Over the past two weeks, I’ve been discussing the rise, temporary fall, and re-rise of a left-right populist coalition in Italy. Last Friday, after much wrangling, the coalition formally took power as Italy’s new national government. Yesterday, it won an official vote of confidence in the Italian Senate.
Writing at Barron’s, Matthew Klein describes the longstanding economic challenges that prompted Italians to take a chance on “euro-skeptic” populists: “Italian businesses have generated no productivity growth in more than 20 years. The Italian government has been unable to handle the recession of 2008. The combined result has been a slow-motion catastrophe.”
As Klein notes, Italy’s membership in the eurozone means that, essentially, it “lives at the mercy of the European Central Bank. The result: Its borrowing costs rise when things look worse. The Italian banking sector amplifies this process as its assets lose value and its funding costs go up.”
Writing in the Financial Times, Wolfgang Münchau argues that previous Italian governments repeatedly mishandled issues related to the single currency: “It was the unconditional pro-Europeanism of Italy’s past leaders that gave rise to the current nationalist backlash. Previous governments accepted European legislation that was profoundly against Italian interests.”
Münchau concludes his FT piece with some tough-love advice for euro supporters: “Stop treating the euro as an article of faith but fight for its sustainability. That fight cannot be won in Italy alone. It requires big policy shifts in Brussels too.”
We also should not overlook the role that European immigration policy played in bringing Italy’s populists to power. “It’s obvious to everyone that the way migrant flows have been managed has been a failure,” the new Italian prime minister, Giuseppe Conte, said on Tuesday, according to the Associated Press. “We will put an end to the business of immigration that grew disproportionately under the cloak of a pretend solidarity.”