that M5S has written to the editor of the Financial Times: it’s a must read.

Matteo Salvini, the 45-year-old member of the Italian Senate and a former delegate to the European Parliament, heads the League and is fiercely anti-EU. And more importantly, anti-euro.

Once a fervent left-winger, Salvini crossed party lines and is credited with transforming the separatist “La Lega Nord” into a national “La Lega” party, which appeals across classes and regions. In February this year, Salvini visited Sicily for the first time, apologising for years of abuse against southern Italians who the League once dismissed as parasites dragging down the country. His appeal worked – the party won a stunning 17.5 of the vote.

What role did the Italian President Sergio Mattarella play in creating the new government?

Huge. Italian presidents usually act as figureheads, representing the country on trips abroad, giving national speeches and keeping the constitution intact. Mattarella has lived up to the role like a magnificent emperor, presiding over the biggest shake-up in Italian politics since Italy became a republic following the Second World War. In his inaugural speech in 2015, Mattarella described his role as that of a “political referee”. But behind the scenes the 76-year-old Sicilian has been more of a sumo-wrestler, bashing heads and twisting legs to get the two nascent parties to agree some sort of working programme.

He is Italy’s 12th president since the war, during which time there have been 65 governments. Presidents are elected only every seven years, to avoid the head of state being too closely tied to any one parliament. It’s seems to have worked this time.

What is the new government’s programme?

The new government’s policies are an intriguing mix of left and right measures – techno-utopian and anarchic principles ranging from a universal income tax to lowering the age of retirement. Di Maio (of M5S) wants to introduce a national minimum income, while Salvini is pushing for a flat tax of 15% to reduce middle class’s taxation.

Will they try to leave the euro?

Not for now. Too much to sort out first, and both parties toned down their anti- EU rhetoric in the run up to the election.

But Salvini’s experts are working on a ‘parallel currency’ and what he calls a Plan B to adopt if the EU does not give in to the country’s demands for reform of fiscal rules. He’s also promised a referendum on staying in or opting out of the euro. Watching the UK’s tortuous negotiations with the EU might put them off. Or make them more determined?

What sort of shape is the Italian economy in?

Still like a boot: plump in the calf in the north but with the skinniest of stiletto heels in the south. The divide between the north and south is more acute than ever, with an estimated six million people living at poverty levels. Immigration, austerity and corruption are all blamed, the trigger for the anti-establishment sentiment behind both parties. Italy’s debt is already the second-largest among EU countries, at 130% of GDP, and the EU has been calling on the country to put its finances in order. Youth unemployment is sky-high, up to 40%, particularly in the south.

Will this government last?

Sometimes the most unholy bedfellows make the best marriages. There is agreement on one essential -Italian politics must change. If together they can thrash out an economic programme which helps contain Italy’s debt, without breaking fiscal rules, then they could be onto a winner. More pertinently, if they can introduce new measures quickly boosting jobs and social welfare payments, they will endear themselves to an angry population. But that depends on how well they negotiate with the EU to get the debt ceiling lifted. If they can’t, Italy becomes the next Greece. Strangely, the financial markets are calm (maybe before the storm).

Who are we missing?

Why, Silvio Berlusconi of course. Don’t forget his Forza Italia party gained 13% of the vote. The orange-faced former three-times prime minister has, along with Mattarella, turned out to be key to getting this coalition off the ground. Even his enemies are secretly amazed. It was when Berlusconi gave the go-ahead last week for his allies in the League to form a government with M5S that the main obstacle to the tie-up was removed. The M5S had demanded the League give up its alliance with Berlusconi’s Forza Italia as a condition of forming a coalition – claiming that the media tycoon represents all that they loathe about the establishment.

So what’s he up to? The ever-crafty Berlusconi has just been given the green light to stand again for office. Maybe the 81-year-old fancies his chances again if the coalition collapses?

Who becomes Prime Minister?

We don’t know. Neither Di Maio or Salvini want the job. Both say they don’t want a technocrat but a politician. Don’t worry – it can’t be Berlusconi as he’s a big EU fan, and both parties have eurosceptic bases.