Italy’s Political Problems are Creating Economic Crises

    Milton Ezrati

    Politics, Europe

    A member of the Italian elite military unit Cuirassiers' Regiment, who are honour guards for the Italian president, stands guard inside the Qurinal palace before Carlo Cottarelli meeting with Italy's President Sergio Mattarella at the Quirinal Palace in Rome, Italy, May 29, 2018. REUTERS/Alessandro Bianchi

    Fractured politics in Italy should continue to offer similar protections against radical policies going forward.

    Italy at last has a government, an unlikely coalition of two anti-establishment, Euro-skeptical parties. Its leadership has begun to talk big, vowing to deliver on its campaign promises. Talk has emerged in some circles about impeaching the country’s president and perhaps withdrawing from the Eurozone and even the EU. Anything is possible—especially in Italy—but given the country’s fractured politics and patterns to date, chances are good that this government, or just about any Italian government, will lack the strength to do anything very substantive. Certainly, it will lack the ability to end Italy’s formal relationship with Europe or even reverse past reform legislation.

    This strange protection against destructive policy is evident in how matters have proceeded to date. The March election failed to produce any party with sufficient votes to form a government on its own. It took until May for coalition efforts to emerge. The two anti-establishment, anti-immigrant parties, the League party and the Five Star Movement, having gained seats in the election, had started talks. It was a strange combination. To be sure, both ran against Italy’s political establishment and showed a good deal of skepticism about the European Union and the Eurozone, but otherwise they had little in common. The League party, right of center, with most of its support in Italy’s industrial north, ran on a more pro-business ticket of tax cuts and economic reform. The Five Star Movement, which leaned to the left and had most of its support in Italy’s impoverished south, ran a more populist campaign. They savaged each other during the run up to the vote. When they began talks for coalition, their proposals reflected these differences with the League’s cut in taxes to a flat 15 percent rate incongruously joined to the movement’s guaranteed income for all Italians.

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