Artwork © Claude Cadi

On paper, France and Italy seem like lovers destined for each other. The “sister republics” are each other’s second biggest trading partner, and perhaps more importantly, they have a natural cultural affinity. It doesn’t need an equivalent to the Franco-German TV channel Arte for Italy and France to become their film industries’s respective biggest foreign audiences.

Still, the EU’s two largest Latin countries have rarely formed a power couple. After World War II, France’s political elite did not trust post-fascist Italy and wanted the Italians kept out of NATO. In the 1960s, Charles de Gaulle felt offended when Rome did not follow his lead but rather welcomed American military bases and supported a supranational Europe instead of his vision of a “Europe des États.”

It didn’t help that the French and Italian left cultivated close ties in the 1980s and François Mitterrand gave asylum to members of the terrorist Brigate Rosse. And in 2000s, at the height of the Iraq crisis, Jacques Chirac snubbed then Prime Minister Silvio Berlusconi, telling him, “One doesn’t export democracy with an armored car.” In France, the one-liner is part of every Chirac Greatest Hits album. But this did not prevent his successor Nicolas Sarkozy from ousting Libyan dictator Muammar Gaddafi in 2011—against Rome’s express protests.

Stand-Off

If recent European history is full of Franco-Italian skirmishes, the recent years under Emmanuel Macron have been no exception. Long before the Five Star Movement and the far-right Lega acceded to power in June 2018, Macron repeated France’s classic mistake of taking Italy’s support for granted or simply not caring about antagonizing Rome.

Once in the Elysée, Macron barred rescue vessels carrying migrants from docking in French ports and decided to maintain checks on the Italian border, which left asylum seekers stranded at Ventimiglia. Macron also did not hesitate to block an Italian takeover of a French ship-building yard and undermine Italy’s long-standing Libya policy.

Rome supports the UN-recognized government in Tripoli. It dominates Libya’s west, which is key to controlling migration across the Mediterranean. Macron’s primary Libyan concern, however, was to secure the Sahel region. This led Paris to throw its weight behind Khalifa Haftar. The general, once an exile in the United States, vowed to go after Islamic terrorists and even seems to have received French arms to that purpose. But Haftar used them to march on Tripoli in the spring of 2019 in an attempt to overthrow the government.

While across the Rhine, the French president is seen as a great European, the Italians discovered Macron’s Gaullist and unilateralist side early on. In Italy, anti-French rhetoric has come to replace anti-German sentiment.

“A Chance to Be Seized”

It is only now that Macron seems to have finally understood that Italy—more than any other country—is the decisive battleground for the EU’s future.

There is of course the economic question. Italy’s 132 percent debt-to-GDP ratio is the bomb that could blow up the currency union—and French companies are Italy’s largest foreign investors. But in a world of ultra-low interest rates, the debt elephant in the room can be ignored for a while.

The real problem is political. The specter of a far-right prime minister taking over in Rome has focused minds in Paris. Lega leader Matteo Salvini would not only have frustrated most of Macron’s plans in Brussels. Perhaps more crucially, the Italian far-right ditching coalition partners and rising to power on its own would have allowed Marine Le Pen’s Rassemblement National to lose its stigma of unelectability, which is what got Macron into the Elysée in the first place.

That Salvini locked himself out of power this summer is, in this context, seen as a godsend that comes with responsibility. As French Finance Minister Bruno Le Maire said, “We believe having a new Italian government is a chance, and chances have to be seized”.

The Elysée is keen to make sure the Italians regain confidence in the EU. The French president was the first head of state to pay a visit to Giuseppe Conte’s second government, formed by M5S and Italy’s Social Democrats (PD) in September. Paris is lobbying Brussels to allow Conte some fiscal breathing space. On Libya, Macron has let Berlin take over to try to mediate a solution as Paris has lost its pretense of neutrality.

Paris is also the main force behind a renewed push for a mechanism distributing incoming asylum-seekers across the EU—an old Italian demand. This is not completely without self-interest on Macron’s part. France is recording rising numbers of asylum-seekers. Those rejected by other EU countries come to France hoping for better treatment. Macron realizes that shutting the border with Italy doesn’t solve the problem.

No Time for Renzi

Lastly, Macron has stopped playing  domestic politics in Italy. In parallel to the government of the day in Rome, Macron had entertained a relationship with Matteo Renzi, the former PD leader. Macron even flirted with the idea of allying with Renzi in the European elections. He was a constant factor of insecurity in Italy’s political landscape.

Last month, Renzi exited the PD to found his break-away Italia Viva party. Importantly, Macron chose not to meet Renzi when he jetted to Rome. Italy’s government is notoriously unstable. But the Elysée has no interest in Renzi breaking away from Conte’s second government and provoking snap elections—at least not before Macron faces his own rendezvous with the French electorate in 2022.

Europe is slowly realizing that Conte must be helped if Salvini is to be kept out of power. In this context, a Franco-Italian allaince may finally become a viable force in Brussels.

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© REUTERS/Remo Casilli

It’s a question that is being asked increasingly frequently these days: Does the nationalist-populist Italian government really want to lead the country out of the eurozone? Is that what Matteo Salvini, who is drifting further and further to the right, wants? The head of the Lega was effectively already setting the tone of the government, in his role as interior minister and vice-premier, especially when it comes to migrants. Now, ever since his party won the European elections with 34 percent of the votes, he seems to have effectively slipped into the role of head of government, determining financial policy and relations with the EU as well.

Salvini likes to use “Brussels” as a scapegoat. On the one hand it’s migration—the EU wants to turn Italy into Europe’s home for asylum seekers, he warns his supporters; on the other it’s “austerity policy”—which he says has brought Italy to its knees. Political scientist Vittorio Emanuele Parsi believes that his arguments are not always without merit. “Because it’s true that the EU’s measures have turned crises that could probably have been overcome with other approaches into chronic weaknesses. Salvini, however, is only focusing the spotlight on one part of the problems. He completely ignores the fact that Italy has also contributed to this.”

“Italians First”

Salvini pulls out his motto “Prima gli italiani,” or “Italians first,” like a miracle weapon whenever the opportunity presents itself. That is particularly so now that the European Commission has recommended an excessive deficit procedure against Rome because the government did not abide by the agreements negotiated with Brussels in December 2018. Instead of falling, the national debt has risen further to 134 percent of GDP.

As expected, Salvini was unimpressed by this EU measure. “If the ones in the EU like to do so, they can go on sending letters,” he let Brussels know, arguing he would not let it dissuade him from his plan to introduce the promised flat tax—which would cost another €30 billion—because “it is not only our right, but our duty to reduce the tax burden.”

The suspicion that he might be up to something completely different, namely leaving the EU altogether, so-called Italexit, is not based solely on the harsh words spoken to Brussels, but on another initiative that comes from the Lega. Exactly two days after the European elections, on May 28, the Italian parliament approved a motion obliging the government to introduce “mini bots.”

The Bots Are Coming

The abbreviation “bot” stands for “Buono ordinario del Tesoro” and is a short-term debt instrument with which Italy finances itself, quite legally, on the internal and international markets. However, the situation is quite different with the mini bots already provided for in the coalition agreement. These are to be offered in small denominations, ranging from €5 to €500, have no expiry date, and primarily serve to repay the debts of public administrations to private companies. These amount to €57 billion. Companies would then be able to pay social and tax contributions. Many economists, however, see something else behind it, namely the first step toward a parallel currency.

And they may be right because the current Lega chairman of the budget committee, Claudio Borghi, declared exactly that in a 2017 video. The president of the European Central Bank, Mario Draghi, also seems to suspect plans for a parallel currency, which is why he spoke out against it at a press conference in Vilnius at the beginning of June. Either it is a payment instrument that is equivalent to money, which is forbidden in the monetary union, he said, or it is additional debt.

After the international sensation that the mini bots have caused, Premier Giuseppe Conte and Finance Minister Giovanni Tria, both of whom are independents and not members of either governing party, were eager to calm things down and assure people that these instruments would not be implemented. But where were they when the motion was tabled?

And the question that now arises is how far Salvini really wants to go. “Salvini will pull the brake at the last moment,” predicts economics professor Maurizio Ferrera who recalls an incident last November when a tranche of Italian government bonds remained almost entirely unsold. “There is talk of tens of billions of euros. Not even the Chinese had taken up the offer, even though they are among the most important buyers of our bonds. At that time Salvini was in a clinch with Brussels because of the Italian budget and the markets reacted nervously.” Ferrera believes it is quite possible that both the officials of the Italian National Bank and those of the government office persuaded him to act responsibly at the time.

Italy has to release government bonds on the market almost every month, and the more unstable the government is, and the wilder its economic and financial policy are, the more cautious the big investors become. And so, at the end of the year a deficit of 2.04 percent was agreed with the EU instead of the 2.4 percent initially demanded. The same could happen now. “Salvini must show consideration for his clientele,” Ferrera says. And a large part of them, at least in northern Italy, would not approve of a further increase in risk conditions and certainly not of Italy’s withdrawal from the euro. An opinion that Parsi also shares. “Salvini is a great opportunist,” he says. “He is only interested in one thing, the maintenance of power, not the principles.”

A Flash in the Pan?

But would an Italexit even work—for example, via a referendum, as in the United Kingdom? Parsi says no. “Our constitution prohibits them in the case of international agreements.” So, if Italy, in an extreme case, violated the treaties, it could only be thrown out of the eurozone. This is an option that had already been considered in the case of Greece, but then rejected, not least because German banks in particular would have suffered as a result. Ferrera also believes that while the other member states could bail out Greece that is not possible when it comes to Italy, which is also too big to fail. “But beside this, if there were a serious danger of being thrown out, our president, Sergio Mattarella, would intervene, address the nation, and bring the politicians back to their senses, I am sure of that.”

Since Italians know themselves since the economic crisis that they shouldn’t alienate the financial markets, the danger of an Italexit could prove to be a flash in the pan. It is doubtful, however, that there is going to be a more harmonious relationship between Rome and Brussels in the future, especially now that the new EU posts are due to be filled.

Today, three Italians hold top positions: Draghi, Antonio Tajani, the president of the European Parliament, and Federica Mogherini, High Representative of the EU’s Foreign and Security Policy. But that could change drastically now, and Italy risks having to settle for second-rank posts. If it were up to Salvini, he would like to see an Italian as the EU Commissioner for Economic and Monetary Affairs. But it is doubtful that this wish will come true.

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© REUTERS/Tony Gentile

The two strong men in the Italian government don’t always agree. Whereas the foreign policy of Matteo Salvini, interior minister and leader of the right-wing nationalist Lega, is more oriented towards Russia, that of Luigi Di Maio, economy minister and leader of the populist Five Star Movement, tends to look to China. But one thing is a foregone conclusion for both: they don’t have much time for the European Union, to put it mildly. While they defend themselves against the accusation that they want to lead Italy out of the Eurozone and EU, from their point of view the EU, starting with its austerity policy, must be fundamentally reformed.

Salvini’s first action as interior minister was to close Italian ports to aid organizations’ rescue ships. It was followed by the showdown with Brussels over the Italian budget. The previous center-left government had foreseen a deficit of 0.8 percent for 2019; the new government raised that to 2.4 percent, in order to be able to keep campaign promises – the basic income and pension reform. Both Salvini and Di Maio persisted with their slogan, “Italy first.” After a long power struggle with Brussels, Rome eventually agreed to reduce the deficit from 2.4 to 2.04 percent.

2019 then brought two serious confrontations between Paris and Rome. The first one was about migrants. Salvini and Di Maio charged Paris with hypocrisy, with preaching solidarity but not taking in any refugees itself. Di Maio went a step further and accused France of being the real cause of the migration wave because it had supposedly continued its colonial policies and driven Africa further into poverty. An uproar then erupted a few weeks later when Di Maio, searching for European allies, paid a visit to Christope Chalençon, one of the most radical spokespeople of France’s yellow vests movement. Paris recalled its ambassador from Rome, and it was only thanks to the intervention of Italian President Sergio Matterella that things calmed down after a few days.

Italy also refused to sign the UN Migration Pact and, under pressure from the Five Star Movement, blocked a common approach from the European Union in the Venezuela crisis. Rome did indeed call for new elections in the South American country, but it refused to recognize Juan Guiadó as interim president.

The Big Misunderstanding

In his recently released book, “Ho imparato” (I have learned), the former social democratic premier Enrico Letta reminds readers that in 1989, with a turnout rate of 80 percent, 88 percent of Italians voted to devolve powers to the European Economic Community. Today, according to a Eurobarometer poll, only 44 percent would vote to remain in the EU. “Not even the trauma that the former prime minister Silvio Berlusconi represented for the EU,” Letta continues in the book, “can be compared with the current low point.” Berlusconi, he adds, was at least a member of the EPP and, if only reluctantly, stuck to the “European rules of the game … which one cannot say of this governing coalition.”

In reality, Rome and Brussels had already begun to drift apart by the early 1990s. In those days, the corruption scandal “Tangentopoli,” which involved illegal party financing and abuse of powers, swept away all the old parties and paved the way for Silvio Berlusconi to enter the political scene. In his 2014 book “Le ragiono della debolezza italiana” (The Reasons for Italy’s Weakness), the political scientist Emidio Diodato argues that the change began with Italy’s signing of the 1992 Maastricht Treaty, as a consequence of which not only foreign policy but, significantly, also domestic policy was shaped by “external restrictions.”

This led Berlusconi’s center-right governments to seek a “national relocation” of competencies, while the center-left governments under former EU Commission President Romani Prodi promoted the “internationalization” or “Europeanization” of the country. Diodato wrote of Prodi: “He did, however, not succeed in transforming the primarily technocratic project, where adhering to European rules had priority, into a political one.” In other words: the Italians supported his plan as long as it promoted economic growth and didn’t demand any “victims.”

Strictly speaking, Italy’s relationship to the EU has always been based on a misunderstanding. “The Italians have always misunderstood Spinelli’s idea of a federal Europe, seeing in the EU a more or less mythical entity that would do everything of which Italy itself was not capable,” explains Ricardo Perissich, former general director of the EU Commission and an important aide to Altiero Spinelli, one of the pioneers of European integration.

So, Italians were for the EU without asking themselves what it actually meant to be a member of the union. Perissich cites the late industrialist, Gianni Agnelli, according to whom 80 percent of Italians support the concept of the EU, but 80 percent of what Italians do runs counter to the concept. Embedded in NATO and later in the EU, Italians felt themselves absolved of any responsibility for decades, Perissich believes.

Nevertheless, the politicians of these years were extremely successful at maintaining the country’s status as a middle power in the Mediterranean. Men like De Gasperini and later Emilio Colombo, Carlo Azeglio Ciampi, Giorgo Napolitano, and Bettino Craxi were perfectly capable of juggling multiple approaches. On the one hand Italy was an ally to Israel, but on the other it had a sympathetic ear for the Arabs. It was a loyal ally to the US, but without losing sight of Russia or China. Some commentators in Italy still believe that the diplomatic networking with Arab countries that took place back then has played a role in Italy being spared from Islamist terror attacks thus far.

As long as the EU guaranteed growth and prosperity, Italy’s citizens were quasi a priori supportive of membership. In the aftermath of the financial and economic crisis, they are today a priori against it—without really concerning themselves too closely with the causes. If one once saw the EU as a lifeline, today the EU has become a scapegoat and must take the rap for everything that goes wrong. This attitude is supported by those in government. When the Morandi Bridge in Genoa collapsed last August, killing 43 people, Salvini had the audacity to claim that the EU’s austerity policy was responsible for the disaster.

The current government also doesn’t spare the German “schoolmaster” from criticism and attacks. But that’s not new, as Perissisch emphasizes: “The German-Italian relationship was always characterized by a certain ambivalence. You might remember what then-prime minister Giulio Andreotti said about German reunification: ‘I love Germany so much that I preferred two of them.’”

New Partners

With its current attitude, is Italy running the risk of losing importance in international terms, also with regard to the new arrangement in the EU after the elections? Salvini and Di Maio repeat, like a mantra, that after the May 26 there will be an entirely different Europe—and to some extent they are right. Yet although the Social Democrats and European People’s Party will almost certainly lose their majority in the European Parliament and therefore become reliant on the Liberals, those “traditional” forces together will not make life easy for the newer, populist and right-wing nationalist groupings in Strasbourg. Moreover, it’s not just Antonio Tajani, the president of the European Parliament, who will be replaced this year; in the Autumn, ECB President Mario Draghi’s term will expire as well. But the departure of two Italians from key positions doesn’t seem to really worry the current government, as the Italian daily Corriere della Sera wrote in early March.

After all, there are other partners. For example, Rome’s policy towards Moscow has always been sympathetic, even if it eventually joined in imposing sanctions on Russia. But the pro-Russian position has never been as aggressively maintained as today. In an interview with the Washington Post, Salvini declared that there are “areas that have always been Russian, in which the Russian culture and Russian tradition are at home and that therefore belong to the Russian Federation.” At the same time, Rome must take into account that relations between Moscow and Washington are rather tense at the moment—and Salvini does not, under any circumstances, want to give up good relations with America.

It’s a balancing act that is threatening to become even more difficult now that Prime Minister Giuseppe Conte has signed a memorandum of understanding on the “Belt and Road Initiative” with Chinese President Xi Jinping. The memorandum was primarily supported by the Di Maio-led Economy Ministry. The reaction from Washington was especially harsh: the US would no longer forward sensitive data to Italy, some said. Brussels, too, felt affronted.

Economists and political scientists warn in Italy that Beijing is known to be pursuing political goals with the New Silk Road, and that Italy could become a Trojan horse. The government rejects these accusations. It “describes this agreement as a pure trade agreement, but does not, however, recognize the real goal of the Belt and Road Initiative,” explains Danilo Taino, economic commentator of Corriere della Sera.

In an interview with the weekly L’Espresso, Romani Prodi recently described his country as “Europe’s Achilles heel.” He doesn’t really see the danger in Italy leaving the EU and the Eurozone, but rather in its potential to divide them from the inside. If that were the case, though, Italy would only be the stooge in this “divide and conquer” strategy. It would be Moscow that would be pulling the strings, or Beijing.

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© REUTERS/ Remo Casilli

Italy’s deputy prime minister, Luigi Di Maio, did not look like a man under siege. Dressed in a suit and tie, the dapper 32-year-old flashed a smile as he faced the media last Friday (Nov. 9) to complain about persistent attacks on the government, questions about its long-term survival, and whether its controversial budget would be rejected by Brussels.

The head of the populist Five Star Movement (M5S) had weathered one of his toughest weeks since his populist party and the far-right League party had formed their uneasy ruling coalition this summer.

“Repeat after me: ‘The government will not fall, the government will not fall’,” Di Maio jokingly urged journalists at the Foreign Press Club in Rome.

Italy has been on a collision course with Brussels after presenting a 2019 budget plan that the European Commission warned would raise the country’s deficit to around 2.9 percent of GDP in 2019, veering very close to the 3 percent limit allowed by the EU in its rules on debt and deficit. The Commission has demanded a correction to the draft budget, but Italian leaders are refusing to budge, spurning Europe’s demands to present a new, revised plan by Tuesday. The standoff has sparked uncertainty on financial markets and triggered fears across Europe that Italy’s ballooning debt will drag down the rest of the eurozone.

But DiMaio’s eurozone woes are just the beginning. He’s also facing growing problems much closer to home, where he’s been dealing with an internal revolt after five of his Five Star senators abstained from a confidence vote called by Interior Minister Matteo Salvini over his controversial security bill, a decree that clamps down on migration and asylum. The senators are against the legislation because they felt it strips away all humanitarian protection for migrants and is inconsistent with Five Star values. They’re now facing a party inquiry for abstaining, and they could be expelled.

“Will there be consequences? I am not afraid,” said one of the rebel senators, Paola Nugnes, a Neopolitan elected in 2013.

Di Maio has also faced embarrassing questions about the future of Rome’s Five Star mayor, Virginia Raggi. She swept into office promising to end corruption, overhaul public transport,  close Roma camps, and promote business and tourism. Instead, Rome is sinking in trash and potholes, and thousands of Romans took to the streets in late October to protest the capital’s run-down conditions. At the same time, Raggi has been embroiled in a scandal over corrupt hiring practices after appointing the brother of a close ally to be Rome’s tourism chief. While she was cleared of the charges, she remains deeply unpopular for failing to stop the city’s degradation and modernize its shoddy public transport.

 If all that wasn’t bad enough, the Italian daily, La Repubblica, accused Di Maio’s father, Antonio, who runs a construction business, of building an extension on the family home back in 2006 without securing a permit.

Di Maio lashed back, saying: “To all these people who spew poison at me, and the Five Star Movement, every day I say, ‘Give us a little more love.’”

Duelling Deputies

The foundation of Di Maio’s political future is a marriage of convenience with Salvini, who is now widely considered Italy’s most powerful political leader. Backed by a relentless social media team, Salvini’s aggressive anti-immigrant platform and his outspoken criticism of the EU have helped to lift his party’s popularity to 30.5 percent, while M5S has dipped to 28.5 percent, according to a recent poll. The coalition government, in other words, is still widely successful. But political differences between the two deputy prime ministers are constantly making headlines.

Last week, Salvini scheduled a parliamentary confidence vote after a slew of Five Star amendments to his security decree, which makes it easier to deport refugees and migrants who have arrived in Italy in recent years. The bill would also put an end to two-year “humanitarian protection” residency permits that were given to 25 percent of asylum-seekers last year. The lower house of parliament has until the end of November to approve it.

Separately, Di Maio and Salvini have clashed fiercely over changes to overhaul the statute of limitations on trials. M5S, which made fighting corruption their battlecry in getting elected to the government, wants to ease the limits on prosecuting a series of infractions, including white collar crimes. After much wrangling, Di Maio and Salvini were able to save face and strike a last-minute compromise.

Yet the leaders’ opposing views over yet another issue–the future of the TAV Turin-Lyon high-speed rail link–were thrown into stark contrast over the weekend. The project has sparked fierce debate in Italy, pitting environmentalists, who object to constructing a 60-kilometer-long tunnel between between Maurienne in France and the Susa Valley in Turin, against those who favor its development.

League supporters see the project as a means of creating jobs and growth: more than 30,000 people took to the streets of Turin to demand that the rail link proceed. Salvini, meanwhile, has consistently voiced his support for the 270-kilometer rail link. “I am convinced that Italy needs more projects, more bridges, more roads, more railways, more airports, not fewer,” he said on the issue.

But the budget for the link has mushroomed. Originally slated to cost €9.6 billion, Italy’s transport minister Danilo Toninelli said recently it would now cost €26.1 billion. “I can only feel anger and disgust at how Italians’ money has been wasted,” wrote Toninelli, a M5S member, on Facebook in July.

Amid all the turmoil, unnamed League sources have started speculating about an imminent coalition collapse and potential elections in March. Salvini has tried to quash rumors, saying in a statement: “There is no conflict, we are working well with the Five Star Movement. Our government has very high popularity levels and in five months we have done more than anyone else.  We are going forward united in order to change the country.”

Five Star Turmoil

While Di Maio also insists there’s no risk to the government’s long-term survival, he is facing yet another challenge within the party, and not only from the rebel senators who abstained from the confidence vote.

Soon he will have to deal with the return of Alessandro Di Battista, a popular M5S politician and former MP currently on sabbatical with his family in South America who is widely seen as Di Maio’s main rival. Di Battista is openly critical of Salvini and is often dubbed “Five Star’s Che Guevara” because of his passion for the Latin American revolutionary, and he’s considered the movement’s most prominent leftist. He has often adopted a hardline against political corruption while criticizing the League’s hardline stance on immigration.

He decided not to run in this year’s national election but regularly expresses his outspoken opinions to his 1.5 million Facebook followers, with his partner and toddler by his side. His return to Italy in December is certain to highlight internal policy differences and exacerbate divisions between M5S and the League.

Giovanni Orsina, professor of political history at Rome’s Luiss University, says M5S is an ideologically complex movement still in its infancy, and under Di Maio it has appeared ambiguous about its policies while allowing the more aggressive League to largely set the political agenda.

“Parts of the Five Star Movement are very unhappy with this government and they think Di Maio is not negotiating hard enough,” he said. “But the movement has not yet grown up.”

The biggest priority for the coalition right now is winning the European Union’s approval on the budget, which they insist will only total 2.4 percent of GDP, not 2.9 percent as the European Commission has predicted.  And it would seem that neither Di Maio nor Salvini want to tear their coalition apart before the European elections in May.

But as M5S is struggling to evolve from a grass roots, populist protest movement into a fully-fledged political party with coherent policies, that is becoming an increasingly difficult task.

“They have a major identity crisis,” says Orsina. “They know what they don’t want, but they don’t know what they want. I still believe the coalition will survive until the European elections. But anything can happen and the pressure certainly is growing.”

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© REUTERS/Eric Vidal

The day after announcing her phased departure from politics, Angela Merkel sought to reassure her international counterparts. “I believe that the negotiating position won’t change,” she said at a joint press conference with Egypt’s President Abdel Fattah as-Sisi on October 30 in Berlin. “One could even say that I will have more time to concentrate on my tasks as head of government.”

It was a disingenuous remark—surely, governing is less about making time available and more about having the political leverage to make an agreement stick. At the same time, Merkel is right: neither her departure as head of her party, the Christian Democratic Union (CDU), in December, nor her eventual retreat from the chancellery will mean that Germany’s negotiating position will change.

With several rivals vying for her succession, in the short term Merkel is bound to stick more firmly than ever to Germany’s established stances. This will be true for several reasons: she won’t want to open herself to criticism from any of her would-be successors, nor does she want to openly take sides. Most importantly, however, Merkel has given up the power to make her coalitions partners and her party accept painful compromises.

In terms of European policy, this means that any hope that French President Emmanuel Macron may still have harbored of moving toward a more integrated EU is dead for now. Then again, his prospects hadn’t been bright anyway: even before announcing her gradual retreat from politics, Merkel had been lukewarm about supporting Macron’s proposals.

As it looks now, the EU is unlikely to take substantive policy decisions before 2020. The upcoming European elections in May 2019, followed by the selection of a new European Commission, mean that the window for reform is closing soon. By 2020, there will probably be a new chancellor, too. Merkel’s regular term in office only ends in 2021, but there is a strong likelihood that her coalition won’t last that long.

Solving a Problem Like Italy

Pro-Europeans will deplore this long stretch of stagnation, but it is truly dangerous only if the spending plans of Italy’s populist government trigger a new euro crisis. An Italian debt crisis could spell the end of the common currency.

It is difficult to see a weakened Merkel agree to any rescue plan which, given the size of Italy’s economy and debt, would need to be massive. The Italian government is not only profligate, but also openly xenophobic and euroskeptic, which doesn’t win it many sympathies in Germany. Also, while the Italian state is heavily indebted, its people on average are actually wealthier than the Germans.

Merkel—as well as her potential successors—would certainly hope that Italy and the EU can solve the budget dispute without upsetting financial markets. Such a respite would give Europe and Germany the time to have a new Commission and a new chancellor in place, most probably after new elections.

What happens next depends to a large extent, of course, on who actually wins the race to replace Merkel, both at the head of the conservative bloc and in the chancellery. Today’s contenders span the spectrum from very pro-European (Annegret Kramp-Karrenbauer, the CDU’s secretary general and presumably Merkel’s preferred choice) to somewhat critical (Jens Spahn, Merkel’s youngish and very conservative health minister, as well as Friedrich Merz, one-time leader of the conservative Bundestag caucus and a long-time enemy of Merkel’s).

Yet their initial outlook matters perhaps less than would appear at first glance. Any future chancellor will find his or her path severely constrained. Given Germany’s economy, its history, and its geopolitical position at the center of Europe, a leader of this country will be driven toward European integration and the defense of the liberal world order.

Wanting the EU to Work Well

Of all European countries, Germany has perhaps the strongest reasons to want the EU to work well, and of all European leaders, the German chancellor is most dependent on the EU for his or her success. And while it is possible, of course, to have a leader who does not conform to the interests of his or her country, it is not the most likely outcome.

Gerhard Schröder, for instance, was no European idealist when he became chancellor in 1998, yet he eventually forged a close partnership with France. Schröder was also key to brokering the financial and institutional solutions that made EU enlargement possible.

Angela Merkel, in turn, started out with a closer rapport with the United States than the EU. But she also found herself working ever more closely with various French presidents as well as moderating agreements at the EU level. While she never turned into a Europhile, she did become the safe pair of hands that Europe now is afraid of losing.

The three most critical events of Merkel’s time as chancellor illustrate how much a German leader needs to work through the EU.

Merkel was reasonably successful in managing the euro crisis because she largely relied on Brussels. It’s a very different story for the Energiewende, the shift toward renewables, which has proved ineffective as well as expensive for Germany’s consumers. After the Fukushima meltdown, Merkel unilaterally took the decision in 2011 to end nuclear power production in Germany, without waiting for either an EU energy policy or the construction of an EU-wide grid.

Finally, there is the refugee issue, which has deeply divided German society and profoundly damaged Merkel’s standing at home and abroad. With a more European approach, much of this could have been avoided. To be fair, any EU agreement on refugees would never have been easy. But in 2015, Merkel didn’t even try very hard before deciding to keep Germany’s borders open.

As her long term in public office draws to a close, Merkel unlikely to do great European deals in order to shape her legacy—apart from the political pressures, that would just be out of character. But neither is there reason to believe that her successor will be more skeptical about future integration than she has been, at least not after an initial learning phase.

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Artwork © Dominik Herrmann

When Matteo Salvini headed to the beach this summer for his first swim of the season, he posed for a selfie that deliberately exposed his flabby belly. He wanted to remind his political supporters that he was one of them.

It wasn’t the first time. Italy’s brash interior minister, who thrives on upending political perceptions with his devil-may-care attitude, once made the cover of a weekly magazine wearing only a tie—even though he rarely wears one with a jacket.

Salvini may not be prime minister just yet, but most Italians agree it is only a question of time. There is no doubt he is the dominant force in Italian politics. Since his rejuvenated Lega party formed a coalition government with the populist Five Star Movement (M5S) in June, his popularity has surged and his right-wing party is now the most popular in the country.  He has even flirted with running for the presidency of the European Commission.

With his anti-immigrant stance and open hostility toward the European Union, Salvini is determined to reshape the political landscape in Italy and Europe, and according to the latest polls, one-third of the country is right behind him.

“Italians come from several decades where they completely mistrusted politicians,” says Lorenzo Marsili, director of European Alternatives, a citizen’s movement based in Berlin. “They think he is less likely to cheat them because he looks like them and speaks like them.”

An Unlikely Rise

Salvini does not fit the traditional mold of an Italian politician. Born in Milan in 1973, he studied political science and history at the University of Milan but dropped out before his final exams. He was involved in left-wing politics before joining the right-wing party then known as Lega Nord (“Northern League”) in 1990. He ran its radio station, Radio Padania, for several years.

In this traditional Catholic country, he married, but then got divorced. He has a son, Federico, from his marriage, as well as a daughter, Mirta, from a subsequent relationship that ended in 2012. He is currently engaged to a popular TV host.

Driven by acute political instincts and ruthless ambition, Salvini easily secured the leadership of the Lega in 2013. He drew on his experience as a local Milan city councilor and member of the European Parliament to reposition the party and give it a nation-wide identity.But it was his ability to tap into the concerns of average Italians and his clever exploitation of social media that secured his popularity.

Drawing inspiration from the success of US President Donald Trump, Salvini has adopted the slogan “Italians First.” In his campaign for the March election, he promised to deport 500,000 illegal immigrants, take a tougher stance on crime, introduce a flat tax, abolish the EU fiscal compact, and even legalize brothels.

The Lega’s share of the vote surged from a dismal four percent to nearly 18 percent, easily surpassing the party of former prime minister Silvio Berlusconi. It became the dominant right-wing player—but not quite dominant enough to seize power on its own. Salvini was forced to seek a marriage of convenience with the populist Five Star Movement.

Immigration was at the top of Salvini’s agenda. No sooner was he appointed interior minister than he made global headlines by refusing to allow a private vessel carrying 629 refugees and migrants rescued off the coast of Libya to dock in Italy. “Go wherever you want, but not to Italy,” Salvini tweeted after he closed the ports to migrants.

A majority of Italians endorsed Salvini’s hard line, and the ship ended up docking in Spain. “The closing of the ports in order to trigger EU solidarity drew a surprisingly positive response despite the extremism of kidnapping people on a boat,” said Marsili, author of Citizens of Nowhere. “People like this strongarm attitude because they don’t believe that democracy is changing Europe, and unfortunately they are right.”

Media Machine

Working with France’s far-right leader Marine Le Pen, Hungary’s nationalist Prime Minister Viktor Orbán, and others from the right, Salvini is aiming to overthrow the European Union’s liberal establishment, reinforce the borders, and restore power to nation states―an agenda many see as a threat to European unity.

Miraculously, he avoided major fallout after the Lega’s founder and former leader, Umberto Bossi, was convicted for illegally using public funds for family expenses. In September, a Genoa court ruled prosecutors could begin to sequester up to €48.9 million in funds from accounts and businesses belonging to the party until the money Bossi had swindled could be recouped. Salvini has lashed back, calling it a “political trial.”

Everything Salvini does is backed by a communications machine that has revolutionized Italy’s political landscape. He has 3.2 million followers on Facebook and 900,000 on Twitter. Former Trump strategist Steve Bannon told Reuters news agency that US politicians could learn a lot from Salvini’s methods. “The use of social media and Facebook Live … were state of the art,” said Bannon, who has met Salvini more than once. He also invited him to join the “Movement”, an organization Bannon set up in Brussels to promote economic nationalism and right-wing populism in Europe. “I was blown away by how sophisticated he was, and how he managed to do it on a shoestring.”

Salvini’s ten-member social media team, dubbed the “Beast,” pumps out messages across YouTube, Twitter, and Instagram, with tweets including xenophobic rants, promotion of his achievements, or upcoming radio and TV appearances—even photos of his favorite pesto sauce or pizza. Thus Salvini’s rate of social media engagement surpasses Trump. Now the Lega is polling as high as 34 percent and has overtaken its M5S coalition partner.

Trouble Ahead?

Well before this year’s election, Salvini had questioned the value of the euro and adopted a position that was very critical of the EU. Since then, he has stepped up his attacks. Most recently, the conflict over Rome’s 2019 budget is providing him with ammunition against Brussels. Despite a binding commitment by an earlier Italian government, Salvini’s coalition inists on increasing spending and running a 2.4 percent deficit next year.

With the stock market in decline and the bond spread rising to its highest level in five years, Salvini was asked what he thought of opposition from the EU and the Bank of Italy to the proposed budget. “This is really a demonstration that we are right,” Salvini told the Italian daily La Stampa on October 18. “The spread will fall. All the economic data is positive.”

Professor Francesco Giavazzi, a leading economist at Bocconi University in Milan, said Salvini flourished by creating an “external enemy,” whether it is the European Commission or the European Central Bank. Given the conflict over the budget and its effects on the financial markets, Giavazzi warned Italy was on the edge of an economic abyss unlike anything it had seen in the past 70 years.

“The fact that the government continues to enjoy widespread popularity is little consolation,” he said.  “Juan Peron, and more recently the Kirchners, were acclaimed by immense crowds, but this did not prevent Argentina which was one of the richest countries in the world just a century ago from becoming a place in which per capita income is now similar to that of Mexico.”

Salvini prefers to blame Brussels or Berlin when questions about the Italian budget or border controls arise. But he is not ready to walk away from the European Union just yet. In fact the Lega leader is staking his political future on the European elections in May 2019, in the hope that they will not only help him reshape the EU but reaffirm his political dominance at home as well.

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© REUTERS/ Remo Casilli

The dust has settled, and a coalition of the League and the 5 Star Movement is governing Italy. Many European commentators have greeted the new government with shock: They worry that Italy will put the eurozone at risk and act as a spoiler within the EU, blocking other countries’ attempts to reform the union and undermining European unity on Russia.

These fears are probably overblown. The friction between Rome and Brussels is likely to be manageable for the time being, in part because domestic politics and international financial markets will constrain Italy’s freedom of action.

But this is not a reason for the EU to be complacent. If the EU does not do more to convince Italians that they benefit from the EU, the chances of Rome becoming more confrontational, and of an Italian exit from the euro or the EU will increase in coming years. This would be a disastrous development for Brussels.

Why do other member-states have concerns about Italy’s new government? The first issue is the new government’s economic program. The coalition has promised a series of tax cuts and increases in social spending, which if implemented would increase the deficit to around seven percent of GDP, breaking a host of EU rules and forcing a showdown with the Commission. But it is very unlikely that the government will even try, let alone be able, to implement such a radical program. A fiscal expansion of such magnitude would panic financial markets, raising the yields on Italy’s debt and hitting Italian banks hard. If financial crisis loomed, Italy’s government would likely step back from the brink. It relies on a small majority in the upper house and could be replaced if MPs defect.

The Five Star and the League know this and have already staged a climb-down. It now appears that the planned tax cuts will unfold over time, while the promise of a universal basic income has turned into a promise of an enhanced unemployment benefit limited to two years. In reality, both may never happen. Instead of embarking on a collision course with the markets and the EU, Rome is much likelier to simply run a slightly higher deficit, in the order of 2.5 to 3 percent of GDP. This would violate the EU’s Fiscal Compact, which mandates small ‘structural’ deficits (deficits adjusted to economic cycles) and speedy debt reduction—allowing coalition leaders Matteo Salvini and Luigi di Maio to celebrate Italian liberation from the ‘diktats’ of Brussels. But it would not panic international bond markets.

In fact, the key problem presented by the new government in Rome is not its economic policy as such, but that it will make reform of the eurozone more difficult. For the 5 Star Movement and the League, stricter European oversight of national governments’ financial and fiscal policies is a non-starter. Yet such oversight is precisely what Germany and northern member-state demand in exchange for deeper risk-sharing in the EU. They will not trust this Italian government to carry out significant risk reduction in its banking system. As a result, any move towards banking union will be slowed down.

Aside from economic policy, analysts are concerned about the new government’s foreign policy, particularly its position towards Russia. The Five Star and especially the League are friendly towards Moscow. In his inaugural speech PM Giuseppe Conte called for a ‘revision’ of sanctions. Italy’s stance, combined with the relative rapprochement between the EU and Russia prompted by Donald Trump’s trade tariffs and withdrawal from the Iran deal, has raised the possibility that the EU could ease sanctions over the next year. However, Italy is unlikely to push for a removal of sanctions by itself. Doing so would drain political capital that Rome would rather use in the economic sphere, where it could be tempted to use the threat of vetoing sanctions as leverage. Instead of attempting to ease sanctions, it is far likelier that Italy will attempt a balancing act, seeking to maintain EU unity while also boosting political and trade ties with Moscow. Many Italian politicians, of all stripes, do not see this as a contradiction—and point to Nord Stream 2, the controversial pipeline that will bring Russian gas to Germany, as evidence that other member-states have long been practicing this.

This Italian government will also be friendlier towards the Trump administration than many in the EU. Rome will probably seek to use its foreign policy influence to prevent or limit escalation in the transatlantic trade war. At the G7 meeting last week, the Italian PM expressed his skepticism about escalating the ongoing dispute with Trump. Italy is not the only member-state to doubt the wisdom of escalating the spat with the US: Germany has also taken on a softer stance than France. And other states, such as Poland and the Baltics, have sought to maintain good relations with Trump because of their reliance on the US for deterring Russia. They, too, are likely to shy away from further escalation, giving Italy some allies.

In essence, Italy is unlikely to act as a spoiler. While Rome will argue with Brussels and work to soften Europe’s stance towards Russia and the Trump tariffs, it almost certainly will not pursue radical economic policies incompatible with euro membership or seek to remove all sanctions on Russia.

The EU’s job: Compromise with the Italians

But in the medium-term, things could get worse. Brussels should not be complacent about Italy. Italians feel the EU has abandoned them in the eurozone crisis and the migration crisis. They have become much more critical of the EU than they were prior to 2008: The latest Eurobarometer survey shows only 44 percent think EU membership has benefited Italy.

The EU should try to work with the government in Rome. It should allow Rome to slightly raise spending—especially if this comes in the form of investment—and thereby secure a symbolic victory over Brussels. As things stand, it appears that the EU will open ‘an excessive deficit procedure’ in response to increased Italian deficits. The procedure would monitor the Italian budget and suggest corrections to Italian finances. The political impact of this familiar move could be contained: Spain is still in the procedure, while France was in the procedure from 2009-2018 and escaped Commission fines. But if the EU ends up issuing Italy a fine, it will merely reinforce the idea that the EU dictates Italian policy, and encourage the Five Star and the League to lash out and espouse more uncompromising positions. A small fiscal expansion may even have the effect of boosting growth and lowering the overall debt/GDP ratio.

The EU should also step up its efforts to help Italy manage migration flows. So far, the EU has focused its efforts on reforming the Dublin regulation, which stipulates that the first member-state an asylum-seeker enters is generally responsible for determining that person’s asylum status. But reform has stalled. It is difficult to imagine that member-states will be able to agree on a relocation scheme of a sufficient magnitude to take the pressure off frontline countries. Additionally, the Dublin-centric approach does little to address factors that push people to migrate, and the difficulties that member-states have in returning rejected asylum-seekers to their countries of origin. A better way for the EU to show solidarity with Italy would be to put money on the table to persuade African countries to sign agreements to take back their citizens. It should make available funds of the same order of magnitude as the €6 billion already pledged to Turkey.

If the EU does not do more to convince Italians that the EU benefits them, Italians are likely to become even more euroskeptic – to the extent that leaving the euro would no longer appear unthinkable. If Italy defaulted and left the euro, the ensuing financial crisis could lead to the unravelling of the euro, and fracture the EU.

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© 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.

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© 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.”

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© 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.”

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