Social Europe: The Populists’ Euro

The second point is less well known, but even less controversial: recent polls show that 60-72% of Italians favour the euro. Some believe the single currency safeguards their savings, while others regard it as an emblem of Italy’s status as a founding member of the European Union. But if motives differ, the balance of public opinion does not.

Bowing to this reality, the coalition partners have now dropped the idea of abandoning the euro, expunging the possibility from their “contract” and respective websites. Paolo Savona, a diehard opponent of the euro, has been denied the finance ministry. But Carlo Cottarelli, whose proposed appointment at the head of a technocratic government would have disenfranchised a majority of voters, has also been denied the reins of power. Appropriately, given the election result, Italians now have their populist government and their euro, too.  [...]

In fact, the argument for a measured fiscal stimulus is sound – just not the kind of fiscal stimulus the League and M5S have in mind. An economy in Italy’s condition needs “two-handed policies”: supply-side reforms of labor and product markets to boost productivity and international competitiveness, accompanied by demand stimulus to prevent the uncertainties of reform and the surrounding political noise from depressing spending. Although Italy has a heavy debt burden, it also has a modicum of fiscal space, given low interest rates and a primary budget surplus.

read the article

The Atlantic: Spitting in Europe’s Face Won’t Help Italy

PARIS—It’s time to retire the famous line by the Italian writer Ennio Flaiano, that in Italian politics, the situation is “always grave but never serious.” Today, it’s fair to say the situation is both grave and serious. The implosion on Sunday of a populist governing coalition—after Italy’s president vetoed the coalition’s choice of a euroskeptical economist as finance minister—has achieved three results, none of them good for the stability of Italy or Europe. It’s set Italy on the path to new elections. It’s strengthened the hand of the right-wing, anti-immigrant League party. And it’s turned Italy into a de facto referendum on the euro—an unprecedented development in a core member of the European Union and single currency. [...]

It’s the latest example of a short-circuit that was tripped when the European debt crisis began a decade ago: Mattarella’s move may be good for short-term stability in the European Union, but it’s not great for democracy—which in turn emboldens the populists who increasingly see the bloc as anti-democratic. The appointment of Cottarelli is a gift for the League, whose leader, Matteo Salvini, campaigned all along on a platform of liberating Italy from servitude to Brussels and Berlin. Meanwhile, the leader of the Five-Star Movement, Luigi di Maio, who only days ago said it was up to the president to choose ministers, has now set Italian social media on fire with calls for Mattarella’s impeachment because he intervened in selecting ministers, and has also called for mass mobilizations across Italy “to manifest our right to determine our future.” [...]

But in rejecting Savona, Mattarella had good reasons. He said on Sunday that any conversations about Italy’s membership in the euro should be held in public—especially since euro membership wasn’t an issue for debate in the platform agreed on by the Five-Star Movement and the League for the government they put forth last week. The League’s Salvini has flip-flopped in recent years on whether he wants Italy to stay in the euro. In the past, he’s said he wants a referendum on euro membership; during the campaign, he moderated his tone on the euro but raised it on immigration. Meanwhile, Di Maio of the Five-Star Movement kept quiet on the euro during the campaign, but the movement’s founder, Beppe Grillo, said this month that he wanted a “consultative referendum” on the currency. “It might be a good idea to have two euros, for two more homogeneous economical regions. One for northern Europe and one for southern Europe,” he told Newsweek this month.

read the article

Politico: Italy’s president scotches populist governing alliance

After the two populist parties refused to compromise on their choice of 81-year-old economist Paolo Savona for the ministry, Italy’s prime minister-designate — a little-known lawyer called Giuseppe Conte — said on Sunday he had told the president he was rejecting the mandate to form a new government. [...]

“Membership of the euro is a fundamental choice for the future of our country and our young people,” said the president, adding that since euro membership had not been part of the election campaign, it could not be questioned by the appointment of a Cabinet minister without holding a proper public debate. [...]

But even if Mattarella gives Cottarelli a mandate to form a government, he will face an uphill battle. Even though the two main opposition parties, Silvio Berlusconi’s Forza Italia and the center-left Democratic Party, have already said they would support a government sponsored by Mattarella, that may not be enough for such a government to survive a confidence vote in parliament.

read the article