Why is Italy in crisis again?

Why does Italy still not have a government?

The election produced a hung parliament with no workable majority for any of the three contenders. The centre right, which included the Lega Nord and Forza Italia, fell short of a parliamentary majority despite winning a relative majority of votes. The 5 Star Movement emerged as the largest party but did not have any coalition allies with whom to form a government.

Neither did the defeated Democratic Party which expressed no interest in teaming up with the 5 Star Movement. To break the impasse the Lega Nord broke ranks with Forza Italia and reached an agreement with the 5 Star Movement on a government led by the technocrat Giuseppe Conte. President Sergio Mattarella made no objection to the new government but objected to the appointment of Carlo Savona as Finance Minister.

Who is Paolo Savona?

The 81-year-old Savona has a career in finance and economics that stretches back to the 1960s, and was Minister of Trade and Industry during fellow banker Carlo Ciampi’s short-lived technical government in the early 1990s.

In his latest book, ‘Like a Nightmare and a Dream’, Savona calls the single currency a “German cage”, and it was his hostility to the euro which led President Sergio Mattarella to object to his appointment.

He also called on Italy “to prepare a plan B to get out of the euro if necessary” adding that “the other alternative is to end up like Greece.”

Italian President Sergio Mattarella

Why was Savona turned down by Mattarella?

Mattarella accepted the entire cabinet proposed by the designate PM with the exception of Savona as Economy Minister. The Italian President insists that he wanted a strong political representative of the new majority in this strategic role. He even offered the Economy portfolio to the Lega Nord’s deputy leader Carlo Giorgetti.

But underlying the President’s reservations on Savona was the risk of sending the wrong messages to Italy’s European partners and the market. Mattarella clearly indicated that he did not want someone “supporting a position which would provoke the exit of Italy from the Eurozone”. The President warned that uncertainty of the new government’s position on the Euro was endangering the savings of the Italian people. “It is my duty in the constitutional role assigned to me in appointing ministers, to protect the savings of the Italian people.”

Does the Italian President have the power to refuse a minister?

Article 92 of the Italian constitution states clearly that the President of the Republic nominates the Prime Minister and “on his/her advice” the ministers.

Although having very limited powers, whenever elections fail to produce clear majorities, Italian presidents have a key role in the formation of new governments. The current President Sergio Mattarella refused to appoint a finance minister, even though he was the choice of the prime minister-designate and had the backing of the majority of parliamentarians.

It is not the first time that an Italian president has refused to appoint a minister supported by the majority of lawmakers – it has happened at least three times before, most notoriously with Silvio Berlusconi.

After winning elections in 1994, the media magnate, who was already in the crosshairs of the Italian justice system, proposed to president Oscar Luigi Scalfaro to nominate his personal lawyer Cesare Previti as Minister of Justice. Scalfaro refused and Berlusconi accepted defeat.

In 2001 Carlo Azeglio Ciampi had also refused to appoint Roberto Maroni as Justice Minister due to pending court proceedings related to a police raid on the Lega’s head quarters. Instead Maroni was transferred to Labour Minister.

Five Star Movement leader, Luigi Di Maio

Why is the 5 Star Movement calling for Matarella’s impeachment?

This time, the 5 Star Movement has refused to accept that the country’s head of state is simply exercising his prerogative, instead denouncing what they claim is meddling by Brussels or financial lobbyists.

It is on this basis that Di Maio has raised the possibility of impeaching Mattarella for treason – something that would require an absolute majority in both chambers of parliament in a joint session.

Matteo Salvini has been more cautious; limiting himself to saying that the President carried great political responsibility.

Although constitutionally correct, the President’s veto to a minister vindicated the populist narrative that market forces are subverting democracy.

Lega's Matteo Salvini

During the financial crisis in 2011, when global markets turned on Italy, President Giorgio Napolitano supported a move to oust Silvio Berlusconi and replace him with former European Commissioner Mario Monti. Monti became PM after gaining a majority in the house following a split in Forza Italia. The collapse of the Berlusconi government came in the wake of a series of the Bunga Bunga scandal. Berlusconi denounced what he said was a state coup and demanded early elections. Instead a new government was formed.

What is likely to happen next?

Mattarella has nominated former IMF official Carlo Cattarelli as designate PM but he is unlikely to win a majority of parliament. Silvio Berlusconi’s Forza Italia is also opposing his nomination.

Berlusconi who can now contest elections after the courts lifted a ban on his participation in elections has invited Salvini to return to the centre-right coalition, which already governs most of the northern regions of Italy.

Elections will probably take place in September. The major political unknown is whether Matteo Salvini will prefer Berlusoni or Di Maio as his coalition partner.

The 5 Star Movement emerged weakened from the latest events having failed to give Italy a stable government after becoming the country largest party. Di Maio may have also alienated segments of its left-leaning and southern electorate by courting the Lega Nord. But his only path to power remains that of re-proposing the coalition with the Lega Nord in a general election. In the absence of this the movement is destined to remain in Opposition.

On the other hand Matteo Salvini has emerged stronger than ever. He now has two options; either to ally himself with the 5 Star Movement in a populist alliance – which appeals to popular indignation against the President’s veto – or he may return to the centre right and thus stand a strong chance of becoming Prime Minister as the leader of a more homogenous alliance with whom the Lega governs Italy’s most prosperous regions. Having two options makes Salvini stronger in his dealings with both the Five Stars and Forza Italia. But having outsmarted Di Maio, will Salvini risk being outsmarted by Berlusconi?