ROME — Italy entered into days of political and financial uncertainty Friday as Premier Mario Draghi weighed his options and political leaders calculated theirs after populist ally the 5-Star Movement sparked a crisis by withholding support on a government-sponsored bill.
On the immediate horizon are behind-the-scenes consultations through mid-week to see if Draghi still commands enough support to govern — which the Italian president and key parties clearly want — or preparations for an early election as soon as September.
Milan’s FTSE Mib was trading 1.12% higher Friday though the spread on Italian debt verses the benchmark German bund widened to 227 points, up from Thursday’s close of 203.
Draghi immediately offered to resign Thursday after 5-Star senators boycotted a vote on helping Italians cope with rising energy prices, arguing that the conditions that created his government of national unity, which included parties on the right, left and the 5-Stars, no longer exist. But President Sergio Mattarella rejected his offer and told Draghi to go back to Parliament on Wednesday to see if he still had the support to govern.
The turmoil couldn’t have come at a worse time for the eurozone’s third-largest economy. Italy is facing soaring inflation and energy costs as a result of Russia’s war in Ukraine, a prolonged drought that is threatening crops in the country’s most productive regions and the ongoing implementation of its EU-financed program to recover economically from the coronavirus pandemic.
While Draghi might still have the numbers and the support of key allies to continue leading the government, some on the right are already gunning for an early election.
“With Draghi’s resignation, this legislature is over for the Brothers of Italy,” said Georgia Meloni, head of the right-wing party that is polling around 22%, nearly the same as the center-left Democratic Party. “We’ll fight until the Italian people are given back a right that citizens of every other democracy have: the freedom to choose their own representatives.”
She added the hashtag #electionsnow.
Meloni’s usual center-right allies — the Forza Italia party of ex-Premier Silvio Berlusconi and the League led by Matteo Salvini — indicated more of a wait-and-see approach. In a joint statement Friday, they backed Draghi for what they said was his understandable ire and blasted the 5-Stars for having created a national crisis over their opposition to a new garbage incinerator for Rome.
“I have no words,” Forza Italia’s Antonio Tajani said Friday.
Friday thus opened days of back-room discussions among party leaders to decide what position to take on Wednesday if a new confidence vote is put before Parliament. Already, there were reports that the 5-Stars could vote in favor of a revamped Draghi program, but it’s not at all clear that other coalition parties would want them back in the ruling coalition.
Guido Cozzi, professor of macroeconmoics at the University of St. Gallen, said international markets are alarmed at the instability and that Mattarella did well to try to keep Draghi, a former European Central Bank chief, in place since he is widely seen as a “vital pillar in guaranteeing the stability of Italian public finances.”
“His coalition government was an unprecedented miracle in Italian political history,” Cozzi said. “However, Draghi lacks an independent political force behind him, and his government will always depend on antagonist party leaders.”
The 5-Star Movement, which was the biggest vote-getter in the 2018 national election, has seen its support tank in the ensuing years and would have everything to lose if Italy went to an early election. In recent years, it has seen dozens of lawmakers defect, most recently the high-profile foreign minister, Luigi Di Maio, who left with 60 lawmakers to found a new movement.
Giuseppe Conte, the 5-Star leader and former premier, blamed others for forcing the Movement to boycott the confidence motion Thursday that was tied to 26 billion euros in new financing to help Italians withstand soaring inflation and energy costs.
The tipping point, Conte said, was giving Rome’s mayor extraordinary powers to manage the capital’s garbage crisis — powers that Conte bitterly said had been denied the 5-Stars’ Virginia Raggi when she was Rome mayor.
Di Maio blasted Conte’s boycott of the vote as essentially a gift to Russia, since the 5-Stars have criticized the Italian government’s military support to Ukraine.
As if on cue, Dmitry Medvedev, the deputy head of Russia’s Security Council headed by President Vladimir Putin, posted pictures Friday of ousted British Prime Minister Boris Johnson and Draghi followed by a black box with a question mark, as if asking “who’s next?”
Medvedev’s social media post followed a stream of comments from other Russian officials who have attributed Johnson’s downfall to his focus on spearheading Western efforts to punish Russia for its invasion of Ukraine.
“My heart weeps seeing Moscow celebrating,” Di Maio told RTL radio. “Medvedev was toasting and was happy because Draghi’s head was served to Putin on a silver platter.”
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