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Italy’s government is on the brink of collapse

The shaky alliance between the Northern League and the Five Star Movement is on its last legs, and a fresh election is likely

QUITE A FEW things have melted away in this torrid European summer. By August 8th, the Italian government too looked ready to dissolve within days after Matteo Salvini (pictured above), leader of the hard right Northern League, the dominant party in Italy’s all-populist coalition, signalled he was withdrawing his support. In a statement he said the League’s always-improbable partnership with the environmentalist, pro-welfare Five Star Movement (M5S) had become unworkable and that the solution was an early election.

“It is pointless to go forward on the basis of [vetoes] and disputes,” he declared. And, indeed, the two parties have clashed over almost everything recently from regional autonomy to judicial reform and security policy to safeguards against corruption. But the crisis that blew up on August 8th nevertheless came as a shock, just three days after the League and M5S appeared to have settled their differences over a bill, sponsored by Mr Salvini as interior minister, that introduces draconian penalties for NGOs attempting to bring rescued migrants into Italian ports.

The yield on Italy’s benchmark 10 year bonds leapt almost 20% after markets opened on August 9th amid fears an election could return to office an unfettered Mr Salvini, bent on busting the euro zone’s budgetary constraints in a desperate effort to revive Italy’s ailing economy. Later the same morning the League said it was tabling a motion of no confidence in the government of which it is a part.

The League leader has sparked a wildfire. But it is one he can no longer control. The crucial decisions from now on will depend on two less adventurous figures: the prime minister, Giuseppe Conte, and the president, Sergio Mattarella.

Mr Conte, an independent law professor who was handed the job by Mr Salvini and the Five Stars leader Luigi Di Maio last year, must now choose between resigning and recalling parliament for a confidence vote. He initially signalled his preference for the second option, arguing that the League leader ought to explain to his fellow-lawmakers why he had decided to torpedo Italy’s populist experiment.

Clearly furious with Mr Salvini, the prime minister quoted him as having said in their notionally private conversation earlier that he wanted an election to capitalise on his support in the polls. Since the last election in March 2018, Mr Salvini’s belligerently anti-immigrant stance, combined with relentless electioneering, has more than doubled support for the League, which he depicts as a party for all Italians. The most recent polls suggest it has 37% backing, twice the share of the M5S, which actually outperformed it at last year’s election.

But a return to the polls is not inevitable. Another possible, if less likely, outcome is that the popular Mr Conte wins the backing of parliament for a new and different government. As ties with the League have strained, the M5S has become more receptive to approaches from those in the centre-left Democratic Party (PD) who favour a coalition between them. Mr Salvini has openly expressed concern over the Five Stars’ growing alignment with the PD and one reason he decided to sink the government may have been to eliminate the risk of an alternative, left-leaning coalition. At all events, he has probably acted in time: the majority of PD voters and lawmakers, including the party leader Nicola Zingaretti, remain opposed to an alliance with the M5S.

If, as seems more likely, Mr Conte loses the confidence of parliament next week, the ball will be in the president’s court. Custom dictates that Mr Mattarella should consult his predecessors, the speakers of both houses, and the leaders of Italy’s parliamentary groups to decide what to do next. Italy has never, since becoming a republic after the war, held an election in the autumn. The fear has always been that it would rob parliament of the time needed to agree a budget for the following year.

This year, that task is trickier than ever. Italy’s huge debts – 132% of GDP at the end of last year – keep rising. Yet, to the dismay of the European Commission, Mr Salvini favours swingeing tax cuts in pursuit of the flat tax he has promised his supporters. That could sway the president to installing a non-party government of respected independents – a solution Mr Salvini has opposed, but which he may privately favour, since it would relieve him of an onerous responsibility.

The remaining, but most plausible, possibility is the election Mr Salvini seeks. For a parliamentary majority in Italy, a party needs only about 40% of the vote, since smaller parties that fail to reach a threshold of 3% are eliminated, and just over a third of the seats are allocated on a first-past-the-post basis. Even if the League falls short of that number, it will be able to rely on the backing of a small party of hard-line former neo-fascists, the Brothers of Italy. The result would thus be a government standing further to the right than any seen in Western Europe since the fall of the Iberian dictatorships in the 1970s and one with a mandate to apply a ‘fiscal shock’ that could plunge the euro zone into renewed crisis long before it helped revive Italy’s ailing economy. Be afraid.



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