Italy Descends Into Political Chaos, Markets Rattled – Trustnodes

Italy Descends Into Political Chaos, Markets Rattled

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Italy’s proposed government has collapsed following President Sergio Mattarella’ veto of eurosceptic Paolo Savona who was selected by the elected M5S and the League as foreign minister.

“I asked for… an authoritative person from the parliamentary majority who is consistent with the government programme… who isn’t seen as a supporter of a line that could probably, or even inevitably, provoke Italy’s exit from the euro,” the Italian president reportedly said.

The 81 year old Savona describes the euro as a “German cage” in a soon to be published book “Like a Nightmare and a Dream.”

“Germany didn’t change its idea on its role in Europe after the end of Nazism, even if it abandoned the idea of imposing itself militarily,” Savona writes. He has however publicly stated:

“I’m passed off as one of those rare anti-European institutional economists but it is not true. I would be in favour of a united Europe in principle, and that’s why I talk about the worst of what I see today in Brussels.”

The once most pro-EU country now has only 39% of the Italian people viewing EU positively, Der Spiegel says, with both M5S and the League promising an EU referendum before dropping the pledge closer to the election in March.

The two have won 50% of the popular vote, but they couldn’t agree on whether the leader of the 5 Stars Movement, Luigi Di Maio or Matteo Salvini of the League should be Prime Minister, so they appointed the politically inexperienced law professor Giuseppe Conte.

Conte surrendered the mandate to be Prime Minister after the President refused to appoint the eurosceptic finance minister.

A new Prime Minister has now been summoned, Carlo Cottarelli, a former executive director of the International Monetary Fund known as “Mr Scissors” for his budgetary cuts.

The situation however has now descended into a constitutional crisis. Although the president constitutionally has the right to veto cabinet members, that is rarely used and only when there is a clearly justifiable reason.

“After tonight, it’s truly difficult to believe in the institutions and the laws of the state,” Di Maio said. He has called for impeachment of the president, with the new Prime Minister’s appointment probably to be blocked in parliament, leading to fresh elections this autumn.

While the two parties were expected to move closer to the centre once in power, promising to reform EU from within, tensions between Italy and Germany in particular may now flair.

Prior to this dramatic turn of events, Salvini said: “German journalists and politicians insult us: they call Italians beggars, lazy, tax evaders, freeloaders and ungrateful people. And we should choose a finance minister that they like? No, thanks!”

Both Di Maio and Salvini have ratchet up the rhetoric since, with suggestions they might go into the polls as one party.

“I want this institutional crisis to be taken to parliament… and the president tried,” Di Maio said before further adding:

“Why don’t we just say that in this country it’s pointless that we vote, as the ratings agencies, financial lobbies decide the governments?”

The president on his part said he had “agreed and accepted all the proposals except that of the economy minister.”

“No-one can claim that I have stood in the way of the formation of the so-called government for change,” he added.

Concerns have now however increased regarding the new election which may be seen as a de-facto referendum on the EU.

With Italy being the block’s third biggest economy, that may have significant repercussions for the EU as a whole and might even bring back the specter of euro breaking up.

The currency is currently diving against the dollar, while concerns over Italian debt levels continue to grow as it is becoming more and more expensive for the Italian government to borrow.

Cryptos haven’t really reacted so far to these events, but the euro, and the European Union as a whole, might now be very much in question in Italy as one of the most historic election is now to be fought very soon.

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