Italy’s Populist Parties Win Approval to Form Government

https://www.nytimes.com/2018/05/31/world/europe/italy-government-populists.html

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ROME — After 88 days of impasses and negotiations, two Italian populist parties with a history of antagonism toward the European Union received approval Thursday night to create a government that has already unsettled the Continent’s political order.

Only days ago, President Sergio Mattarella of Italy rejected a populist government over concerns about a proposed finance minister who had helped write a guide for withdrawing Italy from the euro, Europe’s single currency. The political chaos and sudden uncertainty about the euro helped send global financial markets reeling.

On Thursday, the populists reshuffled, keeping the same prime minister, Giuseppe Conte, and other top players, but moving the objectionable finance minister to a less critical post.

That was apparently enough to satisfy the president, who preferred an elected government to a caretaker alternative he had in reserve. The populist parties constituting the new government won the most votes in a March 4 election, promising a sweeping crackdown on the illegal immigration that helped fuel their ascent.

But the president’s assent was not enough to allay concerns about the actual agenda of the populists once they enter power, even though they now claim a sudden conversion to full faith in the euro.

“The populist and right-wing government has a program that’s dangerous for the country and the events of recent days confirm our longstanding concerns,” said Maurizio Martina, a leader of the Democratic Party, which will now leave government for the opposition. “Their acts so far have been a mix of extremism, anti-Europism and iniquity.”

The new government still needs to win a confidence vote in Parliament, but that was a formality. The government will be sworn in Friday.

The remarkable rise of the populists now leaves Italy’s traditional political establishment, left and right, in tatters. It also shocked a European Union that thought it had successfully beaten back an anti-establishment and hard-right insurgency last year.

The populist victory in Italy now could not come at a worse time for the European Union. A corruption scandal in Spain has led to the ouster of that country’s prime minister, whose government had been a model for the central authorities in Brussels. Britain is leaving. Chancellor Angela Merkel of Germany is weakened. President Emmanuel Macron of France is a pro-Europe leader in search of partners. Poland and Hungary are rolling back democracy. The United States president is waging a trade war on European allies, while more and more Europeans look to Russia’s strongman, Vladimir V. Putin, as a model.

But amid all the geopolitical and economic threats to the European Union, Italy represented perhaps the gravest. And as is often the case with Italy, it was overlooked.

The birthplace of fascism and for years the home of Western Europe’s largest communist party, Italy again proved an incubator for political experiment. The populist parties it produced — the Five Star Movement, a party developed on the internet, and the League, a formerly northern secessionist movement — to varying degrees both blame the euro for depriving Italy of sovereignty.

Like the other countries that have adopted the euro, Italy has lost its power to control interest rates, which are set by the European Union’s central bank. The so-called eurozone countries also must adhere to strict fiscal rules, which are especially difficult for Italy because of its heavy debts.

Economists say that if Italy, the fourth-biggest economy in the European Union, were to exit the euro it would do enormous financial damage to the country and hurt the Continent’s economic stability.

The political uncertainty in Italy — as well the remote possibility of leaving the euro — spooked the markets when the formation of a government by the two parties appeared likely. The combination created some of the scariest economic days for the country since the 2011 financial crisis that planted the seeds for this week’s populist flowering.

After a leaked draft of the alliance’s government platform included proposals about leaving the eurozone and a proposed finance minister turned out to have helped write a guide to leaving the euro, the global markets dipped precipitously.

Since then, however, seemingly every Five Star and League leader has disavowed their antagonism to the euro, or rather denied ever harboring any hostility to it whatsoever.

On Wednesday night, League officials literally whitewashed their anti-euro history by painting over the blue “Basta Euro,” or no more euro, sign on its headquarters in Milan.

“The euro was never in discussion,” Mr. Conte, who will be sworn in Friday as prime minister with the rest of his cabinet, said in Florence on Thursday morning before traveling to Rome and then the Quirinal Palace in a plain taxi cab, the preferred transportation for the anti-establishment Five Star.

But for any global investor with a search engine or European Union leader with a memory, there remained a real question as to whether the sharply negative market reaction had truly chastened the populists, or whether it simply had led them to disguise their hostility as the price of admission into power.

Also unclear was how the parties, which had demanded an Italians-first approach and a dramatic restructuring of their relationship with Europe, would go about it.

“I will read the composition of the government,” Mr. Conte said late Thursday night, minutes after receiving approval to form a government from President Mattarella.

The cabinet still included the minister blocked by President Mattarella — Paolo Savona, the euro-skeptic economist. But Mr. Savona has now been moved from the powerful finance ministry to the less consequential European affairs ministry.

He will nevertheless be Italy’s representative in Brussels, a key spot for a coalition that wants to change the rules of the European Union.

While some other key posts in the cabinet were filled with politicians experienced in working in the European Union, Mr. Conte said the leaders of Italy’s populist alliance, Luigi Di Maio of the Five Star Movement and Matteo Salvini of the League, would be at his side as vice premiers.

Critics have said Mr. Di Maio and Mr. Salvini will most likely be in the driver’s seat.

“We will work intensely” to implement the alliance’s electoral program and “with determination to improve the quality of life of all Italians,” Mr. Conte said.

Populist leaders in Europe and across the Atlantic looked on with delight as they gained a powerful ally in the heart of Western Europe.

Stephen K. Bannon, an architect of President Trump’s own populist-themed campaign, was in Italy to celebrate the new government. He explained in an interview how, a few days after the election, he had met for hours with Mr. Salvini and other senior League officials in Milan urging them to form an alliance with Five Star.

Mr. Bannon said he told Mr. Salvini, “You are the first guys who can really break the left and right paradigm. You can show that populism is the new organizing principle.”

He expressed confidence others in Europe would follow.

The League and Five Star both want to renegotiate treaties on budgets, migration and a range of other issues with the European Union. They also want to lift sanctions against Russia and for Italy to move closer to its president, Mr. Putin, who once said he did not need to meddle in the Italian election because it was all going his way.

The political breakthrough between Five Star and the League seemed both inevitable and frustratingly out of reach.

An inconclusive election led to months of stalemate. Mr. Mattarella threatened to form a caretaker government, which triggered the formation of an alliance between the Five Star and League parties. After weeks of intense negotiations, they presented a prime minister and a cabinet that Mr. Mattarella rejected.

The president was about to exercise his authority to create a caretaker government but held off, as the populist parties struggled to give it another shot.

Mr. Di Maio, 31, triumphant after his party claimed a third of the March vote, was this week reduced to imploring Mr. Salvini to abandon his calls for another election. With grumbling growing inside his own party, Mr. Di Maio needed help forming a government.

Ultimately, Mr. Salvini, with a performance Machiavelli would be proud of, accepted and gained plenty of influence in the government.

In the hours immediately following the official announcement about the new government, Mr. Salvini returned triumphantly to his northern Italian base.

He said he looked forward to “snipping” the billions of euros in the Italian budget reserved for “maintaining immigrants in the country.”

In a retort to the European Commission president, Jean-Claude Juncker, who suggested that Italians must work harder and be less corrupt, Mr. Salvini made clear that the days of Italy going “hat in hand” to Brussels were over.