The new Italian government has been sworn in today by President Mattarella. The old is also the new prime minister: Giuseppe Conte. He presented 21 ministers working under him. The new Minister of the Interior, replacing the former government’s strong man Matteo Salvini of the Lega, is the independent Luciana Lamborgese.
10 ministers of the new cabinet come from the populist, left-wing Five-Star-Movement (M5S) — the Minister of the Environment Sergio Costa is an independent, but he was presented by the M5S, that’s why we count him on the M5S side.
The new Health Minister Roberto Speranza is a member of the small, left-wing party Liberi e Ugualai (LeU). The new government needs the help of LeU and other small parties as well as some independents to guarantee a majority in the Senate.
9 new ministers are members of the social-democratic Democratic Party (PD), the former arch enemy of the M5S. The founder and former leader of the Five-Star-Movement, Beppe Grillo, had for years wanted to send all parliamentarians home. His slogan was Tutti a casa. But then he was first in favor of the infamous coalition with the populist, right-wing Lega. They formed a government which was not ready to respect the Maastricht criteria; M5S wants to spend more money on social programs, La Lega is fighting for the introduction of a flat tax. And now Beppe Grillo was quickly and decisively in favor of this new coalition between his M5S and the PD.
The Cabinet Conte II is a bit more coherent than the previous government, but that does not mean that the new economic and financial policies will be more sound with two center-left parties both ready to spend more money on social programs.
The public debt is above 130% of GDP, with Italy being too-big-to-be-saved by the EU in the case of bankruptcy. The country is kept afloat thanks to the ECB’s low interest rate policy, injecting money into the system as if there was no tomorrow. The interest rate should reflect the underlying risk. This is no longer the case for countries, all kind of private companies (not just banks) as well as individuals. Credit cannot be “free”. In the long run — that’s where we are already in —, this undermines the financial and economic system of the Eurozone.
Unfortunately, unlike Germany, Italy has not used the money saved by lower interest payments on its public debt to partly pay down its colossal debt. The ECB cannot forever continue is loose monetary policy.
Therefore, it is important that Prime Minister Conte presented the PD politician Roberto Gualtieri (*1966) as Italy’s new finance minister. Some may remember that, for years, Beppe Grillo had avocated Italy’s exit of the Eurozone. If Italy was to abandon the euro, it would be bankrupt over night because the new currency would devaluate and the public debt in euro would skyrocket. The Social-Democrat Roberto Gualtieri has not studied economy and finance, but philosophy and history, ended up with a PhD in contemporary history and, subsequently, did a lot of research on the Italian Marxist philosopher and communist politician Antonio Gramsci. Nevertheless, he has a good reputation among EU politicians because, from 2014 until 2019, he presided the European Parliament Committee on Economic and Monetary Affairs (ECON).
Italy’s growth is between slow and inexistant. The unemployment rate is still above 10%. The country needs more economic and financial reforms. The former prime minister Matteo Renzi tried to push his PD on a reform path, with mixed success, partly due to his own incompetence, partly due to anti-reformers within the PD and other parties. After Renzi resigned because he lost a referendum, the PD moved further to the left. Are there enough reformers left within the PD? How reformist is Prime Minister Conte? What about the M5S?
The leader of the M5S, the young (*1986) and unexperienced Luigi di Maio, who has never finished his studies, was appointed foreign minister in the Cabinet Conte II. He does not speak any foreign languages and has not displayed any diplomatic skills in the past. Futhermore, in the previous government, he was no match for the right-wing populist Matteo Salvini. As a consequence, in the polls, Luigi di Maio’s M5S lost almost half of its support, whereas Matteo Salvini’s Lega doubled its numbers, reversing the roles of the two parties.
That is why Matteo Salvini thought it was now or never to end the coalition government with the M5S and to call an early election. However, it is not up to the interior minister to dessolve parliament and call a snap election. Many within the M5S were furious and, in the end, ready to form a coalition with their arch rival, the PD. Matteo Salvini should have been warned because his Lega’s coalition with the M5S was also “against nature”. He forgot that, although the clear leader in the polls (37% and more), in parliament, he still represents only a small minority.
The Cabinet Conte II still has to be confirmed by the Chamber of Deputies and the Senate. In the Chamber, the Five-Star-Movement and the Social Demorats together have a majority. In the Senate, with the help of LeU, other small parties and some independents, this should be a formality too.
However, so far, M5S and PD have only won time. Now, they are forced to deliver — otherwise Salvini will come to power in the next election.
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Photo of Roberto Gualtieri. Italy’s new finance minister will be a key figure in the fight for economic and financial success. Photograph by Foto-AG Gymnasium Melle (Wikimedia Commons).
Article added on September 5, 2019 at 16:14 Italian time.
