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Italy could blow up Europe as we know it

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As Italy’s leading vote-getters work through the weekend to hammer out a coalition deal — about time, some might add, two months after the election — the EU and Brussels establishments are in a state of heightened anxiety, reported Politico (Germany).

A government of the 5Stars (anti-establishment, in media shorthand) and the League (far right, ditto) together, or somehow alone, is unprecedented. Never before in any of the six original EU countries, much less one of its leading powers, have parties deeply skeptical toward the EU grabbed the reins of power. If that happens, the consequences for Italy and the EU could be felt for months and years to come.

But the appetizer has been served. A surprise election outcome that sidelined Italy’s more traditional left and right parties and catapulted this odd couple into the limelight is disrupting European politics in unexpected ways.

Here’s how Italy may yet blow up the EU as we know it.

EU reform is dead, long live …
If the EU elite have understood one thing from Brexit, it is that the EU needs to change. Two years on, that’s where the agreement ends. Italy is poised to be the nail in its coffin — or, perhaps less likely, a shot of adrenaline.

Donald Tusk, who runs the European Council, attempted the Bratislava Declaration and Roadmap in September 2016. Commission President Jean-Claude Juncker won plaudits for his 2017 Future of Europe white paper, but tanked when six months later he put forward a specific plan that wasn’t mentioned in the initial paper. Emmanuel Macron attempted to start the EU’s traditional Franco-German motor for reform, and kept pushing in his speech accepting the Charlemagne Prize this week; but the French president has found himself blocked by a German election stalemate and then a government in Berlin allergic to ideas like a eurozone finance minister.

With the U.K. leaving, Spain mired in its own Catalan constitutional crisis, and Poland neck-deep in rule-of-law complaints from Brussels, that leaves only Italy to help get things moving again. The 5Stars pitch themselves as EU reform-minded: If they stay true to that promise, it would come as pleasant surprise for Tusk, Juncker & co. The odds are higher, though, that Italy will struggle to build a consensus, let alone a European one, and thus close the door on EU reforms before 2020.

Bye bye, euro?
The chances of Italy leaving the euro are slim. Italian President Sergio Mattarella all but said Thursday that he’d scupper any government that puts euro membership into question. And both the 5Stars and the League have dialled back their Euroskeptic rhetoric of late, to different degrees.

Yet an Italian euro-exit is hardly off the table either. Beppe Grillo, the 5Stars’ founder, last week revived the idea of forcing a referendum on Italy’s membership in the single currency. It is, after all, in the party’s DNA — and we all know what usually happens when the EU goes on the ballot (see France and Netherlands in 2005, Ireland in 2008, Britain in 2016, pick your year in Denmark).

Italy’s high debt, low growth and terrible demographics make it an unhappy fit in a eurozone dominated by northern economic powerhouses. If anything, the speculation about the intentions of any government with the 5Stars in it hardly helps boost investor confidence in Italy.

EU’s new pro-Russia caucus
When Hungary (from the right) or Greece (from the left) court President Vladimir Putin, or Russian money gets washed through Cyprus, there is annoyance in Brussels but little fear that the EU’s four-year-old unity on Ukraine or Russia sanctions policy may crack.

It will be a different ball game if Russia gets its first big friend in the European Council (not to mention the G7 and NATO). The League, with a cooperation agreement with Russia’s ruling party, is almost certain to be a thorn in Brussels’ side. The new government team would also have few qualms about undermining fellow Italian Federica Mogherini, the EU’s chief diplomat and a Socialist.

Down on EU
If Italians don’t like Europe, then who?

The success of these two parties brings home the changed mood among Italians. That’s especially true for the young. In a 2017 poll, just over half of people under 45 said they would vote to leave the EU if Italy holds a referendum on EU membership (while 68 percent of respondents over 45 supported staying in the bloc).

Young adults in Italy have memories only of economic stagnation and crisis. While domestic politics and finance can be blamed for much of that, the heavy hand of the EU is often present in the tale of woe.

“The European project has lost its ability to meet the expectations of large portions of the population,” Italian President Sergio Mattarella told a European University Institute conference this week.

While he criticized his own citizens for seeking “refuge in a purely domestic dimension, nurturing an illusion that their problems can be dealt with at only the national level,” he admitted that the EU messages just aren’t working.

Brando Benifei, a center-left Italian MEP, said part of the 5Stars’ appeal is their proposal for radical reform of the EU: “They posed as the Italian version of Emmanuel Macron. The message for Europe is that the EU will have to change its pace of reform if it doesn’t want Italy to become a trend.”

Farewell to your father’s center right
The European People’s Party (EPP) has been the face of mainstream European center right for 40 years, and its biggest party for 20 years. It is almost certain to finish first in the 2019 European Parliament election.

One of the keys to the EPP’s success — that it operates as a big tent — is starting to become a liability.

Internal tensions have been rising over the continued inclusion of Hungarian Prime Minister Viktor Orbán, who led the charge against migration, in the same group as Angela Merkel, champion of open borders. Silvio Berlusconi, once tolerated in the EPP for his ability to win elections, is now seen as the enabler of the EU’s next big headache after he gave the green light this week for a 5Star-League coalition government.

Macron’s centrist allies are eager to exploit these divisions to weaken, possibly split the EPP before the 2019 election. Italy’s rambunctious politics could help there. That would come on top of the crash playing out live among the European socialists, who come into the election season short on cash following their setbacks in Germany, France and Italy.

There’s another, smaller way Italy’s politics could change Brussels: If Berlusconi manages to lure his longtime ally Antonio Tajani, European Parliament president, back home to save Forza Italia from disappearing into Salvini’s shadow, there will be a further shake-up of top EU posts.

New Euro-populist normal
The success or failure of an Italian populist-nationalist government will have a major bearing on Euroskeptic party results in the 2019 European Parliament election.

With the United Kingdom Independence Party out of the picture, leading Euroskeptics such as Marine Le Pen have been trying — so far without success — to unite their fellow skeptics under one banner.

That points to any broadly Euroskeptic Italian government becoming the de facto face of the Euroskeptic forces in the 2019 vote.

If that government succeeds, other Euroskeptics will benefit, putting the parliament’s pro-EU centrist majority at risk. In a parliament deadlocked between centrist and Euroskeptic parties, Greens and far-left parties would be kingmakers.

On the other hand, if a new Italian government fails, the anti-EU groups will struggle to mobilize anyone but their core supporters, and the centrist majority will be secure.

To be sure …
As serious Italians have long complained, the rest of Europe doesn’t take Italy all that seriously. The markets brushed off Grillo’s referendum threat and the growing prospects for this historic coalition deal. Dysfunction in Italy is hardly a new story. And with the exception of that guy named Benito, no recent leader in Rome has ever proved able to impose themselves on a creaky state and a populace that’s grown accustomed to getting around it. This duo has disrupted politics as Italy has known it since the early 1990s, but they’ve yet to prove they can govern in a way that will change Italy and Europe.

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Reporter: Denes Osvalt
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Category: Politics
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