Home Politics 5 problems about to hit Italy’s populist government

5 problems about to hit Italy’s populist government

by host

The honeymoon is almost over for the Italian government.

Despite fears of chaos when the anti-establishment 5Star Movement and far-right League formed an alliance in June, the coalition has proven popular with voters — surveys show 60 percent of Italians support the government.

So far so good, but in the coming weeks Rome has to take some important decisions that could determine the government’s future — and even whether it survives.

Matteo Salvini, League leader and interior minister, was quoted in La Repubblica as saying: “If we survive September then the government goes ahead, otherwise…”

Here are five of the biggest obstacles that the government must overcome.

1. Budget and economy

The national budget, which has to be approved by the middle of October, could be a major problem for two parties who made electoral promises that would cost between €65 billion and €125 billion — in a country with Europe’s second largest public debt after Greece. They pledged to cut taxes while raising pensions and welfare payments, but ratings agency Moody’s said they did this “without any clear proposals on how to fund those.”

“Soon it will be our turn again”  — Former Prime Minister Matteo Renzi

By next month, Moody’s and another big ratings agency, Fitch, will announce if they are going to downgrade Rome. That comes at an awkward time as the economy is slowing and the European Central Bank is reducing the size of its monthly bond-buying program.

As a result, Italy is bracing for a debt crisis like the one it suffered in 2011, fears that have been exacerbated by the problems in Turkey. “I expect a [financial] attack” in August, said Giancarlo Giorgietti, undersecretary in the prime minister’s office and one of most experienced League officials. Italian media, however, believe Salvini would relish a debt crisis as it would allow him to “challenge Europe and the markets.”

Economy Minister Giovanni Tria, a technocrat, has said several times that Italy will stick to its commitments to reduce debt. But Salvini keeps saying the European Union’s budget deficit limit of 3 percent of gross domestic product “is not the Bible.” Tensions in the government are running high with one Italian official saying “I’m not sure Tria will last long.”

2. Infrastructure

In some areas, the 5Stars and League appear miles apart, especially when it comes to large infrastructure projects. That distance widened after Tuesday’s bridge collapse in Genoa, which killed 39 people and could prove costly for the 5Stars who had a history of opposing plans to overhaul the bridge.

The 5Stars also oppose plans for a high-speed rail link between Turin and the French city of Lyon, saying it would be a waste of money and bad for the environment. They also want to cancel the last leg of the €40 billion Trans Adriatic Pipeline, which will bring Azeri gas to Italy, over fears of damage to the environment and to tourism.

The League takes the opposite view. Salvini backs the pipeline and while he hasn’t made up his mind on the train link, he said: “Usually I prefer doing, rather than undoing.” There’s also pressure from farther afield to back the pipeline project, which would reduce Europe’s dependence on Russian gas: In July, U.S. President Donald Trump hosted Giuseppe Conte, Italy’s prime minister, and said “I hope you’re going to be able to do that competing pipeline.”

Italian premier Giuseppe Conte (C) speaks, flanked by Industry Minister and Deputy Prime Minister Luigi Di Maio and Italy’s Interior Minister and Deputy Prime Minister Matteo Salvini (R) in the lower house, ahead of a confidence vote on the government program, in Rome on June 6, 2018. | Filippo Monteforte/AFP via Getty Images

3. Steeled for conflict

A steel plant in Taranto, in Italy’s heel, poses another problem — mainly for the 5Stars.

It’s the biggest steelworks in Europe and belongs to the Ilva group, which has been under state-supervised administration since 2015 when a court ruled the plant must be cleaned up or closed down because it causes so much environmental damage. In May, ArcelorMittal, the world’s largest steelmaker, secured EU clearance to buy Ilva.

But Luigi Di Maio, the 5Star leader and development minister whose party has floated plans to close down the polluting plant, has cast doubt over the legality of the sale and is considering canceling the tender. If that happens, it would very likely mean the end of the Taranto plant, and the loss of some 14,000 jobs in an already depressed region.

4. Don’t forget Silvio

In recent weeks there have been signs of a split between Salvini and Silvio Berlusconi, the ex-prime minister whose Forza Italia party has been the League’s partner for the last 20 years, including March’s general election. The two parties still run six regions and several local authorities together.

First, Salvini proposed the pro-Kremlin, anti-euro Marcello Foa as head of Rai, the state owned television network. The appointment was rejected by a parliamentary committee, thanks to intervention from Berlusconi. Officially it was because Forza Italia hadn’t been consulted, but it was more likely a show of strength from the media mogul. Then the League decided to run without Forza Italia in regional elections in the southern Abruzzo region this fall.

Silvio Berlusconi, leader of Forza Italia | Vincenzo Pinto/AFP via Getty Images

The big question now though, is whether the League and Forza Italia will team up in next year’s European Parliament election. The prospect of a split could be very bad news for the center-right, which may end up with very few MEPs if voters decide to go with Salvini rather than Berlusconi. That particular patata calda is in the hands of Antonio Tajani, president of the European Parliament and Forza Italia’s No. 2. “The League loses if it breaks away from us” he warned on Sunday.

5. The old guard could rise again

“Soon it will be our turn again,” former Prime Minister Matteo Renzi said Wednesday in a Facebook live chat. “In September, October you’ll see we’ll have fun.”

Renzi’s hopes are up because of an investigation into the League’s handling of public cash. The far-right party’s founder Umberto Bossi was convicted in July 2017 of embezzling hundreds of thousands of euros in public funds between 2008 and 2010, and the party was ordered to repay nearly €49 million.

Last month, Italy’s top court ruled in favor of the seizure of the party’s funds and other assets in connection with the fraud case.

Salvini denies any wrongdoing but Corriere della Sera wrote that “it’s unknown how this money may have been used, by whom and when.”

The problem for Renzi is that, unlike Salvini, he is one the most unpopular politicians in the country.


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