‘ugly german’

Italy’s populists blame Germany for thwarted effort to form government

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Lo stato, sono io. Source: Reuters

Italy’s populists, angry at being thwarted in their attempt to form a government, have been quick to assign the blame: It’s all the Germans’ fault. After President Sergio Mattarella vetoed their choice for finance minister and put the country on the path to new elections, the populist parties seemed certain to make Germany’s dominance in Europe a campaign issue.

“We have a basic principle, and according to that only Italians make decisions for Italy, not the Germans,” said Matteo Salvini, head of the Euro-skeptic League party, formerly known as Northern League. Mr. Mattarella vetoed the choice of economist Paolo Savona as finance minister because of his avowed hostility to the euro. “We won’t let anyone blackmail us,” Mr. Salvini said. “A minister the Germans don’t like is exactly the right minister for us.”

The caricature of the ugly German matched that of the lazy Italian, which ran through the German media in the past few days as the populists were on the verge of taking power with a plan to provide fiscal stimulus to Italy’s ailing economy. Newsweekly Der Spiegel ran a story titled “The moochers of Rome,” casting Germany as the generous provider of funds to an ungrateful nation of deadbeats.

“Germany is once again the best ally and the greatest gift for the anti-Europeans of Italy.”

Federico Fubini, Corriere della Sera

Denying the populist coalition of the hard-left Five Star Movement and the League its chance to form a government despite their majority in parliament tested the powers of Italy’s president. Luigi Di Maio, head of the Five Star Movement, has already called for Mr. Mattarella’s impeachment for acting against the constitution. He did not let the fact that Mr. Mattarella’s veto is enshrined in the Italian constitution — and hardly unprecedented — stand in the way of his furious claims.

But the escalating war of caricatures between Italy and Germany threatened to widen the gulf between northern and southern Europe and further fray the fabric of European solidarity already stretched to the limit. Similar insults accompanied the Greek crisis three years ago, but few paid attention. Italy, one of the founding members of the European Union and its fourth-largest economy, is a different story.

Even a normally moderate commentator, Federico Fubini at Corriere della Sera, lit out against the Germans. “And this Germany, in the way it thrashes through Europe, is once again the de facto best ally and the greatest gift for the anti-Europeans of Italy.” He proceeds to catalog once again Germany’s own infractions of EU rules, from its excessive current account surplus to its government aid for banks. “This Germany, rigid only with the others, today is the main obstacle to dialogue with the pro-Europeans of the other countries,” he wrote.

Angela Merkel said Germany was prepared to work with any government formed in Italy.

Mr. Mattarella’s naming a former International Monetary Fund official, Carlo Cottarelli, as prime minister to form a “technocratic” government — that is, one sure to implement the austerity principles of the IMF — only throws oil on the fire. Given the populists’ majority in parliament, he will almost certainly fail to get the required vote of confidence, triggering new elections within the next few months.

Mr. Salvini and Mr. Di Maio had toned down their Euro-skepticism and nationalism to win Mr. Mattarella’s approval. Now the gloves will come off and the new campaign will focus more than ever on the joint currency and the limits on debt and deficits that have put Italy in a straitjacket.

Markets at first breathed a sigh of relief when the president rejected Mr. Savona. But the naming of Mr. Cottarelli, virtually a provocation in the current political environment, brought new agitation. The euro fell to a six-month low and yields on Italian bonds began to rise again. Under the last technocratic government, led by former European Commissioner Mario Monti, the risk spread, the difference in yield between German and Italian bonds, rose to 500 basis points.

Italy is in a political quandary with little hope of a quick resolution. In Brussels, too, the initial relief at dodging the bullet of a Euro-skeptic finance minister quickly gave way to concern that Mr. Mattarella’s move had fueled anti-European feeling in Italy. The perception is that pressure from Germany and France motivated the president’s rejection of Mr. Savona.

But there is little evidence to back this claim. Chancellor Angela Merkel said on Monday that Germany was prepared to work with any government formed in Italy, just as it did with the far-left government that swept to power in Greece after an election in 2015.

Presuming Mr. Cottarelli fails to win sufficient support in parliament, new elections will take place sometime after August. The technocratic government would act as caretaker until then, but with little possibility to do anything. The growing worry in Brussels, as in Berlin, is that Italian voters would increase their support for the populist parties out of protest against perceived foreign interference.

29 p07 Italy – Key figures-01

Regina Krieger is Rome correspondent for Handelsblatt. Ruth Berschens heads the Brussels bureau. Handelsblatt Global editor Darrell Delamaide adapted this story into English. To contact the authors: krieger@handelsblatt.com and berschens@handelsblatt.com.

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