© REUTERS/ Alessandro Bianchi

The standoff emerged when the coalition of former rivals, the anti-establishment Five Star Movement (M5S) and the far-right Lega, winners of the March elections, put forward their nomination for economy minister. They chose Paolo Savona, an 81-year-old staunch euroskeptic. But President Matterella blocked the nomination, leading to the collapse of a possible Five Star and Lega government.

Mattarella said he didn’t make the decision lightly. In a statement, he explained that he feared Savona’s nomination would pave the way for Italy to leave the Euro, despite neither party pledging to do so during the election campaign or in their joint policy document. (In the past, Savona has supported a secretive “Plan B” to leave the euro). The president argued that Italy’s eurozone membership could only be discussed “openly and after a serious in-depth analysis.”

So Mattarella vetoed the nomination—as is permitted by the constitution—sparking the incoming government’s collapse and calls for his impeachment, as well as plunging global financial markets into turmoil. Investors sold Italian assets en masse, making it the worst day for Italian bonds in 25 years.

Carlo Cottarelli, a former director at the International Monetary Fund, was immediately summoned to form a government that would steer Italy towards fresh elections. He is expected to present his cabinet lineup on Wednesday, but with the administration widely anticipated to lose a vote of confidence in parliament, a ballot could be held as early as July.

In some quarters, Mattarella has been hailed as a hero for protecting Italy against the perils of populism. On the other hand, some view him as an establishment, anti-democratic villain—a president installed with the help of Matteo Renzi, the reviled former prime minister, who has succumbed to ‘bullying’ from European institutions by unjustly opposing Savona simply because of his stance towards the single currency.

The president’s decision has concerned pundits, particularly as the chances of Italy ever extracting itself from the euro are actually very slim: Apart from the process being technically insurmountable, Italy is struggling under €2.28 trillion worth of public debt. It would need to get its economy into shape before even contemplating a switch back to the lira.

“Disdain for Democracy”

The coalition’s threat to challenge the EU and flout budget rules were enough to raise significant fears in Brussels before this crisis. But Mattarella’s move, though constitutional, has effectively given the M5S, led by Luigi di Maio, and the Lega, led by Matteo Salvini, a stronger hand. It is also possible that he was deliberately pushed into a corner by Salvini and di Maio—they perhaps knew he would reject Savona, prompting desired new elections that would give them an even stronger mandate. Salvini’s popularity in particular has surged since the March 4 vote, and he responded to the government’s collapse by attacking the EU, saying that criticism from EU leaders showed their “disdain for democracy.”

The power of this rhetoric, alongside Italians’ rising antipathy toward Europe, is stark: After new elections, Italy could end up with a government that is even more defiantly populist and anti-European.

“This time I’m really worried,” said Mattia Diletti, a politics professor at Rome’s Sapienza University. “Now it’s clear that it’s a poker game, everything is more Machiavellian than we thought it would be. There is now a real, clear clash between the pro-establishment and anti-establishment.”

Jacopo Iacoboni, a journalist at the daily newspaper La Stampa and author of The Experiment, a book about the Five Star Movement, argued that Mattarella should have endorsed the government to allow the populists to take the helm and reveal “how they really are” once in power.

“Over the last two days so many people, even from the higher middle class, are saying that ‘Mattarella robbed the election.’ But this is a false narrative—we must be clear on that point. I don’t agree with his choice but he respected the constitution.”

The crisis is moving fast, and the coming days will decide both the duration of a caretaker, technocratic government and the timeline for possible new elections.

The post Chaotic Days in Rome appeared first on Berlin Policy Journal - Blog.

© REUTERS/Tony Gentile

Giuseppe Conte, a 53-year-old lawyer and professor, was an unknown on Italy’s political scene—until Monday, that is. He was thrust into the spotlight when Luigi Di Maio, leader of the anti-establishment Five Star Movement (M5S), and coalition partner Matteo Salvini, who heads up the far-right Lega (“League”), nominated Conte to steer their “government of change” as prime minister.

The decision to nominate a complete political novice as premier was unprecedented, but then these are unprecedented times for complex Italy: Almost three months of political wrangling, two former rivals not only buried their significant differences but also united in their determination to break from the status quo for good.

After Conte survived scrutiny over his credentials—he was accused of embellishing his university studies on his CV—president Sergio Mattarella handed him a mandate to form a cabinet and start putting the new government’s program in place. That program includes a list of pricey fiscal pledges, with both a flat tax and an universal basic income, as well as a raft of hardline policies against illegal immigrants. The policy document, titled “Contract for the Government of Change,” also calls for sanctions against Russia to be withdrawn, EU treaties to be renegotiated, unauthorized Roma camps and mosques to be shut down, and imams to be registered.

More than 90 percent of supporters from both the M5S and Lega backed the program, leaving Mattarella little choice but to ratify a government that many analysts believe will leave the eurozone’s third-biggest economy in peril and immigrants more vulnerable.

“The voters of these two parties are very happy because they are in power, so there won’t be any rebellion from them. The parties were out to grab power and they grabbed it,” said Mauro Calise, a politics professor at the University of Naples Federico II.

Conte’s path to the premier’s office could still be derailed, however, by President Mattarella’s strong reservations over the coalition’s pick for finance minister: Paolo Savona, an 81-year-old economist who wants to pull Italy out of the euro. 

Turbulence Ahead

Salvini and Di Maio both campaigned on a highly euroskeptic platform, and they have continued to challenge the EU since Italy’s March election. Yet in his first public address on Wednesday, Conte moved to allay fears in Brussels by saying that Italy would indeed stay in the EU.

Even so, in keeping with the two parties’ populist rhetoric, he also pledged to be the “defense lawyer” of the Italian people and protect their interests in Europe and abroad.

“[The speech] was a tool to demonstrate that the government would not be an adversary of European and international institutions, but you can find every element of populism in his discourse as well,” said Massimiliano Panarari, a politics professor at Rome’s Luiss University.

“What does Conte mean when he presents himself as a ‘lawyer of the people?’ It’s very artificial. He also has the problem of demonstrating to his political stakeholders—Di Maio and Salvini—that he will be close to their political desires and narrative.”

With Salvini and Di Maio pulling the strings, it is unlikely that Conte will have much influence. Mauro Calise, the politics professor from Naples, pointed out that Conte may be an expert in law, but those are not necessarily the skills he’ll need as prime minister.

“It’s not so much a matter of experience, which is important, but political autonomy. Conte has been put there from out of nowhere by these two leaders simply because neither one could agree on the other being prime minister—that’s the only reason he is there. It’s a mess,” added Calise.

Deep in the Red

The government will be under pressure to deliver the financial incentives promised to an austerity-weary electorate during the campaign. But with Italy’s public debt at more than 130 percent of GDP, there will inevitably be clashes with the EU.

The first key fiscal test will come in September, with the unveiling of an updated economic policy plan, followed by the drafting of the 2019 budget in October. Both will need approval from Brussels.

“Given the very limited margins available to the government on fiscal policy, the stringent EU deficit reduction requirements, and the fragile state of Italian public finances, even limited fiscal slippage could risk creating a conflict with the EU and undermining market confidence,” Federico Santi, an Italy analyst at Eurasia Group, wrote earlier this month.

In that respect, the government’s longevity will very much depend on how its navigates the financial challenges over the next six months.

“At the beginning they’ll try to make things smooth and not be too aggressive,” said Calise. “Europe will also be very cautious—they don’t want the Italian situation to explode. But once the honeymoon period is over and tough decisions need to be made, that’s when the difficulties will arise.”

If Conte succeeds in installing a government, then pundits forecast it faltering within a year. In that case, Di Maio and Salvini would inevitably eschew responsibility before readying themselves for new elections—and put the blame for any failures squarely on Conte. So even as concerns over the new Italian government run deep in Brussels, it might not be around all that long.

“This government is unlikely to prove stable in the medium-term,” Santi wrote in his note. “The two parties’ ideological differences, the challenges they will face given the limited fiscal space available, and the fact that the ‘mainstream’ parties’ retreat makes M5S and Lega natural rivals are all likely to create friction between them going forward. This creates a latent risk of early elections, possibly as early as Spring 2019. In any case, this government is unlikely to last a full five-year term.”

The post The Big Gamble appeared first on Berlin Policy Journal - Blog.

© REUTERS/Ciro De Luca

There was no clear winner in Italy’s general election—not that you would get that impression from the euphoria emanating from two populist parties, the Five Star Movement (M5S) and the League.

Luigi Di Maio, the 31-year-old leader of the anti-establishment M5S, hasn’t stopped grinning since March 4. On Tuesday, he told reporters that the elections were “a slap in the face for the old way of doing politics.” Meanwhile his rival Matteo Salvini, who heads the far-right League, stamped an image of himself onto bottles of wine with the words: “My Prime Minister is him.”

The pair certainly have reason to celebrate. M5S became the biggest single party in Italy’s general election, taking almost 33 percent of the vote; the League, with 18 percent, was the surprise winner within a coalition that included Silvio Berlusconi’s center-right Forza Italia and the smaller far-right Brothers of Italy. The coalition got more votes—37 percent—but neither side has the majority required to form a government.

After a gloomy campaign that hinged mainly on immigration and pies in the sky, Italians signaled that they wanted change, trouncing the “old guard”—Forza Italia and former Prime Minister Matteo Renzi’s center-left Democratic Party, which scored its worst result ever with just 19 percent.

No Winners, No Losers

In reality, there were no real winners or losers in Italy’s election. The vote produced a stalemate that could drag on for months, making it difficult even for pundits to envisage what form Italy’s next government will take.

All they can agree on is that caretaker prime minister Paolo Gentiloni of the Democratic Party will have to steer the ship with a steady hand in the meantime.

“I’m really lost,” said Roberto D’Alimonte, a politics professor at Rome’s Luiss University. “Everyone is confused, it’s a very chaotic situation. But the markets don’t seem to be worried. We’ll have to wait and see. We saw the same thing in Germany, Belgium, the Netherlands,” he said. “Time is essential.”

The first stages of haggling over a coalition government have produced little in the way of concrete results: Di Maio has called on rivals to bring him “proposals” that might help form a government, although he resolutely refuses to budge on M5S’s platform. The party’s most likely bedfellows are the League or the Democratic Party. The League’s Salvini has insisted his coalition should govern with him as prime minister, but he has not excluded an alliance with M5S.

Meanwhile, internal strife continues to cripple the Democratic Party since former prime minister Matteo Renzi announced he was resigning in the aftermath of the disastrous election performance. Interim leader Maurizio Martina wants the party to regroup in opposition. On Monday he called on M5S and the League to take responsibility. “The time for propaganda is over,” he said. “Your citizens asked for you to govern, now do it.”

Down But Not Out

That leaves Italy’s Berlusconi and his Forza Italia. The 81-year-old media magnate went into the elections believing he would be the kingmaker. He emerged weaker than expected, but not completely out of the game.

Still, with M5S pledging to get tough on conflict of interest rules and introduce a new law for media businesses, an alliance would be Berlusconi’s worst nightmare.  After all, one of his central aims is to protect his business interests.

“Berlusconi is not sleeping at night because if M5S gets into government, those are the first two things it will do,” said D’Alimonte.

As the parties continue to squabble, the next major milestone will be the election of speakers for the two houses of parliament—the Chamber of Deputies and the Senate—at the end of March.

The most likely scenario is an M5S parliamentarian being appointed speaker of the Chamber of Deputies and one from the League leading the Senate.

“The election of the house speakers is a potential litmus test,” said Francesco Galietti, the founder of Policy Sonar, a Rome-based consultancy. “But at the same time, it is a little bit misleading,” he added. “Obviously having M5S and the League together is a scary prospect for outsiders, so investors could jump to the conclusion that it foreshadows a government.”

Gro-Gro-Ko?

There has been some speculation that we could see a broad coalition made up of all the key players on the political landscape, led by M5S. But because Italy’s various parties have such starkly different platforms, D’Alimonte finds such a union difficult to imagine. Galietti said that while momentum is building for the so-called Gro-Gro-Ko, one of the main questions would be whether the cabinet is made up of technocrats or politicians.

“There will be enormous disappointment if Italian voters find out that having voted en-masse for anti-establishment parties they instead get a mainstream government,” said Galietti.

The post Italy’s Impasse appeared first on Berlin Policy Journal - Blog.

© REUTERS/Max Rossi

The only thing observers of Italy’s national election campaign can agree on is that whatever the outcome of Sunday’s vote, Silvio Berlusconi, the country’s scandal-tainted four-time former prime minister, will likely play a pivotal role in the next government.

In this most unpredictable, divisive, and complex of election races, the 81-year-old billionaire’s center-right coalition, made up of his Forza Italia party and two far-right groups—the League (formerly the Northern League) and Brothers of Italy—had the edge in opinion polls before the black-out period began on February 17.

But who will be leading the country after March 4 is anyone’s guess. Neither of the three main contenders are expected to reach the requisite 40 percent majority to form a government.

Polls suggested that the populist Five Star Movement (M5S), which snatched the second-largest share of the vote in the 2013 elections, will emerge as the single biggest party with around 30 percent. M5S has long railed against alliances, but true to its ability to switch political stances with ease, it now says it’s open to forging post-election partnerships with other parties on condition they abide by the Five Star’s program.

Meanwhile the incumbent center-left Democratic Party, led by former prime minister Matteo Renzi, was lagging behind in third place before polls closed. The party, credited with bringing a modicum of economic and political stability back to Italy in recent years, has been riddled with strife ever since Renzi was forced to resign on the back of a failed referendum on constitutional reform in December 2016.

The 43-year-old is also striving for a comeback in this election, although his appeal has long diminished, with many voters perceiving him as arrogant or even a replica of Berlusconi. Complicating matters are the 10 million undecided voters.  Discontent in Italy’s political system runs deep.

With all this in mind, most analysts forecast a hung parliament.

“Looking at projections, it seems quite likely that the election will not produce a clear, coherent majority, at least not immediately,” said Federico Santi, a political analyst at Eurasia Group. “They all seem to be short of the numbers needed to form a government, although could probably be within reach of that threshold.”

The Italian political system allows parties to cast aside previous loyalties and form new partnerships to make up seat numbers after the vote—and this also means the electorate is unlikely to get the government they selected.

Hot Topic Immigration

Immigration has dominated the campaign, largely driven by the League and its junior ally Brothers of Italy. “This has been the election about security and immigrants,” said Mattia Diletti, a political professor at Rome’s Sapienza University. “That is why Matteo Salvini [the League’s leader] is so strong. For the last five years he has been talking about only one thing—immigrants.”

Both the League and Brothers of Italy have been crusading on an “Italians First” platform, taking aim at the thousands of migrants who have landed on Italy’s southern shores in recent years.

But supporters have been duped into believing the duo is concerned about the country’s future prosperity. “I don’t think they really care about poor Italians as their flat-tax proposal, for example, goes against poor people,” added Diletti. “Having a flat-tax means not having any money to keep social services alive. Plus, the Northern League has a lot of support from small business owners, not exactly poor people, while those who support them in poorer areas do so because of the immigration issue.”

The immigration debate took a toxic turn in early February when 28-year-old Luca Traini injured six African migrants in a racially-motivated shooting spree in the central city of Macerata. Traini had been a failed candidate for the Northern League in local elections last year. Extremist violence and a rise in racist attacks have also marred the campaign in recent weeks.

Fanning the Flames

Berlusconi, previously seen as the master who could keep his far-right partners in check, fanned the flames the day after the Macerata attack by pledging to deport 600,000 migrants. The Northern League followed suit with a similar promise.

Even though the partners have been useful to each other in shoring up support, it remains to be seen if the coalition will remain intact after the vote, particularly with tensions brewing between Berlusconi and Salvini. Forza Italia had the edge over the League in polls; if this is maintained, Berlusconi, who is banned from running for office until 2019 due to a tax-fraud conviction, would have the power to pick the coalition’s prime minister. But as the vote nears, there are concerns that the League could even eclipse its partner.

“This possibility should be taken into account,” said Santi. “At that point Berlusconi is more likely to lean toward the center-left and go for another grand coalition, which is basically the same coalition that has been in power since 2011.  It will be difficult to explain that to his voters, it all depends on the result. But I struggle to see him taking orders from Salvini.”

Pundits have also mooted the possibility of M5S teaming up with the League. Although Five Star leader Luigi Di Maio has ruled out such an option, the two parties are more closely aligned on issues like immigration. With the exception of the League, which has threatened to pull Italy out of the EU, Europe has been a non-topic, although officials in Brussels are said to be hoping for a grand coalition of pro-European parties, namely an alliance between Forza Italia (Berlusconi) and the Democratic Party (Renzi).

In the event of gridlock, there is also the possibility of a repeat election within six months to a year. Such a scenario is backed especially by Berlusconi, who will be free to run for the premiership next year. “He didn’t plan it this way in the beginning but now he thinks he can win anything,” said Diletti. “Whatever happens, he will be in a strong position.”

The post All Eyes on Rome appeared first on Berlin Policy Journal - Blog.

Artwork: © Dominik Herrmann

To outside observers, Luigi Di Maio, the immaculately groomed 31-year-old hoping to become Italy’s next prime minister, is as ambiguous as the Five Star Movement (M5S) he leads. Described as poised and reassuring, he is the antithesis of the rabble of rebels initially brought together by Beppe Grillo, the messy-haired, loud-mouthed comedian who founded the opposition movement in 2009 against a backdrop of economic decline and severe discontent with the traditional political class.

Yet ever since he was elected the youngest-ever deputy speaker of Italy’s lower house of parliament in 2013, Di Maio has shown signs of being as temperamental as 69-year-old Grillo, and equally prone to gaffes. An attempt last year to compare former prime minister Matteo Renzi to Augusto Pinochet fell flat after he referred to the late Chilean dictator as Venezuelan; in November he described Russia as “a Mediterranean country.” He has also made several linguistic and grammatical errors in his native Italian.

Blunders aside, in 2016 he was ranked among the most influential people in Europe under the age of 30 by Forbes magazine, and in September he became leader of the M5S after winning an online ballot. The party’s founder Grillo has always excluded running for office because of a 1980 manslaughter conviction after a car crash in which three people were killed. So with Renzi forced to quit after a botched referendum on constitutional reform in December 2016 and the ruling center-left Democratic Party in disarray, Di Maio can now position himself as a serious contender in the electoral race.

He was just 21 when he was brought along by a friend to participate in Grillo’s debut “V-Day” protest against corrupt politics, with the “V” standing for vaffanculo, the Italian word for “fuck off.” Di Maio was tasked with collecting signatures for a petition calling for politicians with criminal records to be banned from standing for parliament.

But it has been his ability to distance himself from the party’s bombastic, conspiracy-theorist, euroskeptic tone that has not only aided his meteoric rise but also broadened the party’s appeal to such an extent that it is now Italy’s most popular. Di Maio has pledged to “rescue” Italy, a country with a perennially sluggish economy, high unemployment, and huge public debt, not to mention a vast number of migrants who have arrived on its shores in recent years. Still, as he travels around the country garnering support ahead of general elections on March 4, he is facing the double challenge of disproving critics and convincing a weary electorate to place their faith in a party that has yet to be tested at the national level.

“There are those who continue to say that we are anti-politics,” Di Maio told me in an email. “But the reality is we are another type of politics. It’s their way of discrediting us, but if Italy is at the point it is today, the responsibility is certainly not ours.”

From Engineering to Politics

Born in Avellino, a town close to Naples in the southern Campania region, di Maio’s penchant for order emerged early, when he decided he wanted to become a policeman at the age of 10. That aspiration was influenced by his upbringing in a region ravaged by the Camorra mafia organization.

While his inclination towards activism might have been shaped by his father Antonio, a former construction firm owner who was involved in the now-defunct neo-fascist Italian Social Movement (MSI), their political views differed. Earlier this month Di Maio reiterated his party’s condemnation of fascist ideology after being criticized for not taking part in an anti-fascism protest in the northern town of Como.

The eldest of three siblings, Di Maio studied engineering at Naples University before switching to law, but never completed either course. He said he became civically and politically engaged while at high school and university, where he helped establish a students’ union. Di Maio’s work experience includes waiting tables and laboring on building sites, as well as a stint as a steward at a Naples football club. As a student, he co-founded a web and social media marketing firm, and in 2012 created a documentary about the demise of small businesses in Naples.
A car lover, Di Maio has said his entrepreneurial idol is Enzo Ferrari, the racing driver and founder of the iconic sports car company. Meanwhile, in the world of politics, he told Vanity Fair earlier this year that he looks up to Alessandro Pertini, a socialist politician who was Italy’s president from 1978 until 1985. Yet he himself generally represents the conservative side of the M5S.

Di Maio recently split from long-term girlfriend Silvia Virgulti, a party spin-doctor credited with nurturing his communication skills and boosting his image. “They say the love story is over but I think she’s still his adviser,” said Alberto Castelvecchio, a public speaking professor at Rome’s Luiss University. “He listens to his spin-doctors – he’s very disciplined and studies hard, and he respects what they suggest.”

Nonetheless, it’s when he speaks publicly that the inconsistencies surface, Castelvecchio added. “You can see the difference between the two Di Maios: one is the perfectly programmed storyteller, and the other – who comes out when he has to improvise – is the real Di Maio, who unfortunately is not as brilliant as his spin-doctor.”

His boyish, clean-cut look and moderate manner have helped the party gain a lead over its rivals in opinion polls since September, with an Ipsos survey on December 18 positioning M5S at 29.1 percent, ahead of the ruling Democratic Party’s 24.4 percent. “He looks perfectly designed to be the grandson every grandmother would like,” Castelvecchio added.

The Populist Challenge?

Di Maio’s skyrocketing popularity comes despite outcries over how badly M5S politicians have run Rome and the northern industrial city of Turin, a lackluster performance in local elections in June, and a defeat in Sicily’s regional elections in early November. And as things currently stand, there is little chance of the party winning the 40 percent of the vote required to govern alone. A new electoral law was recently introduced allowing parties to form coalitions ahead of an election – something the M5S has vehemently opposed.

That is, until now: in a sign of his ability to change tack, Di Maio told an Italian radio station on December 18 that if it fails to reach a majority on election day, M5S might appeal to parties that have won parliamentary seats to forge an alliance. Until then, a key test will be his ability to unite a group made up of militants from across the political spectrum while giving voters a clear impression of what the party represents.

Ever since the Brexit vote, the party has softened its stance towards Europe, saying a referendum on the euro would be a “last resort.” But it has become tougher on immigration, an issue that will dominate the campaign. The party’s views on the topic now appear to be more in line with the far-right Northern League, even though in 2011 Di Maio volunteered to help asylum-seekers in Naples settle in, according to his online CV. And even with the shift, M5S’ core values of free water, sustainable transport, sustainable development, free internet access, and environmentalism remain mostly intact.

If it manages to seize power, the party has said it will place ministerial posts in the steady hands of people with high institutional profiles – magistrates, economists, professors, and the like. But competence is not something that seems to bother those supporters drawn to the radical ideals that helped establish the party, and which are expected to help it emerge as a clear winner, at least in terms of vote percentage.

“It’s about revenge, not competence,” said Castelvecchio. “They are bitter about the kind of climate we have in Italy… and they want to send the cronies home.” Meanwhile Di Maio says he never set out to become a politician, and even now he is not dwelling much on the prospect of leading the country. “I’m committed to bringing forward a program, an idea, values… after which it will be up to citizens to choose which way to go.”

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