The Italian political saga took an unexpected turn last weekend, as President Mattarella vetoed Mr Savona’s appointment to the economy ministry. This collapsed the perspective coalition between Lega and M5S after Giuseppe Conte resigned his mandate to form a government following President Mattarella’s decision.
Mr Savona, a Eurosceptic, has made some incendiary remarks in the past. Savona described the Euro to a ‘German cage’ and likened Germany’s to the Euro to Walter Funk’s economic policy during WWII. In addition to calling for Italy to leave the Euro altogether.
Speaking to the media, President Mattarella pointed to the growing difference between German and Italian bond prices which raises borrowing costs for the Italian government. He also said that he wanted to protect every-day Italians from the financial turmoil of Mr Savona’s economic policies.
This has enraged the leaders of Lega and M5S. In the Umbrian city of Terini, Mr Salvini said “We will not be blackmailed by anyone”. Luigi Di Maio described the impasse as an “institutional clash without precedent” and “unacceptable”.
Mr Di Maio went further, suggesting that President Mattarella should be impeached in accordance with Article 90 of the Italian Constitution.
President Mattarella also invited Carlo Cottarelli, a former International Monetary Fund official, to the Presidential Palace on Monday. He will form a caretaker government until fresh elections can be held. Mr Cottarelli is known as ‘Mister Forbici’ or Mister Scissors, for his backing of spending cuts.
4) The President has summoned a former IMF director of fiscal affairs Carlo Cottarelli to see him tomorrow. This choice of technocrat candidate seems a deliberate ? to Five Star & the League. Cottarelli is nicknamed Mister Forbici – Mr Scissors for his backing of spending cuts
— Henry Newman (@HenryNewman) May 27, 2018
Italian President’s Misstep
The appointment of Mr Cottarelli would only inflame relations between Lega, M5S, and the President. Mr Cottarelli comes from the global financial establishment decried by Italian populists. Especially so given that Di Maio blamed the fall of the government on the “financial lobbies”.
President Mattarella may have made a grave error of judgement by vetoing the appointment of Mr Savona. Populists are dominant in Italian politics, obtaining approximately 50% of the vote at the last election. An establishment figure such as Mattarella preventing a populist government from forming legitimises populist grievances against the establishment. This is a powerful rhetorical tool. Mattarella has galvanised the already dissolution supporters of Lega and M5S. This will be a powerful campaign tool for an upcoming election.
President Mattarella’s decision to veto Mr Savona on the basis of preventing an economic crisis will backfire. Prolonged political uncertainty is not welcomed by the financial sector. Uncertainty would also grow if either another hung parliament or a stronger government became evident. This could lead to the economic instability President Mattarella tried to avoid in the first place.
With a President acting in a manner that elicits strong populist resentment, installing a caretaker Prime Minister who is the antithesis of what the populists stand for is a risk. Fresh elections may prove to be more hostile towards the establishment and the European Union than before. With the attempted coalition as their martyr, Lega and M5S could make further gains in future. This would cement their position in Italian politics.