Insight
Why Italy will confront the EU, but stay in the euro by Luigi Scazzieri and John Springford 4 June 2018
The new Italian government is likely to initially try to score some easy victories. The EU should give it some leeway, and avoid inflaming public opinion in Italy. Almost three months after elections, Italy has a government. The coalition between the populist Five Star Movement and the nationalist League will lead to friction between Italy and Brussels. But the EU should avoid head-on confrontation and wait to see what the new government does. The government is not as radical as it could be: League leader Matteo Salvini and Five Star Leader Di Maio are deputy prime ministers, and the eurosceptic Paolo Savona, initially vetoed by Italy’s President as finance minister, is minister for Europe – allowing Salvini to claim victory despite his swift climb down. But the government includes moderate figures, with economics professor Giovanni Tria in the finance ministry, and Enzo Moavero Milanesi, Europe minister in Mario Monti’s government, as foreign minister. And the long process of forming a government has revealed the constraining role that Italy’s President, its constitution – and the bond markets – can play. The new government will attempt to throw its weight around more with other member-states, and act more unilaterally in pursuing its interests. But it will probably not try actively to leave the eurozone. According to the latest Eurobarometer poll, only 30 per cent of Italians disapprove of the euro. And polling reveals that even 56 per cent of Five Star supporters and 40 per cent of League voters want to keep the single currency. Politicians and officials in other countries should wait and see how the new government behaves before opening their mouths. Commission President Jean-Claude Juncker exhorted Italians to “take care of the poor regions of Italy” themselves, which meant “more work, less corruption, more seriousness”. Belgian MEP Guy Verhofstadt’s claimed “Italy is not struggling because of the euro, but because of a lack of structural reforms”. Lectures by northern Europeans reinforce the idea that the EU is always telling Italy what to do, and encourage Five Star and the League to lash out, and push them towards more hardline positions. It may also be best to put plans to reform the eurozone on hold for now, rather than risk exacerbating tensions. Angela Merkel gave an interview to the Frankfurter CER INSIGHT: Why Italy will confront the EU, but stay in the euro 4 June 2018
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