Italy Prepares Itself for Prime Minister Matteo Salvini

Ferdinando Giugliano

(Bloomberg Opinion) -- Italy’s populist Five Star Movement joined forces with the center-left Democratic Party five months ago to push its former coalition partner Matteo Salvini out of power. A regional election this week in the leftist heart of the country will show just how much that experiment is failing.

The Emilia-Romagna region has supported the left since World War Two — even as the rest of Italy backed a succession of Christian Democrat leaders or Silvio Berlusconi. “Red Emilia,” Italy’s sixth-largest region by population and one of its wealthiest, has also been one of the left’s most reliable financial coffers. Traditionally, it would have been less of a surprise for Boston in the U.S. to vote Republican than for Emilia to pick a conservative regional governor.

Yet Salvini’s League and its right-wing partners are neck-and-neck with the Democratic Party ahead of a crucial regional vote on Sunday. A win would be Salvini’s most symbolically important electoral triumph to date, and cement his role as Italy’s prime-minister-in-waiting. It would also make it much harder for his opponents to keep him out of office.

The governing coalition will try desperately to stick together to prevent new national elections, but the pieces are already falling. Luigi Di Maio is quitting as Five Star’s leader after a string of electoral disappointments, and ahead of the Emilia-Romagna result.

The rise and rise of Salvini since last summer was, in many ways, predictable. Five Star and the Democrats had been trading insults for years. It was clear that they only chose to form a government together because they feared a new election would propel a right-wing coalition into power. The League lost support in the polls for a few weeks, but has bounced back. Together with its allies in the Brothers of Italy and Forza Italia parties, it commands about 50% of the nation’s votes, according to the latest polls.

The failings of the Five Star-Democrat government have been more remarkable. Its 2020 budget was built on a succession of policy U-turns, which created little fiscal space to pass meaningful tax cuts or spending increases but gave the impression of a wavering administration. In foreign policy Italy has lost any influence in Libya, where it traditionally played a significant role, as has been seen in the talks aimed at halting hostilities in the country. Giuseppe Conte, Italy’s prime minister, and Di Maio, the coalition’s foreign minister, have been lightweights just as players of the size of Russia and Turkey decided to step in.

On immigration, the government is too afraid to repeal the harsh decrees that Salvini passed when he was minister of home affairs. The government also cannot make up its mind on a long list of industrial cases — from the future of the bankrupt airline Alitalia, to the troubled steelmaker ILVA, to the destiny of Italy’s motorway concessions. The coalition can take credit for helping push down borrowing costs, which rocketed during the early stages of the former League-Five Star government. But this is proving hard to sell as a lone achievement to an increasingly frustrated and disenchanted electorate.

Salvini is still a long way from offering a coherent response to Italy’s problems, which range from dismal productivity growth to widespread generational and regional inequality. He says now that the League doesn’t want to quit the euro, but parts of his economic program appear incompatible with the euro area’s fiscal and state aid rules. While the prospect of a new Italian government would no doubt spook investors, it would at least force Salvini to be clearer about the direction he wants to take.

The Democratic Party and Five Star are pushing Italy into Salvini’s arms. Regardless of what happens this weekend in Emilia-Romagna, it seems it will be only a matter of time before the right takes over.

(This column was updated with details on Luigi Di Maio. )

To contact the author of this story: Ferdinando Giugliano at fgiugliano@bloomberg.net

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Ferdinando Giugliano writes columns on European economics for Bloomberg Opinion. He is also an economics columnist for La Repubblica and was a member of the editorial board of the Financial Times.

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