The populist coalition in Italy and its impact on European politics
The populist coalition of the Five Star Movement (M5S) and League is likely to rattle Italian and European politics with a new approach to governance, and risks fracturing relationships with the dominant powers on the continent – namely France and Germany.
As GRI forecast in January 2018, instability was likely to be the only winner of the Italian elections in March, with the strongest coalition existing of a right-wing alliance between former Prime Minister Berlusconi’s Forza Italia party, the League and the much smaller Fratelli d’Italia party. A left-leaning partnership, which we placed at a 40 percent probability, has since proved elusive. The Rosatellum bis electoral system also presents the danger of institutional blockages, and the risk of the leaders of M5S and the League finding the support to effectively present their agenda for the country.
The populist faction has emerged as the strongest, with the far-right League and the non-ideological M5S finding the greatest degree of alignment on key issues related to migration policy, the debt and Italy’s relationship with Brussels. Both parties are willing to reject the status quo, take a confrontational approach to governance and relationships with existing allies, and fundamentally alter the course of Italy’s foreign and economic policy.
Relationship with Brussels
So far in negotiations, the far-right League has taken a tougher position against the EU, while Luigi Di Maio, the leader of M5S has taken a more balanced and thoughtful negotiation stance. Both parties have railed against the austerity policies from Brussels, the effect of sanctions against Russia and a migration policy that can place a disproportionate burden on Italy as a first point of entry for asylum seekers coming from North Africa. The League has primarily blamed the EU for stifling Italy’s economic growth and the party has come out against the euro, claiming that it is a ‘dead currency’ and ‘one of the worst crimes against humanity in history.’
One of their conditions on forming a government will be to demand the cancellation of 250 billion euros of Italian bonds purchased by the European Central Bank. EU commissioners have already proclaimed that the rules will not be changed, which is a sign of the volatility to come. Italian long-term borrowing costs have already spiked to a seven-month high and stocks in Milan fell over one percent after the League and M5S announced they would increase spending as part of their new coalition government.
These positions signal that M5S and the League view Brussels as part of the problem and not the solution to many of Italy’s troubles, and that is likely to cause friction with major powers such as France and Germany. However, a common cause is likely to be found within Central and Eastern European states, such as Poland, Hungary, the Czech Republic and Slovakia, which also oppose migrant quotas, the rising tide of immigration and interference from Brussels. Both parties see the EU as an external actor capable and willing to interfere in Italian domestic politics, rather than an internal actor capable of providing for and addressing Italy’s concerns. As one of the founding members of the EU, this is a stark and worrying development, as the EU is no longer viewed by the parties in power as a vehicle for Italy’s economic and political success but rather a hindrance.
Italy’s Future
The Economist claims that the new coalition government could send Italy ‘off the rails’, and there are serious questions as to how the fiscal policy of this populist pact could affect the third largest economy in the Eurozone. Unemployment remains high in Italy and reforms are desperately needed if the country is to rival the economic weight of France and Germany on the continent. A prime minister still needs to be named, and the first all-populist government in western Europe will likely face challenges from domestic rivals, such as former Prime Minister Berlusconi’s Forza Italia party and the Partito Democratico, over the nation’s orientation towards Brussels and Moscow when it comes to foreign and immigration policy.
Unlike in France and Germany, the League-Five-Star Movement coalition will be pushed towards the extremes of the political spectrum, and racist, xenophobic sentiments coupled with corruption and illiberalism will struggle to stay off the sidelines. Italy has an important role to play in the future of Europe, and it is vital that the incoming government remains supportive of EU policies and the role that the EU can play for both fiscal and immigration purposes. If the new government continues to take a contentious stand against Brussels, this could heighten the rise of populist and far-right and left parties in the EU while promoting divisions on some of the most critical challenges facing member states.
