POSSIBLE big news on Europe this week. There are talks that Italy could bring down the edifice. It’s all just talk at the moment, but the threat is there, and if the situation does escalate then a lot of interesting things are sure to follow in the European continent.
The basic gist of the issue is this. The European Union (EU) is worried that Italy’s new government will cause a new financial crisis, which in turn will blow up the European Central Bank.
The new government, which consists of the League and 5 Stars parties, are proposing to cut taxes (dangerous if interest rates go up or growth slows down), some expensive promises and a new approach towards the EU to put it mildly.
And, of course, there’s the general nationalism in the background. Both the League and 5 Stars have been accused of racism in the past, which in the European context means closing down immigration, being anti-EU and general nationalism.
As of the writing of this article, the two parties of the coalition are still trying to make a deal. The leaders of both groups also expressed interest in becoming the leader of any new coalition, but both also said that they are willing to step aside to get a deal.
It’s hard to say what sort of deal could come out of Italy in the next few days, but Brussels is already scared. Many articles are talking about the rise of “populism” in Italy and how it’s undermining the ruling consensus of the past few decades. A few Italian figures have even praised Eastern European countries like Poland and Hungary for their staunch border controls as well as their willingness to stand up to Brussels.
The Eurocrats’ fears are real. As I’ve written before, the EU is full of fault lines. All it takes is for one of those fault lines to unravel and it could bring the whole thing down. So far, none of that has happened, and for all the talk about populism, the Italian coalitions are still only just talking about border enforcement and tax cuts. A lot of noise, but we’ll have to wait and see what comes next.
Although the winning populist parties don’t need to pay lip service to leftwing talking points, they’re not talking about leaving the EU either. They are also constrained by the political and financial situation in the country, which is fragile and limits their options into doing anything radical.
However, as we’ve mentioned before, the threat is there. Even if Italy doesn’t choose to leave the EU, their government could still bring about a crisis that could pull in other populist forces into mortally wounding the EU. The momentum is there, and the real threat (as far as the Eurocrats are concerned) is that the trends are against them./PN
