What happens in Italy is important because the country has a lot of debt and a tottering banking system. From Tom Luongo at strategic-culture.org:
Italian leader Matteo Salvini is in the headlines again, now openly threatening divorce with his coalition partner, Five Star Movement (M5S).
Salvini unleashed another round of rhetorical bombs at M5S to get on them board with his part of the agenda. But that seems to have failed and he is now prepared to go to Parliament and withdraw his party, Lega, from the coalition government which will lead to new elections.
He had put off any kind of talk of new elections in the past because the opinion polling wasn’t strong enough to grant Lega the kind of majority it needed to govern without strings.
The coalition is dead but it may not matter.
The biggest problem Salvini faced, however, wasn’t M5S’s internal strife and contradictions. His biggest obstacle lies in the Troika of Technocrats that hold all the real power in Italy as it pertains to the European Union.
That Troika is President Sergei Mattarella, Prime Minister Giuseppe Conte and Finance Minister Giovanni Tria and they are the problem, as I wrote back in June.
Prime Minister Giuseppe Conti and Economy Minister Giovanni Tria are in open revolt against the coalition leaders over the upcoming budget fight with the EU.
Reuters is reporting this morning that these two are working together to undermine the internal reforms Salvini is proposing to spur economic growth from the ground up by instituting a flat tax and spending a whopping $3 billion more than Brussels wants them to on rebuilding crumbling Italian infrastructure.
Conte and Tria were essentially hand-picked by Mattarella to slow the current government’s roll and make nice with Brussels if they painted outside the lines. It was Mattarella who nixed Paolo Savona as the coalition’s pick for Finance Minister and it nearly saw him impeached for overstepping his authority.
Savona was deeply anti-euro.
Conte was also a compromise pick to get the coalition formed and deal with the fallout later. The latest threats by Salvini to take down the government is something he has been goaded into doing in the past when the polls were less definitive.
But today his threat is a much bigger one. When Lega was polling 32-34% there was no election calculus that would allow them to take control and still not be saddled with an albatross; either a spiteful M5S or a coalition of minor parties with deep state Italian ties, like Forza Italia.
Today, however, the calculus is different. Lega is polling at 38-40%.
And that puts them in a much different position. Remember that the Italian Deep State pushed forward under former Prime Minister Matteo Renzi the new election law that allocates one-third of parliamentary seats by marjoritarian, or first-past-the-post, voting. The remaining two-thirds are allocated proportionally.
Now, this was done to blunt the rise of Euroskeptic parties like M5S and create over-representation for establishment parties. But that only works if the establishment parties’ support doesn’t collapse.
Look at what just happened in Ukraine, with a similar system. Volodymyr Zelensky’s Servant of the People took less than a majority of the votes but won more than 55% of the seats. Now, Ukraine’s internal politics are such that controlling the Verkovna Rada doesn’t that much, but it’s a good start that Zelensky won’t have to govern with a coalition partner.
I don’t have any idea of the internal, regional numbers for Italy but if Lega pulls more than 40% in a general election it is likely they will have enough seats to form a majority government without partners. That’s what Salvini is banking on. And he should be confident given he trends in polling and the frustration with M5S, who were the recipients of support out of pure protest.
Now that there is competition for that protest vote and a leader with a clear path for Italy, it’s no surprise that they have fallen and Lega risen.
The worst-case scenario I can see for Salvini would be having to coalition with the ideologically aligned Brothers of Italy (FdL).
Silvio Berlusconi’s Forza Italia (FI) is failing quickly, as is M5S, whose support has halved since last March’s election.
This election calculus creates a much more stable situation that what shook out of 2018’s election. And it is the reason why Salvini looks ready to take the fight to the Italian Troika.
The key here is President Mattarella whose job it is to keep in place people loyal to Europe and defeat Salvini in any real reforms. So, color me shocked that there’s a hit piece on Bloomberg attacking his lack of accomplishments while over-stating his promises.
Most importantly, Salvini appears more interested in his popularity than in policy. He revels in tweeting on pretty much anything – from the beer he is drinking to celebrating the birthday of the Virgin Mary – and in DJ-ing shirtless in a beach club on Italy’s coast. But when one looks at how much of the League’s program he has actually implemented, voters have little to celebrate.
Take economic policy. The League has failed to deliver on its pledge to bring in a “flat tax” to lower Italy’s notoriously high rates. Instead, the tax burden has increased in the first three months of this year to 38% of gross domestic product from 37.7% in the same period of 2018, according to Italy’s statistics office. Salvini has also failed to deliver on a law which would give greater autonomy to Italy’s northern regions – the League’s electoral base – because of opposition from Five Star, which fears losing support in the South.
Yes, Salvini has failed to deliver on his promises as the junior member of a coalition government run by inept leftists and sabotaged by his own Prime Minister, Finance Minister and President.
The writer, Ferdinando Giugliano, then states that Salvini promised to get Italy out of the euro, which he explicitly did not campaign on nor has he talked about openly since being in power. That Salvini wants to get Italy out of the euro without concessions and changes to the EU’s finance rules is well known. But it’s not something he’s agitating for.
Laying the plans for leavingh the euro through the mini-BOT? Of course.
Is that a bargaining chip to use in negotiations with Brussels? Absolutely.
If you look at what Giugliano is saying it’s clear that his opening statement is the most accurate in the entire piece. “Matteo Salvini… likes to play the long game.”
Which is exactly what he should be doing, as I’ve pointed out consistently for nearly two years now (here, here, here). At every turn Salvini must cast others as the problem if he wants to win politically, which isn’t hard because it’s the truth.
And the more he does this the higher in the polls Lega rises.
With numbers where they are Salvini is looking at the opportunity to force the Troika to back down. This was why the rumors of forcing a cabinet reshuffle sound plausible. Now that he’s calling for a new election they could all be out of jobs.
The best outcome was for Brussels to keep Salvini saddled to M5S, retaining the status quo for as long as possible. Oops.
But Salvini, in constant contact with his fellow Euroskeptic leaders like Viktor Orban in Hungary, Nigel Farage in the U.K., Marine Le Pen in France, knows that timing in politics is everything. Poking this snake now, going for a consolidation of power the people seem to want of him, while Brussels is up to its neck in Brexit, new divisions within the EU parliament, and financial markets becoming more unmoored from reality every day is the right move.
If he pulls this off he could change the face of Italian politics for a generation and the face of Europe for a century.