Wednesday, June 19, 2024

Giorgia Meloni’s hard-right bid to shake up the EU

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Welcome back. Among those expected to score big victories at national level in next week’s European parliament elections are Italian prime minister Giorgia Meloni and her hard-right Brothers of Italy party. If that happens, will it result in more influence for Italy, and for Meloni personally, in the EU’s post-election power structures and policies? I’m at

Italy’s low-key voice in the EU

Longtime readers of the FT will know that I once worked in Rome and Brussels. In both cities I was often struck by how Italy seemed to punch below its weight in the EU.

There were several explanations. One was the traditional leadership role of France and Germany. Another was the mistrust in which many governments and the EU’s Brussels-based institutions held the fickle, even irresponsible Italian premier Silvio Berlusconi. He once compared Martin Schulz, a German legislator, to a Nazi concentration camp guard.

Many EU policymakers felt similar, if less acute misgivings about subsequent Italian leaders such as Matteo Renzi and Giuseppe Conte, who promised more than they delivered.

But a third, deeply rooted factor was Italy’s long-term economic decline, compared to other EU countries. This began in the 1990s, was reflected in high public debt and almost permanently low GDP growth, and meant that Italy — after the single European currency was created in 1999 — tended to be seen as a potential source of destabilisation for the Eurozone.

Italy’s relative economic weakness continues to this day under Meloni’s government. Although Germany and France undoubtedly have troubles of their own, Italy remains unable to speak in the EU from a position of economic strength.

Shaky public finances

How has Italy’s economy performed since Meloni came to power at the head of a three-party right-wing coalition after winning parliamentary elections in September 2022?

According to the IMF’s latest report on the country, the economy has recovered well from the pandemic and recent energy price shocks:

Activity expanded by 0.9 per cent in 2023 and 0.6 per cent (year-on-year) in Q1 2024. As a result, GDP surpassed its pre-Covid level by 4.5 per cent — a stronger performance than in other large euro area countries.

However, analysis by Scope Ratings, a credit-rating agency, highlights Italy’s underlying vulnerabilities. It estimates that Italy will overtake Greece by 2028 as the EU economy with the highest public debt — 143.7 per cent of GDP, up from 137.3 per cent in 2023.

Meanwhile, poverty levels in Italy have been rising, according to the national statistics institute. Its latest report says:

Between 2013 and 2023, the purchasing power of gross wages in Italy has decreased by 4.5 per cent, while in the other major economies of the EU, it has grown at rates ranging from 1.1 per cent in France to 5.7 per cent in Germany.

Another problem concerns Italy’s EU-backed post-pandemic Recovery and Resilience Fund. The EU made available some €200bn in loans and grants to Italy, on condition that the government’s investment projects received approval from Brussels. But by the end of March the government had spent only 23 per cent of that figure, Scope says.

This raises questions about whether Italy will make use of all the funds by the time the EU programme runs out in 2026.

We should also consider the impact of an unusually generous tax credit scheme for homeowners, launched in 2020 and known as the Superbonus. This has cost the Italian state some €219bn, or more than 10 per cent of GDP, reminding Italy’s EU partners once again of the shaky state of the nation’s public finances.

Dubious reforms, demographic crunch

Perhaps the most troubling issue of all is that Meloni’s government has shown little willingness to introduce the structural reforms that are essential to boosting Italy’s economic growth and productivity over the long term.

If anything, policies have sometimes gone in the other direction — as Andrea Lorenzo Capussela wrote for the FT this week, in a piece highlighting an amnesty for illegal construction that bodes ill for business competitiveness and the rule of law.

Lastly, we mustn’t forget the shadow cast over Italy’s economic future by a birth rate in chronic decline. Not only is it at its lowest since Italy’s unification in 1861, but the country now has more than 4.5mn people over the age of 80 in a population of about 59mn.

As the FT’s Amy Kazmin reported, Italy has just 11.4mn women of reproductive age (between 15 and 49), down from 13.8mn women in that bracket 20 years ago. (Kazmin will be joining a few of my colleagues from around Europe to discuss what the European Parliament elections mean for the EU in a webinar on June 12. Subscribers can register here.)

Meloni rules the roost

Despite these difficulties, Meloni’s party has stayed top of opinion polls since the 2022 election, and the prime minister enjoys solid approval ratings. What’s her secret?

One of the most perceptive recent articles on this topic was written by Luzi Bernet of the Neue Zürcher Zeitung. It’s worth reading in full, but here is the nub of his argument:

She has achieved what rightwing politicians in most other countries have so far failed to do, but which has always been their real goal: to establish themselves at the heart of power, form a stable government and march successfully through the nation’s institutions.

Put differently, Meloni has carefully cast herself as a level-headed, pragmatic leader, a reliable ally for Italy’s democratic partners on the international stage and no threat at home to the administrative elites and business interests that control the state apparatus and large parts of the economy.

By contrast, others in her coalition — above all, Matteo Salvini of the rightwing populist League — struggle to make an impact in government and are less popular with Italian voters.

Salvini’s insect obsession

Salvini’s case is truly fascinating. His party stormed to victory in Italy’s 2019 European parliament elections with 34 per cent of the vote (Meloni’s party won less than 7 per cent).

Having acquired government experience as deputy prime minister and interior minister, Salvini appeared well-placed to become premier one day.

Then he failed in an ill-advised gambit to force the departure of the government of which he formed part. Next week, according to opinion polls, the League will do well to win 10 per cent, roughly a third of the vote share predicted for Meloni’s party.

Nothing better sums up how Salvini has lost his way than his slightly weird obsession with the use of crickets as food ingredients. Take a look at the image below: a League campaign poster which proclaims “No to chemical meat and insects”.

You tell me — is Salvini’s anti-insect crusade a vote-winner?

No explanation for Meloni’s dominance is complete without a mention of the electoral weakness and internal splits of the opposition centre-left Democratic party and the once anti-establishment Five Star Movement.

Overturning EU consensus politics

Meloni makes no secret of her ambitions for her party, and the hard-right pan-European group of which it forms part, after next week’s elections. She would like to overturn the long-standing domination in the European parliament of the centre-right European People’s party (EPP) and the centre-left Socialists and Democrats group.

She recently called this an “unnatural majority” and said it should be replaced by a broad coalition of the right, including her party, that excludes the left from power.

Some influential EPP politicians find her initiative appealing. Take Jens Spahn, a senior figure in Germany’s Christian Democratic party. He says the EPP shouldn’t co-operate with extremist parties, but suggests that Meloni’s party isn’t, in his view, in that category:

The “firewall” — that potential partners of the EPP must be pro-European, pro-Nato, pro-rule of law and pro-Ukraine — runs to the right of Meloni’s party in the European parliament.

Still, leftist, liberal and Greens parties don’t have the same benign view of Meloni. They point to her participation (by video link) in a recent rally in Madrid of hard-right politicians as proof that, at heart, she is anything but mainstream.

It seems clear that any attempt by Ursula von der Leyen to secure reappointment as European Commission president by relying, at least in part, on the support of Meloni and her party will run into trouble by prompting a backlash among potential centre-left and centrist supporters.

What do you think? Should Europe’s centre-right parties strike a co-operation pact with Meloni? Vote by clicking here.

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