Brussels, Rome During the election campaign, Giorgia Meloni announced: “The fun is over for Europe now.” This included the threat to put national interests ahead of common European projects. Her party’s election as Italy’s strongest force on Sunday is therefore causing some concern in Brussels and other European capitals.
Not only will the third largest EU country be governed by a right-wing populist in the future. Even in the Council of 27 Member States, decision-making on many issues could become more difficult if Italy were to form a block of obstructors together with the like-minded governments of Hungary and Poland.
Nicola Beer (FDP), Vice-President of the European Parliament, told the Handelsblatt: “I’m concerned, after all, Italy is Europe’s third-largest economy.” affect the whole of Europe.”
CSU MEP Markus Ferber warned that Italy should not give the financial markets any reason to get nervous. Otherwise the rising interest rates on Italian bonds could quickly develop into a new debt crisis. “Rome cannot afford political uncertainty and a conflict with Brussels,” he said.
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According to initial projections, Meloni’s party, Fratelli d’Italia, won the election with around 25 percent. It could now form a conservative-right three-party coalition with Matteo Salvini’s Lega (8.5 percent) and Silvio Berlusconi’s Forza Italia (8.0 percent).
Investors look at Meloni’s economic policy
The likely new prime minister will inherit one of the highest debt ratios in the EU (150 percent of gross domestic product). At the same time, the country is the largest recipient of aid from the European Corona reconstruction fund with around 200 billion euros.
According to initial projections, Meloni’s party, Fratelli d’Italia, won the election with around 25 percent.
(Photo: IMAGO/Antonio Balasco)
Investors on the financial markets are therefore watching closely how the new government is positioning itself in terms of economic policy. Risk premiums on Italian government bonds had already risen in anticipation of Meloni’s victory. The return on ten-year paper was around 4.3 percent on Friday, the highest it has been in nine years.
In terms of economic policy, observers expect that Meloni will largely continue the course of her predecessor Mario Draghi. Luigi Scazzieri from the think tank Center for European Reform says she cannot afford to deviate greatly. Italy needs the European reconstruction billions as well as access to the crisis instrument of the European Central Bank (ECB).
Both are subject to strict conditions controlled by Brussels. Although Meloni’s coalition partners have promised big tax cuts, Scazzieri expects some fiscal discipline from the new government.
EU does not want to renegotiate reconstruction aid
During the election campaign, Meloni announced that he wanted to renegotiate the conditions for the Italian payments from the EU fund. But she will meet with rejection in Brussels.
Beer warns that Meloni will be measured by how she implements the agreed structural reforms. “I see no willingness in Brussels to renegotiate the agreements on the Corona reconstruction fund,” said the FDP politician.
EU Commission President Ursula von der Leyen (CDU) had already issued a precautionary warning before the election. “If things go in a difficult direction – I’ve already talked about Hungary and Poland – then we have tools,” she had said. By this von der Leyen meant the infringement procedures and lawsuits that the Commission has brought against Hungary and Poland after their violations of EU requirements.
Meloni is expected to seek to allay concerns by bringing some respected establishment figures into her cabinet. There has been speculation for weeks about Fabio Panetta, a respected economist and central banker who sits on the Executive Board of the ECB. Should he become finance or economics minister, that would calm the markets at least a little. But it is completely unclear whether Panetta is even considering such a step.
Another European veteran whom coalition partner Forza Italia would definitely send to government is Antonio Tajani. The Berlusconi confidant was both EU Commissioner and President of the European Parliament in recent years. More Brussels establishment is not possible. There is speculation that he could become foreign or defense minister.
>> Read here: The result in Rome is an expression of democracy – a comment
As a board member of the conservative EPP group in the European Parliament, Tajani also works closely with the party and group leader Manfred Weber (CSU). He was accused of being a “stirrup-holder” of the right after campaigning for Forza Italia.
Nevertheless, the relationship between Rome and Brussels will probably deteriorate noticeably. Teresa Coratella from the think tank European Council on Foreign Relations said: “Meloni will try to play the troublemaker in Europe.” It is very unlikely that she will have a constructive relationship with Olaf Scholz and Emmanuel Macron. “She is much closer to Viktor Orban,” said Coratella.
EU fears legal bloc with Hungary, Poland and Italy
The Green MEP and Italian expert Alexandra Geese sees it similarly. “Meloni’s role model is Hungarian Prime Minister Viktor Orban, who turned his country into an illiberal democracy,” she said. Italy could now form a right-wing bloc with Hungary, Poland and possibly Sweden in the EU Council. “It means a shift in mood in the Council. It is becoming increasingly difficult to achieve a common understanding of the rule of law.”
In the European Parliament, the eight members of the “Brothers of Italy” have already given a foretaste of what could come next. Recently, together with their colleagues from the Polish ruling party PiS, they voted against declaring Hungary an autocracy.
Italy could now form a right-wing bloc with Hungary, Poland and possibly Sweden in the EU Council.
(Photo: AP)
Meloni’s party and the PiS sit together in the European Conservatives and Reformists (ECR) group, which brings together the soft Euro-sceptics in Brussels. Salvini’s party, on the other hand, sits in the more extreme ID faction – along with the AfD and Marine Le Pen’s French Rassemblement National (RN). Right-wing parties across Europe celebrated Meloni’s victory. “We celebrate with Italy,” tweeted AfD member of the Bundestag Beatrix von Storch.
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The FDP politician Beer now fears for the EU’s ability to act. Meloni and her allies have maintained a “clearly anti-European tone” for years, she said. It will therefore be very difficult to push through the urgently needed EU reforms “which should make us more capable of acting in the geopolitical crisis”. This includes, for example, the abolition of national vetoes and the introduction of qualified majority voting in more policy areas.
Even with future sanctions against Russia, the reliable partner Italy threatens to fail. Meloni has personally promised further support for Ukraine. But her two coalition partners, Salvini and Berlusconi, are declared Putin friends. Salvini in particular could play the brakes here, says Scazzieri. Coratella also sees Salvini as a destabilizing factor. “He can undermine Meloni at any time,” she says. “Salvini is not a reliable partner.”
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