10 August 2022

Populists at the Gates

Michele Barbero

For the first time in decades, under now outgoing Prime Minister Mario Draghi, Italy seemed to have claimed back its mantle as one of the pillars of the European Union. The former president of the European Central Bank, Draghi played a crucial role as Italy and its neighbors sought to navigate the COVID-19 pandemic, a devastating war on the EU’s doorstep, and an energy crisis that is sending the cost of living through the roof. For a year and half, Rome carried yet again almost the same weight as Paris or Berlin.

But following the downfall of Draghi’s national unity government this month, Italian political parties have swiftly leapt back into campaign mode, and the country finds itself plunged in a state of deep uncertainty—at the worst possible time.

Polls suggest that the post-fascist Brothers of Italy party has a good chance to come out on top in a general election slated for the end of September, with its leader, Giorgia Meloni, close to becoming Italy’s first far-right (and first female) leader since the end of World War II. The only major party in opposition during Draghi’s tenure, the Brothers of Italy has seen its appeal steadily grow in recent months. It is currently polling at about 23 percent (up from just over 4 percent in the 2018 election), neck and neck with the center-left Democratic Party.

And she’s not alone. Meloni is running as part of an alliance with Matteo Salvini, the leader of the far-right League, and Silvio Berlusconi, the former prime minister and head of the conservative Forza Italia; the combined right-wing front is expected to snag about 45 percent of the vote—enough to secure a comfortable majority of seats in Parliament.

The prospect of a hard-right government in Rome with strong populist and Euroskeptic undertones comes as EU leaders seek to maintain cohesion of the 27-nation bloc, coordinate their response to the ongoing Russian invasion of Ukraine, deal with a looming energy crisis caused by Moscow, and tackle skyrocketing inflation.

The uncertainty over how exactly Italy’s right-wing coalition would position itself on all those issues has many in Brussels worried, said Arturo Varvelli of the European Council on Foreign Relations (ECFR). “There is great sorrow over the loss of Mario Draghi,” he said.

Brussels has already been dealing with right-wing governments in Budapest and Warsaw that have challenged the bloc’s legitimacy and sparked increasingly bitter showdowns over the judiciary, rights, and democracy. Meloni, while rejecting the far-right label, seems birds of a feather with the Hungarian and Polish leaders. Her party has strong links with Italy’s post-fascist tradition, and her views include securing borders against “mass immigration,” defending Europe’s “Christian roots,” and battling the “LGBT lobby.” Meloni also wants the EU to stop interfering with the “sovereignty of the peoples” and has sided with Poland and Hungary in their ongoing row with Brussels over their democratic backsliding. Salvini has long railed against “Brussels bureaucrats,” while Berlusconi famously shocked the European Parliament when, in the middle of a plenary, he suggested that its future president, Martin Schulz, was fit for a movie role as a Nazi death camp guard.

When it comes to Russia, the Italian right is ambivalent at best. Meloni used to oppose sanctions against Moscow, but since the start of the war, she has displayed staunch support for Ukraine and NATO, calling on the West to deploy “all useful tools” to back Kyiv. But Berlusconi has long enjoyed a close friendship with Russian President Vladimir Putin and has urged Ukraine to “accept Putin’s demands,” while Salvini, another outspoken admirer of the Russian leader in the past, is against sending weapons to Kyiv and recently came under fire over an aborted trip to Moscow paid for by the Russian government.

Should a right-wing alliance win the day in September, the new government’s line would “largely depend on the balance of power within the coalition,” said Angelo Panebianco, a professor emeritus of political science at the University of Bologna. “If Meloni wins big, she’ll be the one calling the shots.”

Italy, the eurozone’s third-largest economy, is being closely scrutinized by investors and EU authorities over its sky-high public debt—one of the highest in the world at over 180 percent of GDP. As the Italian electoral campaign picks up steam, many of the proposals cropping up on the right suggest a spending largesse hardly in line with the fiscal restraint favored by Brussels. Forza Italia has pledged to raise pensions, while the League has promised an early retirement scheme and a wide tax amnesty.

Worsening relations between Rome and Brussels, after the idyll of Draghi’s tenure, may jeopardize the country’s economic recovery, which is largely dependent on the 200 billion euros earmarked for Italy by the EU as part of its unprecedented pandemic stimulus package. The funds are conditional on the accomplishment of a long list of systemic reforms—such as shortening the duration of trials, simplifying the rules of public tenders, and fostering fair and open market competition—which Draghi launched but has by no means completed.

In order to get the remaining tranches of cash, whoever takes over will have to press on with the program, but overcoming powerful lobbies and the inefficiencies of Italy’s administrative machine to meet EU standards will require a degree of resolve that is often in short supply on both sides of the political spectrum. In recent weeks, the right has been dragging its feet over Draghi’s attempt to deregulate sectors including ride-hailing and beach concessions. When it comes to the reform plan, “there is no such thing as an automatic pilot,” Panebianco said.

A lot of the groundwork for the reforms will have been done by the time Draghi leaves office. But if a Euroskeptic government were to pick up the baton, the mutual distrust with Brussels could still complicate the remaining steps, said Carlo Altomonte, a government advisor for the implementation of the reforms and a professor of European economic policy at Bocconi University in Milan. Last spring, responding to EU pressure for fiscal and competition reforms, Salvini urged Brussels to “refrain from school reports and bureaucratic reprimands.”

That’s not to say that a March on Rome is baked into the September calendar. The united right-wing front may still crack amid tensions over the distribution of the electoral districts and which leader should get the top job in case of victory. With talks also underway among various left-wing and centrist parties and two rocky months to go before Italians head to the polls, the election’s outcome remains far from certain.

Even if Meloni were to become the next prime minister at the helm of a hard-right coalition, the hundreds of billions of euros of the EU recovery fund may well be enough to soften her Euroskeptic tones of years past, ECFR’s Varvelli said. “She probably knows all too well that she will have to be more pro-European than she had thought,” he said. Another populist, Euroskeptic government formed by the League and the anti-establishment Five Star Movement was in power in Italy for over a year between 2018 and 2019. Despite its tough talk, it failed to obtain greater fiscal flexibility from the EU and kept Italy’s public debt largely stable.

From the EU’s perspective, blocking the much-touted recovery fund mechanism and letting Italy sink would be anything but a success, said Giovanni Orsina, the director of the Luiss School of Government in Rome. If a radical, populist right were to take over from Draghi, “Brussels would certainly be much less accommodating,” he said, “but as much as it may hate that government, in the end it would find it convenient to turn a blind eye every now and then.”

But on one important matter, Draghi may have left his country—and his successor—a valuable parting gift. As the whole bloc scrambles to reduce its dependence on Russian natural gas, now that Moscow has begun choking supplies at a critical time, Italy has moved early and well, said Altomonte, the government advisor. In just a few months, Italy has replaced its traditional dependence on Russian gas for greater imports from Algeria, which Draghi visited twice since April, making the North African country its top natural gas provider. That could restore some leverage to Rome as the EU’s other big economies brace for a frigid fall.

“Italy may end up selling gas to Germany from November, December,” Altomonte said. “This changes the balance of power in Europe.”

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