Italy has been plunged into a constitutional crisis as a result of a stand-off between President Sergio Mattarella and its populist leaders. The Prime Minister in waiting, Giuseppe Conte, has resigned after the nation’s President refused to accept his nomination for the next Finance Minister.
Meanwhile, Moody’s has indicated that it could be downgrading the nation’s rating.
Italy is a unitary parliamentary republic in Europe. It is home to 61 million inhabitants. The country is the fourth most populous EU member state. Historically, Italy is perhaps best known for being the origin of the Renaissance. Italian culture flourished at this time, producing famous scholars, artists and polymaths such as Leonardo da Vinci, Galileo, Michelangelo, and Machiavelli. It was a period when great strides were made in science and art. It was also during this era when Italian explorers such as Marco Polo, Christopher Columbus, Amerigo Vespucci, and Giovanni da Verrazzano discovered new routes to the Far East and the New World.
Present day Italy is known as a vibrant tourist destination in Europe. It is the 3rd-largest national economy in the eurozone, the 8th-largest by nominal GDP in the world. Italy is also the eighth largest exporter in the world. In 2016, its nominal GDP was $1.850 trillion. Italy conducted 59% of its trade with other nations in the European Union.
Politically, Italy has often been plagued by instability in the 20th and the 21st century. After the first world war, the nation was economically weakened. In 1922, the National Fascist Party of Benito Mussolini came to power. This resulted in protectionism and greater control by the government. There have been several dozen governments in the country since the advent of the second world war. The Italian political landscape underwent a seismic shift in the early 1990s when the "mani pulite" ("clean hands") operation exposed corruption at the highest levels of politics and big business. Despite hopes of a change, the old power structures remained largely unchanged. Under the leadership of Silvio Berlusconi, politics was mired by controversies and scandals.
The elections were called by President Sergio Mattarella in December 2017, after he dissolved the Parliament, and were held in March 2018. The campaigning saw a marked shift towards neo fascism and was built upon the anti-immigration wave. It also saw the return of former leader Silvio Berlusconi as a dominant force in national politics. The centre-right alliance, in which Matteo Salvini's League emerged as the main political force, won a plurality of seats in the Chamber of Deputies and in the Senate. However, no political group or party won an outright majority, resulting in a hung parliament.
Now, Italy has been plunged into a constitutional crisis as a result of a stand-off between President Sergio Mattarella and its populist leaders. The prime minister-in waiting, Giuseppe Conte has tendered in his resignation after Mattarella refused to accept Conte’s choice for finance minister. Paolo Savona, an 81-year-old former industry minister, is known for harbouring anti-European Union sentiments. At one point, he even called Italy’s entry into the euro a “historic mistake”. The President had already signalled that he was against the nominee.
“I asked for that ministry an authoritative political figure from the coalition parties who was not seen as the supporter of a line that could provoke Italy’s exit from the euro,” Mattarella said. “The uncertainty over our position within the euro has alarmed Italian and foreign investors who have invested in securities and companies. In a democracy, if we are still in democracy, there's only one thing to do, let the Italians have their say," he told supporters in a speech in central Italy. Mattarella’s move to push back on Savona’s nomination was unprecedented in recent history in Italy.
This stand-off is stalling efforts to form a government. Luigi Di Maio of the populist Five Star Party said President Sergio Mattarella had caused an "institutional crisis". "I want this institutional crisis to be taken to parliament... and the president tried," Mr Di Maio said."After tonight, it's truly difficult to believe in the institutions and the laws of the state." League leader Matteo Salvini called for fresh elections. “In a democracy, if we are still in a democracy, there’s only one thing to do, let the Italians have their say,” Salvini said.
Moody’s said in a statement that the coalition’s proposals would lead to “a weaker, not a stronger, fiscal position,” pointing to “potentially costly tax and spending measures, without any clear proposals on how to fund those.”
Our assessment is that Italy is in the throes of political instability. The struggle to form a government has set a new record for post-war Italy. The nation has been without a new administration for 83 days after the inconclusive March 4 elections. It is also a battle between pro-Europe and anti-Europe sentiments within the leadership and the nation itself. This instability also poses a threat to not only the Euro but also Italy’s economy. Will fresh elections save the nation’s democracy?