Populist Forces Fail to Form a Government and Italy Now Heads to New Elections

Italy has been without a government since elections on 4 March ended in a hung parliament. After more than 80 days, attempts to form a political government have failed.

Less than a week after the populist parties, the anti-establishment Five Star Movement and the anti-immigrant League had concluded their negotiations over the government contract and received a mandate to form a government, its designated prime minister, Professor Giuseppe Conte, a lawyer with no political experience, announced that he had failed to form the so-called “government of change”.

His resignation was the result of a standoff over Italy’s future in the eurozone and parties’ controversial choice for finance minister. Sergio Mattarella, the president of the republic,  has in fact refused to accept the nomination of Paolo Savona, an 82-year-old economist and former industry minister who has called Italy’s entry into the euro a “historic mistake”.

The announcement has prompted the creation of a technical caretaker government, as President Mattarella summoned a former official at the International Monetary Fund, Carlo Cottarelli, to the presidential palace to give him a mandate to form the government. The country is now expected to head to the polls again in the fall or at the beginning of 2019 at the latest.

A constitutional crisis ahead?

Mattarella’s decision was taken in the framework of the president’s constitutional obligations to confirm a stable government that protected Italian interests. It is not unprecedented for a president to raise doubts over the name of a designated minister, but it is an absolute first for the prime-minister-to-be to promptly abandon efforts to form a government because of a veto on one of his ministers.

In Mattarella’s statement, he said he has done everything he could to accommodate the parties’ choices but that his constitutional role of guarantor had required him to oppose their choice of an economics minister who followed a line that probably would lead Italy to exit the euro. A line that, according to Mattarella, should have been openly discussed in the electoral campaign and would have further alarmed Italian and foreign investors.

The president’s position is going to clash with the League and Five Star’s narrative of an undemocratic decision whereby institutions have made choices on behalf of the people. Luigi Di Maio, leader of the Movement, already called for President Mattarella’s impeachment for blocking the will of people. Both parties have also called for snap elections to profit the most from the situation and reach an even bigger majority, avoiding, at the same time, for a new balance of powers to take shape in the coming months.

What’s next?

After few weeks, President Mattarella had to go back to one of the announced scenarios: the appointment of a technical government, which, however, might not have enough support to pass a confidence vote in Parliament. This task has been assigned to Professor Carlo Cottarelli, a former Italian spending review commissioner and former director at the International Monetary Fund, who should try to form his cabinet in the next few hours or days.

The caretaker government would aim at protecting the Italian economy from the financial backlash of this institutional crisis. In case of positive confidence vote, the government will also draft the yearly budget law, ahead of elections in early 2019. On the contrary, if the government fails to get the confidence in Parliament (that is currently the most likely scenario), the elections will take place already in fall 2018. In the meantime, the government will also represent Italy at important international summits that will take place in the coming months, such as the G7 in Canada, the European Council and the NATO summit.

The latest developments put Italy on an uncertain path. Any move by Mattarella to push against the populist parties might now only serve to agitate their supporters, and fuel anti-euro sentiment. Therefore, the next few weeks will be crucial to understand the country’s resilience and ability to overcome this new political storm while setting the path towards a new vicious electoral campaign where the relations with the European Union could be at the core of debate.