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Is Italy Sliding Back to Political Instability?

In a time-critical step, three Italian parties that were involved in the coalition government forced Prime Minister Mario Draghi and his government to step down, with early elections to be held in late September or early October. Draghi, however, will stay on as caretaker prime minister until the election.

In Western capitals and the European Commission, this development provoked a mixture of astonishment, indignation, anxiety, and trepidation. Overall, this was a turn-up for the book. Draghi, who is known as the euro’s savior, is a major banker, a member of the Western financial elite, and a globally known figure. His chairing of the government was one of the reasons the European Union (EU) accepted ​​ infusing large amounts of money into the Italian economy (€209 billion).

Draghi spearheaded a reform process that seemed essential. The coalition government meant that everyone involved had a responsibility but none was to assume responsibility but the non-partisan prime minister. Rather than dictatorship in its original sense, observers spoke of Draghi’s “Central bank dictatorship”.  While Draghi’s decisions were mostly rational and necessary, his strong inclination to unilateral action –in all spheres including foreign policy– enraged the political forces.

Onset of the Crisis

Former Prime Minister Giuseppe Conte’s outrage at Draghi was no secret to anybody. Conte, who is the president of the Five Star Movement (M5S), served as a prime minister from June 2018 to February 2021. He has always believed that his performance as prime minister was quite reasonable and that Draghi’s international contacts is what brought him to office. So, he never failed to make trouble. This didn’t come in useful for the M5S. On the contrary, its popularity declined, particularly after Foreign Minister Luigi Di Maio and 60 members left it following sharp divisions.

The crisis that toppled the government started when the M5S refused the government’s economic aid package. Draghi didn’t care about the M5S suggestions, outbidding them. Then, everyone was taken aback by the right wing parties’ (particularly Forza Italia [Italy Forward] and Lega [League]) call for reformation of the government without involving the troublemaker M5S. Draghi didn’t respond to the call. After all, he is a technocratic and wanted to secure the widest possible support of voters.

The crisis culminated when, contrary to expectations, the two parties along with the M5S refused to give a vote of confidence to Draghi. This was a bolt from the blue because, until the last moment, observers envisaged that the two parties were maneuvering rather than sitting tight. Perhaps this standpoint had resonance in thousands of calls of local councils’ members for the continuation of the Draghi government. However, it turned out that forcing the government to resign would allow all parties that conspired against it to play a role in the deep-seated disputes.

A Fragile Situation and European Anxiety

The simplicity of the crisis that overturned the government speaks volumes of its shaky foundations. Draghi was appointed to deal with the Covid-19 crisis and to urge the EU to provide a huge package of aid to Italy. His management of the crisis was resolute yet seemed authoritarian. He introduced reforms and implemented them in a similar manner. This authoritarian approach and gravity of the situation explain his insistence on obtaining the largest party support that rises to the level of mandate.

Draghi’s phone number was known to just a few members of his government. Many of the cabinet members knew of the substance of the reforms only after they were adopted. The M5S resented Draghi’s reforms of the justice system and the League fumed at his tax reforms, but they backed the government for a while.

Initially, Draghi’s unilateral action was not contested. After all, his competence in finance and economics isn’t questionable and the man can bring plenty of European money into Italy. However, things changed two or three months before Russia’s invasion of Ukraine when Draghi declared his intention to run for presidency. His declaration raised fears of the elite that dreaded the ghost of Mussolini. He seemed to be motivated by a personal ambition; so, many conspired to spoil his endeavor and persuade President Mattarella to continue in office. Then came Russia’s invasion of Ukraine which made the situation worse. On the one hand, Draghi isn’t competent in foreign policy. On the other hand, the Italian people are the most sympathetic Europeans to Russia. All Italian right-wing parties (Fratelli d’Italia [Brothers of Italy], Italy Forward, the League) have close ties to the Kremlin, as do the left populist M5S. In short, Draghi’s policy on Russia, which toes the NATO line, has “seemingly” failed to express views and positions of Italy, running counter to its interests, particularly in the energy field.

Perhaps this aspect is a key cause of concern for Europe. A common ground between all the forces that brought Draghi down was their close ties with the Kremlin. Opinion polls in Italy suggest that Brothers of Italy (BoI) will top the ballot, gaining about a quarter of the votes. BoI didn’t participate in Draghi’s government in the first place and opposed it from day one. It is a far-right wing party and was, at some time, close to Moscow. Yet its leader, Giorgia Meloni, openly condemned Russia’s invasion of Ukraine and endorsed sanctions on Russia. The sincerity of her stance remains questionable, though. Most likely, she will get into an alliance with the League and Italy Forward parties, both of which maintain strong ties with President Putin. Some observers underestimate this, arguing that the League party has the backing of small and medium manufacturers and entrepreneurs, who managed in the past to mitigate the League’s hostile attitude towards the EU. Experts do not question the ability of this group to convince party leaders to stay away from Moscow. Clearly, though, we are leaping into the unknown, particularly with the League, M5S, and Italy Forward parties pressing charges and attributing every negative development in Italy to the EU bureaucracy.

Realizing how Hungary complicates the decision-making process in the EU, all European circles fear that the potential Italian government could play a similar role (Italy is the third economy in the EU), suspending decisions on aid to Ukraine, Russian gas, rationalization of Russian gas use, and imposition of sanctions on Moscow. They also fear that Italy could adopt irrational economic policies that aggravate the euro crisis, complicate European debt management, and affect plans to revitalize economies. Additionally, cooperation between France and Italy may be difficult or impossible given the poor relations between President Macron and the Italian right.

These fears may not be justifiable, though. So far, Italy only got a quarter of the EU aid, which is conditional upon Roma’s commitment to carry out profound reforms. The potential aid from the EU may drive the coming government to pursue Draghi’s policies pertaining to engagement with the EU and managing the economy. Meanwhile, Italy remains crippled until the elections are held late September at best. This paralysis may be detrimental if prices rise abruptly.

Upcoming Elections

The upcoming elections are expected to be highly competitive. Opinion polls suggest that BoI and the Democratic Party (established in 2007, comprising communists and ex-Christian Democrats, a combination that does not enable internal coordination) will compete for the first place, followed by the League (less than 15%), the M5S (a bit more than 12%), and Italy Forward (8%).

Leader of the BoI, Giorgia Meloni, has expertise in ministerial work. She served as a minister of youth in Berlusconi’s last cabinet, is a gifted public speaker but adopts an anti-immigrants rhetoric, and pursues protectionist policies that gain popularity yet raise doubts of the financial and economic circles. The Democratic Party can brag about being the only party that supported Draghi sincerely, without narrow partisan calculations. However, it is quite isolated, can’t pass the 22 percent mark, and is labeled as being an “elite party. Furthermore, it has no “natural” ally: it is highly critical of the M5S, and sees it as irresponsible and highly volatile, with no clear line or identity.

Politically, Italy has previously known “unusual and bizarre” alliances but I believe that the lack of a natural ally may result in losing votes. There is consensus among observers on the little chances of Italy Forward, with its leadership growing old and proving incompetent after taking office. The League is perhaps the only party with a solid organizational structure but it suffers divisions between populists and small and medium manufacturers and entrepreneurs who have European orientation and favor “rational” economic policies.

It may be too early to talk about a crisis of governance in big EU countries, but there is a mounting momentum for this. The German government experiences sharp divisions and the main party in the ruling coalition did not do well in the elections and was forced to ally with two parties, not one. The decision-making process is quite complex in Germany as well. In France, the government does not enjoy an absolute majority in Parliament, has not forged alliances that secure such a majority, and is forced to negotiate daily with opposition forces that are mostly extremist. Italy, too, seems on the way back to political instability. All of this comes amid a stressful international situation whose consequences are difficult to precisely predict. 

Dr. Tewfik Aclimandos
Chief of European studies unit

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