x

Abu Dhabi, UAEFriday 14 December 2018

Italy's battle for political stability is far from over

The crisis engulfing the nation has major implications for the Eurozone

Italy's president has invited Carlo Cottarelli, an economist with no political experience, to form an interim cabinet composed of technocrats. EPA
Italy's president has invited Carlo Cottarelli, an economist with no political experience, to form an interim cabinet composed of technocrats. EPA

The political crisis unfolding in Italy is the longest in the republic’s history. For more than two months, a pair of populist parties – the Five Star Movement (M5S) and the League – that won the most votes in the March elections have struggled to forge a government. That struggle has, over the past week, landed Italy in a constitutional crisis. Sergio Mattarella, the country's president, is facing calls for impeachment from the right for refusing to allow Giuseppe Conte, the prime ministerial candidate backed by M5S and the League, to name a notorious Eurosceptic as his finance minister. Mr Mattarella then quickly went ahead and invited Carlo Cottarelli, an economist with no political experience, to form an interim government. All cabinet appointees will, like Mr Cottarelli, be non-political technocrats.

The decisive repudiation of populism inherent in Mr Mattarella’s actions is a welcome departure from the growing tendency among western politicians to surrender to populists. Yet the wave of public disaffection that the populists rode is gathering force – and will probably return M5S and the League with a larger share of the vote in the next election. Mr Mattarella is already being portrayed as the anti-democratic underling of the European Union and nationalists appear thrilled at the prospect of turning this crisis into a referendum on Italy’s sovereignty. We witnessed something similar in Greece. The difference is that Italy is the third-largest economy in the Eurozone and among the ensemble of populists paralysing the country are unmalleable and extreme right-wingers.

What is happening in Italy has drastic implications for the Eurozone and all who do business with it, including the UAE, which has seen a steady rise in commerce with Italy (in 2015, bilateral trade stood at Dh30 billion). The free trade agreement being negotiated between the EU and the GCC member states is likely to be further delayed by crisis of confidence in Europe. The prospect of a Eurosceptic government in Rome has already knocked the euro to a low. The task before Italy is to create political stability without succumbing to populism. It won’t be easy but the future of Europe depends on it.