The face of the new government.
A right-wing coalition composed by the nationalist Brothers of Italy, the far-right League and centre-right Forza Italia won the Italian elections on 25 September 2022, obtaining 44% of the vote. This is the highest percentage for a winning coalition since 2008. Giorgia Meloni, leader of Brothers of Italy, won the lion’s share, with 26%, and is set to receive the mandate to form a government. Italy’s first female prime minister, she will lead the country’s first right-wing government since World War II. This result is a stark defeat for the contenders, notably the centre-left Partito Democratico which earned only 19% of the vote and will struggle to oppose the comfortable majority that Meloni enjoys in both chambers.
In contrast to the two previous elections, which led to broad coalitions involving political parties that had been rivals during the campaign, this time the government will be formed by a coalition that ran together and presented a common programme. Forming a government in Italy usually takes 4 to 12 weeks. Given the solid numbers for the centre-right, we can expect a government by end of October at the latest. The leaders of the EU Institutions and other EU Governments will be following the process closely to understand what the EU can expect from Rome in the coming months, notably in view of Meloni’s good relations with the Polish and Hungarian ruling parties, both seen as far or extreme parties and opposed to many EU policies.
According to speculation, Meloni could include some technocrats in key cabinet posts to reassure Brussels and investors. Among them, Fabio Panetta of the European Central Bank’s executive board might lead the Treasury; diplomats like Giulio Terzi or Stefano Pontecorvo might be appointed as Foreign Minister; the current Environment Minister (and key actor in the Italian recovery plan) Roberto Cingolani might keep his position; former judge Carlo Nordio could become Justice Minister. The alternative is to have a fully political government, which might create hiccups or delay, in its approval by the President of the Republic Sergio Mattarella, again sparking concerns at EU level.
Challenges: energy, economy, public finances, relations with the EU.
The upcoming government will face near unprecedented challenges, particularly rising energy costs. In the longer term, the government will have to handle the impact of tightening monetary policies for a country whose debt/GDP ratio is 151%. The first deadline is on October 15, the deadline for the presentation of Italy’s draft budget plan. Even more, the new government will have to approve the budget law in a relatively short time, by 31 December. The main challenge would be to immediately find resources to preserve former prime minister Mario Draghi’s economic-relief package.
The government will have to strike a careful balance between the nationalist verve at home and the need to strike compromises in Brussels. The three parties making up the coalition are members of three different political groups at EU level – Brothers of Italy (ECR), The League (ID) and Forza Italia (EPP). The perceived ambiguity of Meloni vis-à-vis Hungary’s Viktor Orban (Brothers of Italy has not supported the European Parliament resolution against Hungary) and of his ally Matteo Salvini vis-à-vis Russia’s Vladimir Putin, may all be irritants in discussions with other political parties or governments amongst European member states. However, Meloni has already declared that she wants “to be like France: nationalist, in and for Europe”.
While Meloni is the President of the ECR Party, the role and positioning the future Italian government will have in the EU will also depend on the influence of the two other parties. The stabilisation of Forza Italia and the unexpectedly poor result of the League may indeed have an effect in the high-level EU political balances and ensure the new government is closer to the wider alliances that run Brussels than to the so called Visegrad Group of Hungary, Poland, the Czech Republic and Slovakia.
The key challenge for the centre-right coalition is to balance welfare and fiscal promises with the relationship with the EU and sound budgetary policy. Maintaining more moderate tones and fiscally-responsible policies could disappoint the electoral base and introduce some instability in the coalition, while a fight with the EU could further endanger Italy’s financial credibility. However, a confrontational approach is unlikely while Italy is implementing its €209 bn national recovery plan under the EU post-pandemic Recovery Fund.
Despite its apparent Euroscepticism, the centre-right also governs the main Italian regions, home to those with strongest interests in smooth economic ties with the EU. We will have to see whether the government will continue with the liberalisation (notably on taxi drivers and beach concessions) agreed with the EU and started by Draghi, as this would contradict electoral promises. Another change of course may be on sustainability, with less focus on environmental policy and (even) more protection for the agriculture sector, for instance by opposing attempts to introduce the nutri-score (labelling of food by health properties popular in France and Belgium) and putting more emphasis on “made in Italy” production.
Impact on EU institutions.
The results will have a significant impact on the EU institutions, notably at personal level.
At the European Parliament, a few of the 76 Italian MEPs will be replaced, including several high-level posts which will trigger some moves in the groups. Some key Italian MEPs will join the national parliament or may even get ministerial positions. Former prime minister Silvio Berlusconi and MEP Tajani, Chair of the AFCO Committee, as well as ECR Co-Chair Raffaele Fitto, will leave. On the other side, other influential MEPs were elected, notably Simona Bonafé (currently S&D Group Vice-Chair for interinstitutional relations and key ENVI member), and Carlo Calenda (currently ECON and ENVI for Renew Europe), whose seat is going back to the S&D.
At the Council, there would be a new ECR-led government joining Poland. This has a substantial impact, considering the combined voting weight of the two countries, and may tilt the balance against some ambitious reforms promoted by the socialists (notably Germany and Spain) and centrist (France) governments. Whilst some more divisions can be expected in the Council, the transatlantic direction of the EU and support for Ukraine are likely to stay unchanged. However, the devil lies in the detail, and it cannot be excluded that the new government may take a less pro-active stance against Russia, notably on sanctions.
By Antonio Pilati & Giovanni Bazzoli, consultants at SEC Newgate EU.