Pop­ulist al­liance in Italy un­nerves lib­eral pow­ers in Euro­pean Union.

Anti-estab­lish­ment par­ties near al­liance, ready to chal­lenge euro, im­mi­gra­tion

The Washington Times Daily - - FRONT PAGE - BY ERIC J. LY­MAN

ROME | The pop­ulist wave that has washed over both sides of the At­lantic may be about to swamp one of the Euro­pean Union’s found­ing pow­ers.

After months of drift and po­lit­i­cal un­cer­tainty, Italy looks set to anoint its first gov­ern­ment dom­i­nated by pop­ulist and anti-im­mi­grant par­ties, set­ting Rome on a col­li­sion course with the EU pow­ers that be in Brus­sels over plans to cut taxes, in­crease spend­ing, re­con­sider the euro cur­rency and dra­mat­i­cally curb the flow of refugees ar­riv­ing on the coun­try’s shores from north­ern Africa.

Pop­ulist and anti-im­mi­grant par­ties have led EU gov­ern­ments in East­ern Europe and even in neigh­bor­ing Aus­tria, but Italy — with the 28-na­tion EU bloc’s fourth-largest econ­omy and pop­u­la­tion — would pose a po­lit­i­cal chal­lenge of an­other mag­ni­tude to the al­liance’s lib­eral order.

Ne­go­ti­a­tions to form a new gov­ern­ment have heated up in re­cent days after an in­con­clu­sive March 4 gen­eral elec­tion. The top two fin­ish­ers — the up­start anti­estab­lish­ment 5-Star Move­ment and the na­tion­al­ist League party — have been inch­ing this week to­ward an al­liance that would have a ra­zor-thin ma­jor­ity in Italy’s par­lia­ment.

Party lead­ers Luigi Di Maio of the 5-Star Move­ment and Mat­teo Salvini of the League were ex­pected to present their gov­ern­ing plan to Ital­ian Pres­i­dent Ser­gio Mattarella on Mon­day but asked for a de­lay. Mr. Mattarella granted them a few more days to try to hash out their dif­fer­ences.

With the bond mar­kets rat­tled and much of Europe watch­ing anx­iously, the two prin­ci­pals sounded in­creas­ingly defiant as they in­sisted Wed­nes­day that a coali­tion deal was close. “It would be crazy to give up at the mo­ment of truth,” Mr. Salvini told fol­low­ers in a Face­book post. “The more they in­sult us, the more they threaten us, the more they black­mail us, the more de­sire I have to em­bark on this chal­lenge.”

Mr. Di Maio said he un­der­stood that an al­liance of the 5-Star Move­ment and the League may “scare a part of the Euro­pean estab­lish­ment.”

“There will be ut­most di­a­logue with Europe, but we will not be subor­di­nate to Eu­ro­crats,” he said.

The 5-Star Move­ment, founded less than a decade ago by an Ital­ian co­me­dian as an ex­per­i­ment in di­rect democ­racy in de­fi­ance of Italy’s tra­di­tional par­ties, says any coali­tion deal must pass muster with its sup­port­ers.

Any deal “will be put to our mem­bers through a vote on­line,” Mr. Di Maio told re­porters Mon­day.

Among the key dis­putes still in ques­tion are specifics of what could be a $120 bil­lion spend­ing spree, in­clud­ing pro­pos­als for a flat in­come tax, an au­to­matic ba­sic in­come for all Ital­ians and more gen­er­ous pen­sions. The League is also push­ing an am­bi­tious over­haul of the jus­tice sys­tem.

Those poli­cies would eas­ily push Italy to the wrong side of Euro­pean Union lim­its on gov­ern­ment bud­get deficits. EU of­fi­cials also are ner­vously fol­low­ing de­vel­op­ments of a pro­posed Ital­ian ref­er­en­dum on the future of the euro cur­rency and poli­cies aimed at turn­ing away refugees from Africa and the Mid­dle East.

As the like­li­hood of a pop­ulist gov­ern­ment in Italy in­creases, the yield on Ital­ian gov­ern­ment bonds — a mea­sure of in­vestor con­fi­dence in the coun­try — has climbed. The rate on 10-year bonds traded above the 2 per­cent thresh­old Tues­day for the first time in more than a year. Mean­while, the euro has steadily lost value against the dol­lar and other ma­jor cur­ren­cies, ap­proach­ing its low­est lev­els since De­cem­ber.

“It’s very pos­si­ble that the par­ties will have to mod­er­ate their plans on a lot of th­ese con­tro­ver­sial ar­eas once they try to gov­ern,” said Flavio Chi­ap­poni, a po­lit­i­cal sci­en­tist at the Uni­ver­sity of Pavia and au­thor of a book about the 5-Star Move­ment. “But dur­ing the cam­paign, nei­ther party was shy about crit­i­ciz­ing the Euro­pean Union, and their sup­port­ers do not ex­pect them to back down. No­body knows ex­actly how it will all play out.”

While both par­ties and party lead­ers revel in chal­leng­ing the con­ven­tional wis­dom of the EU, it hasn’t made them nat­u­ral part­ners on Italy’s deeply fragmented po­lit­i­cal land­scape.

Ni­cola Pasini, a po­lit­i­cal sci­en­tist with the State Uni­ver­sity of Mi­lan, said the par­ties are not a nat­u­ral fit. Though both draw sup­port from young vot­ers and those who op­pose tra­di­tional po­lit­i­cal pow­ers, their poli­cies on fis­cal mat­ters and on the en­vi­ron­ment are of­ten at odds.

Ms. Pasini said the two par­ties — nei­ther of which has led a na­tional gov­ern­ment — will have to switch gears from cam­paign­ing to gov­ern­ing.

This would be the first time the 5-Star Move­ment has had a gov­ern­ment role higher than the mu­nic­i­pal level. The League has been only a ju­nior part­ner in gov­ern­ments led by bil­lion­aire ty­coon Sil­vio Ber­lus­coni, whose hopes to play king­maker were dashed when his cen­ter-right Forza Italia party fin­ished be­hind the League in March. Both lead­ers are young: Mr. Di Maio is 31, and Mr. Salvini is 45.

“Both par­ties cam­paigned by at­tack­ing the po­lit­i­cal elite,” Ms. Pasini said. “Now they are on the verge of cre­at­ing a gov­ern­ment and be­com­ing the po­lit­i­cal elite.”

Mr. Chi­ap­poni said that would prob­a­bly re­sult in in­sta­bil­ity.

“I think we will have a power play be­tween th­ese two par­ties, and as soon as one of them thinks his party will be better off with new elec­tions, he could pull his sup­port and the gov­ern­ment would col­lapse,” Mr. Chi­ap­poni said.

Mr. Mattarella said this month that if po­lit­i­cal lead­ers can’t form a coali­tion, he will ap­point a non­par­ti­san fig­ure to lead a care­taker gov­ern­ment and hold new elec­tions by the end of the year.


Mat­teo Salvini (left), leader of the League party, and Luigi Di Maio, who heads the up­start 5-Star move­ment, are in con­sul­ta­tions to de­ter­mine whether any party or coali­tion can muster sup­port to form a gov­ern­ment after the March 4 elec­tion pro­duced no ma­jor­ity in par­lia­ment. Much of Europe is watch­ing anx­iously, and bond mar­kets are rat­tled.

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