Italy’s political turmoil is far from over. Luigi Di Maio, the leader of the populist Five-Star-Movement, wants the Italian President Sergio Mattarella to be impeached. According to Di Maio, Mattarella was in breach of the Italian Constitution (attentato alla Costituzione).
Mattarella is a former Constitutional Court judge. He should know the constitution.
On May 27, the designated prime minister Conte, a lawyer with no political experience whatsoever, gave back his mandate to form the next Italian government. Previously, Mattarella had accepted all new ministers proposed by Conte with the exception of the Minister of the Economy and Finance, Paolo Savona.
Savona was the favorite of the right-wing, populist leader Matteo Salvini. Savona has great credentials as an economist, university professor, central banker, Confindustria President as well as company executive (Credito Industriale Sardo, Banca Nazionale del Lavoro, etc.) and, in 1993-94, served as Minister of the Industry, Commerce and Craftsmanship under Prime Minister Carlo Azeglio Ciampi. Ciampi was a great supporter of Italy joining the eurozone. In recent years however, Savona has distanced himself from those times and, on the contrary, strongly advocated Italy’s exit of the Eurozone and attacked the 1992 Maastricht Treaty as a big mistake.
The eurozone exit, also advocated by the Five-Star-Moving founder Bebbe Grillo and just dropped before di election by Di Maio to make the party more attractive to Italian voters and more “credible” in economic and financial cercles, would be disastrous. Overnight, the new Italian currency would massively devaluate. Already today, Italy’s public debt stands at over 130% of GDP. Since the public debt would still be in Euro, it would increase massively because of the immediate and massive devaluation of Italy’s new currency. In addition, the currently ridiculously low interest rate – due to the ECB’s expansive financial policies – would rise massively. Nobody would be willing to give credit to Italy anymore or only at prohibitively hight rates. The country would be bankrupt overnight.
In addition, Paolo Savona is not only a Eurozone and EU-critic. He has accused Germany of wanting to dominate Europe as in Nazi times. According to him, the Germany leaders have just renounced on military means and try to achieve their goals now through the EU as well as economic and financial means.
Di Maio, Salvini, Savona (and Berlusconi) are all fans of the autocratic Russian President Putin. Di Maio and Salvini want to drop the Western sanctions against Russia. The Five-Star-Movement and the Lega both received money from Putin to finance their electoral campaigns. In the past, Salvini has been in favor of Putin annexing the Crimea and publicly said that he would replace EU President Juncker by Putin if this was possible.
Luigi Di Maio’s potential coalition partner, Matteo Salvini of the extreme right-wing populist Lega, hinted at a conspiracy regarding President Mattarella’s no to Savona becoming Minister of the Economy and Finance. Salvini has repeatedly blamed Germany, France, the EU, financial markets and rating agencies to intervene in Italian politics.
Di Maio and his Five-Star-Movement as well as Salvini and his Lega are anti-establishment, euro-sceptic populists. They do not want to accept that Italy’s economic and financial problems are almost entirely home-made and have nothing to to with the EU and/or the euro.
It is true that, before the introduction of the euro, Italy “solved” its competitiveness problems by devaluating the Lira. With the introduction of the euro, that was no longer possible. However, the easy solution of devaluating the currency does not increase your productivity. In addition, many Italian companies have quality problems.
The one problem where the EU has miserably failed is the immigration crisis. For years, Germany and other countries in the north looked the other way while Italy and Greece were struggling with an ever greater influx of refugees and migrants for economic reasons.
Di Maio and Salvini think that the Italian establishment is trembling because of their possible rise to power. There are good reasons to be fearful of the Five-Star-Movement and the Lega governing together. Their coalition treaty comes without a credible economic and financial plan. The Lega pushed through the introduction of a flat-tax, the Five-Star-Movement an end to the pension reform as well as the introduction of a minimum income. You cannot lower taxes and increase wellfare spending without consequences for the public deficit and debt.
On the other hand, a majority of Italians voted for the Five-Star-Movement and the Lega. In early elections, they can hope to get even more votes. President Mattarella cannot withstand voter pressure for long. Italy’s future looks compromised. The country is too-big-to-fail and too-big-to-be-saved. That’s why Italy’s future is of global interest.
Photo of Luigi di Maio (center). M5S at Quirinal Palace on April 12, 2018. Photo: public domain, Presidenza della Repubblica.
