Italy's rule bending government a headache for Brussels

Italy was never just going to quit the euro, not right now at least. But the new government is going to be a big headache for Brussels whose failing deep integrationist project will continue to lurch from crisis to crisis

Giuseppe Conte, Prime Minister of Italy
Tim Hedges
On 4 June 2018 10:15

On 2nd June, 1946, Italy was on its knees after the Second World War, the country’s infrastructure destroyed both by the departing Germans and by the arriving allies. Many men were still missing, stranded in foreign camps. It was a difficult moment for politics but the Italians were asked what sort of government they should have, monarchy or a republic.

They voted by 12 million to 10 million for a republic.

What is known as the Second Republic came into being in 1992. The old system of Christian Democrat rule with the Communists in opposition ground to a halt, the Communists destroyed by bickering after the collapse of the Soviet Union, the Christian Democrats by the exposure of deep rooted corruption in the Tangentopoli prosecutions. Silvio Berlusconi arrived on the scene at this time.

What some are calling the Third Republic began on Republic Day, 2nd June, this year. Little known university professor Giuseppe Conte has finally formed a government, although people assume he is the puppet of Luigi di Mayo’s 5-Star and Matteo Salvini’s Lega parties.

The birth of this Third Republic, if that is what it turns out to be, has not been without its troubles. In my last article I showed how the EU had nobbled President Mattarella to refuse the appointment of finance minister designate Paolo Savona, a man with eurosceptic credentials.

It was then that the games began. Silvio Berlusconi, the acknowledged master of this peculiarly Italian art, will have been delighted.

Di Maio and Salvini both exuded outrage: what was the point of the people voting if the government was to be chosen by bankers and eurocrats? Then Di Maio called for the impeachment of Mattarella.

Mattarella responded by inviting Carlo Cottarelli to form a government. To give an idea of the flavour of this move, Cottarelli had been employed as costcutter in chief (a process politely known as reform of the public administration)  to the government of Enrico Letta, before running the Italy desk of the IMF. He is known as Signor Forbici - Mr. Scissors.

Cottarelli appeared before the press looking tanned and tough, carrying a rucksack which might have contained torture equipment. He explained that far from the proposed legislative programme, he believed Governments should live within their means.

So here was a man who had worked for the old guard and, you can imagine Di Maio wincing, the IMF, who wanted to make spending cuts. Salvini said he wasn’t sure they needed to go as far as impeaching the President and Di Maio wondered publicly whether perhaps - surely? - they could get the plan back on the road with different personnel.

Salvini this time had been closely following the opinion polls which showed his own party rising in popularity and that of Di Maio falling. So he said no, he was inclined to go for an election. Di Maio, running scared now, begged to reopen the dialogue and the result is a huge success for Salvini. Despite his Lega party getting around half the seats that 5-Star got at the election, he has secured virtually equal cabinet representation.

They gave in on Paolo Savona being Finance Minister, appointing instead Giovanni Tria, a mildly eurosceptic independent. But to cock a final snook at President Mattarella they made Savona Minister for Europe.

So with the games over the serious work begins. Let us see what they can do.

Can they last? Whether or not the two parties are populist, a word which seems to mean less and less, they are certainly popular. The feeling in Italy is the more things they change - the finances, the immigrants, the public administration, the voting system, the better.

Will Italy stay in the euro? Leaving, even for a committed eurosceptic like me, is extremely difficult. My guess is that Brussels will allow the rules to be bent until Jens Weidmann of the Bundesbank is weeping publicly, and Italy will stay in. Just.

Tim Hedges, The Commentator's Italy Correspondent, had a career in corporate finance before moving to Rome where he works as a freelancewriter, novelist, and farmer. You can read more of his articles about Italy here

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