Editorial | Not just another Italian political crisis

Italy’s woes can be brushed off as the usual political machinations but in an ever-connected EU, what happens in Italy can have a profound impact on the bloc


Italy’s political crisis is nothing new to those of a certain age who have been following happenings in the neighbouring country.
Backstabbing, intrigue and governments that come and go have been a mainstay of the Italian political system since the end of World War II.

There is historic logic in Italy’s fragmented system that shies away from installing strong governments that can last a whole legislature.

Italians were wary of strong governments in the aftermath of the fascist years under Benito Mussolini. Fragmentation was a guarantee against the return of the ugly years under fascism.

This legacy, coupled with a political culture that seems to thrive on divisions, has, however, left the country in a perpetual state of flux.

Within this context, the latest resignation of prime minister Giuseppe Conte and the subsequent wrangling over the formation of a new coalition government comes as no surprise.

The likeliness is that the populist Lega Nord led by its charismatic communicator Matteo Salvini will be pushed out of government.

The development is good news for the markets because it opens up the possibility of the mainstream centre-left Democratic Party to join the government with the populist Five Star Movement.

It is unclear whether this coalition will be able to last the rest of the legislature. And there is the fear that Salvini, unshackled by the strictures of government, will grow in popularity in the polls, putting him in a stronger position to become prime minister at the next election.

That possibility could send shockwaves in the EU given Salvini’s disregard for the need to balance public finances and his most recent call for Italy to pull out of the Eurozone.

Italy’s woes can be brushed off as the usual political machinations but in an ever-connected EU, what happens in Italy can have a profound impact on the bloc.

The country has the fourth largest economy in the EU, and it will become the third largest when Britain leaves. Italy also has an extraordinary amount of public debt, which gives the country no room for manoeuvre.

Bringing public finances under control and managing to grow the economy are crucial to stave off a financial crisis. Successive governments have failed to shake up the country enough to bring substantial change. Public projects such as the high-speed train link that will connect the Italian city of Torino with France’s Lyon appear to have no end in sight.

Unemployment among youngsters remains high and reforming stifling labour laws has been an uphill struggle.

This time around, what happens in Italy cannot be simply brushed aside as the usual happenings.

If Italy buckles, the Eurozone crisis of 2010 will pale into insignificance next to the impact an Italian debacle will have.

Recovery in the EU has been slow and economists are forecasting slower growth this year.

With the uncertainty caused by the US-China trade war, and Brexit, the Eurozone may not be in the best of places to contend with an Italian financial crisis.

This is why Italy must steer away from populism that proposes flimsy solutions to real life problems and embark on a programme of socio-economic reforms to unshackle the country and ensure Italians live a decent life.

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