Ημ/νια δημοσίευσης: Τρίτη, 29 Μαΐου 2018

Italy heads towards new elections

Italian Prime Minister, Giuseppe Conte, resigned from his attempt to form a government after the President vetoed the election of the Minister of Economy. In particular, the Italian President, Sergio Mattarella, said he agreed on all the proposals but did not approve the candidate Economy Minister Paolo Savona, who had suggested in the past that Italy could leave the euro. The move by Sergio Mattarella angered the 5-Star Movement (M5S) and Northern Lega (LN) that formed the coalition to form a government.1

Thus, Giuseppe Conte, a barely known 53-year-old lawyer without political experience, subsequently rejected the President's bid to form a government and threw Italy into a new political crisis. The country completed 11 weeks without government since the March 4 elections where the 5-Star Movement (M5S) and NorthernLega (LN) won 32% and 18% respectively in a hungparliament. Sergio Mattarella summoned a former International Monetary Fund official, Carlo Cottarelli, also known as “Mr. Scissors” for making cuts to public spending in Italy, at the presidential palace on Monday morning, which was interpreted as an indication that Cottarelli will be called upon to form a government of non-elected technocrats.2,3

Mattarella’s move could jeopardize a constitutional crisis and the country is now expected to go back to the polls in the autumn. In addition, Sergio Mattarella as Head of State is supposed to be politically neutral. Of course, the President himself declared that the choice of Paolo Savona as Minister of Economy would cause problems for the economy. The leaders of M5S and Lega, Luigi Di Maio and Matteo Salvini, denounce the veto, revealing Germany's involvement, rating agencies and financial lobbies.

Some analysts have believed that any move by Mattarella to push against the populist parties would only serve to agitate their supporters, and fuel anti-euro sentiment in Italy. Moreover, they have argued that new elections could create an even bigger majority for the M5S and the Lega.

Economists estimate the cost of coalition promises, including lower taxes, higher benefits and early retirement, could reach 170 billion euros, about 10% of Italy's GDP. This would jeopardize the country's already high debt of 2.1 trillion euros and as a result that would trigger the EU’s worst case-scenario: a debt crisis similar to that of Greece in the Eurozone’s third-biggest economy.4