A new page in Italy’s history – or a basket-case administration?

EU leaders are deeply worried about the Five Star-Lega populists taking over in Rome

Five Star Movement: Luigi Di Maio, the party’s leader, with Giuseppe Conte, the lawyer he nominated to be prime minister. Photograph: Filippo Monteforte/AFP/Getty

Five Star Movement: Luigi Di Maio, the party’s leader, with Giuseppe Conte, the lawyer he nominated to be prime minister. Photograph: Filippo Monteforte/AFP/Getty

 

They believe they are writing a new page in Italy’s history. Luigi Di Maio, the youthful leader of the anti-establishment Five Star Movement, describes the appointment of his new prime minister, Giuseppe Conte, a little-known lawyer with no government experience, as opening a new political era – Italy’s “Third Republic”. In his view traditional ideologies have been supplanted by direct democracy.

His movement and its allies in the hard-right Lega party, under Matteo Salvini, have, it is true, effectively shattered Italy’s old party system. Next week they will install the first populist government in one of Europe’s largest economies and in a founding state of the European Union.

It is an unprecedented alliance between Five Star, which won 33 per cent of the votes in March’s elections and 36 per cent of the seats in the lower house, and the Lega, which won 17 per cent of the votes and has 20 per cent of the seats.

What we have here is simply an exceptionally right-wing government led by people with virtually no experience of governing

But, scusi, Signor Di Maoi, what we have here is not something qualitatively new. It is simply an exceptionally right-wing government led by people with virtually no experience of governing.

Brussels and most other EU capitals are deeply worried, not only about Italy but also about economic contagion across the euro zone – although there is glee in Hungary and Poland.

The new government has been propelled to power on promises that it will profoundly reform the EU, the euro and the budget, and take on the EU’s fiscal and budget disciplines. A threat to leave the euro has not made it into the programme for government, but it is still talked of.

Others have similarly promised to reform the union – remember David Cameron? – and it ain’t so easy. Consensus governs treaty change, and Italy’s new leaders will find little sympathy for the sorts of changes they want.

But a single member state has, by the same logic of consensus voting, the power to obstruct and prevaricate. And there’s little European Union leaders can do in advance to stop a government from tearing up the economic rule book.

The political priority in Brussels of completing monetary and banking union looks more difficult. Agreement on new means of dealing with migrants is likely to stall on Italian ultimatums. Renewing sanctions against Russia is likely to be blocked.

On Wednesday the European Commission in Brussels published its spring economic recommendations, and the commissioner for economic affairs, Pierre Moscovici, was unusually coy.

The message was that Italy was reducing its debt – 130 per cent of GDP – sustainably and is conforming to EU budget-deficit targets. “More of the same, please,” was the commission’s message.

We accept the decision of the Italian people and will work with any legitimate government, was Moscovici’s pledge, albeit through gritted teeth. No one in Brussels believes the new government will play by the rules.

But if politicians are cautious the markets were more eloquent. Italy’s 10-year-bond yield, a gauge of political risk, hit a 14-month high – making it clear that if the Italians are as irresponsible as everyone expects, they will pay a heavy price for borrowing to do so. And no one in the EU institutions is going to be offering them cheap credit.

Lega: Matteo Salvini’s party won 17 per cent of the votes in March’s elections. Photograph: Yara Nardi/Reuters
Lega: Matteo Salvini’s party won 17 per cent of the votes in March’s elections. Photograph: Yara Nardi/Reuters

The bizarre coalition that is taking power in Rome has its antecedents, of sorts. In the 1970s the then powerful Italian Communist Party proposed a “historic compromise” (“compromesso storico”) in which it reached out across the huge, seemingly unbridgeable gulf in Italian politics and life to the Catholic right in the Christian Democrats.

Lega and Five Star have created their own improbable compromesso – a marriage of convenience, north with south, the nativist middle-class northerners with the poor, workless, alienated young of the southern Mezzogiorno.

Only a couple of years ago, pillorying the latter as parasitic wasters was the raison d’etre of Lega Nord. Now Five Star, whose electoral base is the south, is happy to go into government with the renamed Lega – the promise, notionally,that they get their chance to root out corruption and bureaucracy.

But the contradictions between the two parties remain, embedded in their programme for government. So wealthy northern backers of Lega will get tax cuts on a huge scale – a two-tier flat tax: firms and individuals to pay either 15 or 20 per cent of income in tax – while southerners, who rallied overwhelmingly to Five Star, gain a minimum income of €780 a month per head (not for residents with foreign citizenship) and a €100 billion economic stimulus.

Pension reforms saving billions will be scrapped, reversing a planned increase in the retirement age, and there will be free daycare for children.

And how will such ambitious programmes be paid for? No one knows.

The EU’s failure to organise burden-sharing among fellow member states has poisoned many Italians, for long its most passionate advocates, against the union

The reconciliation of these opposites was accomplished on the back of migrants whose arrival in their thousands from north Africa has fed the populism of the right and left.

The EU’s failure to organise burden-sharing among fellow member states, in no small measure precisely because of the reluctance of those eastern countries now cheering Italy’s populist revolt, has poisoned many Italians, for long its most passionate advocates, against the union.

The two parties promised during the election to repatriate 500,000 of the refugees and in their programme for government to open special “temporary stay facilities ” for those targeted for expulsion.

Ten years of severe economic and social crisis is the background to all these developments. Italy’s per-capita income is now back to the levels of 20 years ago; behind this average there is a collapse of about 30 per cent in the incomes of a quarter of the poorest Italians in the south or in the declining peripheries of the centre north.

As Conte takes over, and tries to get endorsement from the sceptical president, Sergio Mattarella, for the parties’ cabinet nominees, he has a lot of convincing to do, at home and abroad, that he is not leading a basket-case administration.

His WhatsApp profile displays a quote attributed to President John F Kennedy: “Every success begins with the willingness to try.” That may not be enough.