It looks indeed as if Italy — the beating pulse of European civilisation — will be the first country in western Europe to fall to what’s popularly known as populism. Those who regard populism as an affirmation of democracy are pleased; those who regard it as a negation of democracy are appalled. The markets remain silent. For the moment.
The alt-left Five Star is on the verge of forming a coalition government with the hard-right Lega in the EU’s fourth largest economy, which has been stuck in more or less permanent stagnation since the global banking crisis of 2008. These two opposing expressions of popular revolt, described by the ever so civilised FT on Monday as ‘the modern barbarians’ at the gates of Rome, are busy in secret trying to find a politician who can be their prime minister and draft a contract of government which will not cause them to tear each other to shreds within months of taking office.
On Tuesday, a leaked copy of this document was published revealing that, despite their deliberate silence on such matters during the election campaign, Lega and Five Star have not given up their shared hostility to the euro or their shared desire to abolish sanctions against Russia, and though they want Italy to remain in Nato, to ‘rehabilitate’ Russia as a ‘strategic mediator’ in crisis zones such as Syria. Specifically, the contract includes a proposal to create an opt-out mechanism for eurozone countries to leave the euro in an ‘agreed manner’, were there to be a ‘clear popular will’ to do so. It also proposes ‘radical reform’ of the EU, in particular of the Stability and Growth Pact which compels member states to keep budget deficits below 3 per cent of GDP.
To tackle Italy’s staggering €2.3 trillion public debt — the third highest in the advanced world as a percentage of GDP (at 132 per cent) — the document includes a demand that the European Central Bank writes off €250 billion worth of Italian sovereign bonds bought under its massive quantitative easing programme begun in 2012 to save the euro.
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