Category Archives: Italy

(BBG) Italy Populists Stand Firm on Budget, Presenting EU Dilemma

(BBG) Italy’s populists are calling the bluff of European Union enforcers.

The unlikely alliance of deputy premiers Luigi Di Maio and Matteo Salvini has stuck to the government’s 2.4 percent budget deficit and 1.5 percent growth forecast targets for next year. The move bulldozes aside attempts by Finance Minister Giovanni Tria to placate the European Commission, which had demanded changes to ease concerns about excessive spending and overly optimistic growth estimates.

“We won’t change” the budget targets, Di Maio told reporters after a cabinet meeting late Tuesday night to finalize a letter of reply to the commission. “We believe that this is the budget the country needs to start up again.”

The commission received Italy’s response to a demand for submission of a revised 2019 budget and posted the letter from Tria, dated Tuesday, on its website.

“The fiscal expansion decided on by the government is limited to what is strictly necessary to counter the slowdown of the economic cycle,” Tria wrote.

The benchmark FTSE MIB stock index sank as much as 1.8 percent, the most in almost three weeks, while the yield on the Italian 10-year bond rose to 3.56 percent, a November high. The yield spread between Italian 10-year bonds and similarly dated German bunds touched 317 basis points, the widest this month.

European commissioners, who rejected a first draft of the budget last month, now have to decide whether to kick start a long and complex process that could lead to several billion euros in fines for Italy. But coming down hard on the populists could boost Di Maio’s anti-establishment Five Star Movement and Salvini’s anti-migration League, who have been quick to exploit anti-EU sentiment in the past.

The commission is also in a weakened position with a change of leadership coming up after European Parliament elections due next May. That’s a vote Salvini says he hopes Europe’s populist forces will win in order to change Europe from the inside.

For the ruling coalition, the priority is to start delivering on campaign promises to boost benefit spending, cut taxes and lower the retirement age. The government’s letter confirms all key measures and features plans to sell real estate worth 1 percent of GDP. It also includes automatic spending safeguards to ensure the 2.4 deficit target is not breached, officials said.

Salvini, a compulsive user of social media, appears to relish the battle ahead. While in the premier’s official residence to discuss the budget, he provocatively posted a picture of himself on Twitter beaming as he holds up a bottle of red wine with the words: “You uncork a bottle of Nebbiolo and the evening takes on a different flavor. How’s your evening?”

Not Amused

There is little appetite for such merriment among commissioners, who are under pressure from EU countries to demonstrate that they can actually enforce budget discipline.

The next clue to Italy’s fate is likely to be on Nov. 21 if the commission brings forward an assessment of the country’s finances that would normally come out in the Spring. A report showing Italy is in breach of the EU’s debt rules would be another step down the path toward potential financial penalties.

In a procedure for excessive deficit, EU governments get several opportunities to weigh in and Italy could be given as much as six months more to comply once the process starts. The government would risk an initial fine of 0.2 percent of Italy’s annual GDP of 1.7 trillion euros ($1.9 trillion), rising to 0.7 percent if Rome still doesn’t fall into line. The EU has never fined a country for budget violations.

Playing on anti-EU sentiment helped the populists win March general elections. The League’s Salvini, who is more virulent than Five Star’s Di Maio in denouncing Brussels, has since the vote overtaken his coalition ally in opinion polls. The League was credited with 31.7 percent support in an SWG survey, compared to 27.4 percent for Five Star. The League won 17.4 percent of votes in the March elections, while Five Star got 32.7 percent.

(Reuters) Portugal debt chief says difficult to see near-term Italian ratings downgrade

(Reuters) Italy’s credit rating is unlikely to be downgraded in the near term because the country still has a primary surplus and is less exposed to external shocks than other countries, the head of Portugal’s debt agency said on Tuesday.

“I find it difficult to see Italy downgraded in the near future,” Christina Casalinho, chief executive officer at the Portuguese government debt agency said at a conference in Brussels.

She added that Portugal had a more diverse investor base, helping to limit contagion from Italian market volatility.

(Economist) The real story of what happened to Italy’s Jews

(Economist) Simon Levis Sullam unpicks the accepted version of events.

The Italian Executioners: The Genocide of the Jews of Italy. By Simon Levis Sullam. Translated by Oona Smyth with Claudia Patane.Princeton University Press; 208 pages; $26.95 and £21.

The police report said that “the terrified child, Emma Calò, aged 6, clung, weeping, to the clothes of the concierge…Mr and Mrs Berna begged the official to desist from his intentions, but he was adamant.”

Told that this heart-wrenching scene took place in Rome in 1944, most Italians could confidently guess the background: the official would have been a Nazi engaged in the round-up of Jews that followed Italy’s withdrawal from the second world war, when the Italians’ German allies became their occupiers. As for the Bernas, their compassionate behaviour typified the Italian nation, which had been seduced by fascism but was never anti-Semitic.

The official, however, was not German, but Italian. And, as Simon Levis Sullam’s vigorously revisionist history makes clear, while many Italians stood up for the Jews, many did not. Some looked away, and some took an active, even enthusiastic, part in the persecution and removal of the 6,746 Jews sent from mainland Italy to German extermination camps. This was particularly true in the Italian Social Republic (rsi), the fascist-run state in the north.

To ingratiate themselves with the victors after the war, Italian bigwigs exalted the role of the Jews’ defenders while minimising that of their persecutors. Hampered though it is by the disappearance of much of the documentary evidence, Mr Levis Sullam’s short book sets out to give the latter group their sinister due.

It is hard to overstate the pervasiveness and potency of what became the accepted version of events. Even the leaders of the surviving Jewish community adopted it. “Everyone”, declared the president of the Union of Italian Jewish Communities in 1956, was “careful to warn the doomed innocent victims; all the friends, the acquaintances, the neighbours were ready to take them in, to hide them, to help them.” That story has entered history textbooks and has even been embraced by Yad Vashem, the Holocaust museum in Jerusalem: one of its publications states that Italians rejected anti-Semitism as “contrary to Italian traditions”.

But, as a German diplomat explained in a note to Berlin as the deportations began in December 1943, “with the forces at our disposal in Italy, it is impossible to comb through all the towns”. Italians took part in 2,210 arrests; 1,898 were made by Italians alone. Then there were informers who betrayed Jewish acquaintances and people who worked willingly for such bodies as the General Inspectorate of Race and in Italy’s seldom-mentioned concentration camp at Fossoli near Modena. (Fossoli was no Buchenwald, but nor was it a holiday camp: in February 1944, prisoners appealed to Catholic prelates for help in alleviating their “miserable conditions” and for “aid that the elderly, women, children and the ill implore from human solidarity”.)

Though his focus is on the cruelty Jews endured, Mr Levis Sullam acknowledges that the story was many-sided. After a Jewish man and his mother were caught trying to flee to Switzerland, the local fascist chief released them and returned their seized property. The Bernas’ efforts to save Emma Calò met with the “tacit agreement” of a policeman accompanying the official.

Not that they succeeded in saving the little girl. She died in Auschwitz two months later. The official was acquitted of all charges after the war, “thanks to the activities that he claimed to have carried out on behalf of the Resistance”.

(WSJ) In First for Europe, Brussels Rejects Italy’s Budget

(WSJThe populist Italian government has vowed to press ahead with plans to cut taxes and expand welfare and pension benefits

Giovanni Tria, Italy's finance minister in Rome on Thursday. The Italian government has three weeks to submit a revised budget.
Giovanni Tria, Italy’s finance minister in Rome on Thursday. The Italian government has three weeks to submit a revised budget. PHOTO: ALESSIA PIERDOMENICO/BLOOMBERG

The European Union took the unprecedented step Tuesday of rejecting Italy’s draft budget as incompatible with the bloc’s rules on fiscal discipline, escalating a battle between Europe’s establishment and populists in Rome.

Following a meeting of the European Commission—the EU’s executive arm—Commission Vice President Valdis Dombrovskis said the Italian government was “openly and consciously going against commitments made” to drive down the country’s debt and deficit levels.

The Italian government’s effort on Monday to explain why it had planned its budget in breach of rules was unconvincing, Mr. Dombrovskis added.

The government—a coalition of the antiestablishment 5 Star Movement and the nationalist League—vowed after Mr. Dombrovskis’ rejection to press ahead with its plans to cut taxes and expand welfare and pension entitlements, insisting that Italy’s economy needs a fiscal boost.

The battle is the new front line in disputes pitting the EU’s political mainstream against rebels across Europe that have gained voter support following the region’s economic and migration crises.

Insurgent movements in Italy and elsewhere want to loosen EU constraints on member countries. Victory in the budget battle would bolster the League and 5 Star ahead of elections to the European Parliament in May, a contest in which populist movements around Europe hope to make gains.

Italy, a founding member of the EU and Europe’s fourth-biggest economy, is testing whether a rebel government can defy the bloc’s rules and skirt pressure from financial markets to back down.

Investors have dumped Italy’s government bonds and bank stocks repeatedly since the League and 5 Star agreed to govern together in May. Italy’s combination of high government debt and chronically weak economic growth make it vulnerable to capital flight.

The extra yield that investors demand to hold 10-year Italian bonds over safe German bonds hit 3.3 percentage points last week, the widest gap in more than five years. That has battered shares in Italy’s banking sector, which is heavily exposed to its national debt.

However, markets remain far more stable than during the eurozone debt crisis of 2010-2012. Back then, the spread between Italy and Germany peaked at 5.6 percentage points.

Most investors expect Rome and Brussels ultimately to reach a compromise over the budget. Plus, today’s economic backdrop is better than before. Italy’s economy is expected to grow by around 1% in 2018, in contrast to its sharp contraction during the debt crisis.

League and 5 Star leaders have brushed aside investor pressure to compromise over the budget. The Commission had hoped that this pressure, coupled with its courting of Italy’s pragmatic finance minister, Giovanni Tria, would nudge Rome into compliance.

“Markets love Italy more than some European institutions do,” 5 Star leader Luigi Di Maio said.

He predicted “weeks of strong exchange with the European Commission, but both the Commission and the markets will come to understand that this is a government that believes in what it is doing.”

The Commission has much to lose. Failure to stop a flagrant breach of agreements on fiscal discipline would weaken economic-governance rules created after Europe’s debt crisis that are already tarnished by the waiving of regulations for France. Some member countries have indicated they believe the Commission has already been too lenient with Italy.

Officials also know that disciplinary proceedings against Italy will play into the hands of 5 Star and League politicians, who routinely paint Brussels as a remote bureaucracy hostile to the needs of ordinary Italians.

Under the EU’s protracted procedures, Italy has three weeks to submit a revised budget and the Commission then has three weeks to respond. The budget fight could thus come to a head in early December. That will likely be a sensitive time for Italy, since the European Central Bank has said it plans by the end of 2018 to cease its bond purchases, which have been vital in moderating Italy’s borrowing costs.

If Italy refuses to adopt a compliant budget, the resulting EU disciplinary proceedings could lead to fines equal to 0.2% of Italy’s gross domestic product and the freezing of some funding. Those fines can grow over time if Italy continues to defy Brussels.

Defiance toward Brussels has lifted the Rome government’s popularity. Over 60% of Italy’s electorate support the League or 5 Star, according to recent polls. A similar share of voters say they support the draft budget.

To go into effect, the budget must be approved by the Italian parliament before the end of the year.

The government’s weakest spot is the vulnerability of Italy’s banks, and thereby its economy, to investor flight. Further pressure on Italian bonds could erode the capital of Italian banks and force them to restrict their lending to the country’s businesses and households.

(P-S) Will Italy Sink Europe? – Jim O’Neill

(P-S) Italy’s coalition government has been generating headlines with its pursuit of populist economic policies that threaten to leave eurozone fiscal rules in tatters. But before EU authorities respond, they should bear in mind that if Italy does not achieve stronger GDP growth, political conditions there could deteriorate further.

LONDON – Despite political turmoil and  at the global level, the eurozone has had two years of strong economic growth, at least by its own historically disappointing standards – and even with the United Kingdom  toward withdrawal from the European Union. But with the emergence of a populist government in Italy this year, it is no longer safe to assume that the eurozone’s worst days are behind it

Italy was the first country that I studied when I entered the financial world back in 1982, so I have a special affection for it. I was working for a very large American bank at the time, and I can still remember joining frequent transatlantic conference calls to discuss Italy’s debt-to-GDP ratio. The question on everyone’s mind was when the country would default; but it never did. Instead, Italy muddled through, and has continued to do so ever since. Still, now that the Italian government seems poised for a standoff with the EU, it would not be surprising if worries about a default were to re-emerge.

As my experience more than 30 years ago shows, Italy’s economic problems far predate its adoption of the euro. It has long had poor productivity by European standards, and that translated into relatively low trend growth in the pre-euro decades. At the same time, occasional spurts of faster growth regularly sowed the seeds for various crises, often resulting in devaluations of the Italian currency, the lira.

Of course, there are some who now yearn for the days when the lira could be weakened to restore growth. That is no longer an option under the single currency. But what the pre-euro romanticists overlook is that euro membership has given Italy low inflation, and thus lower interest rates. Moreover, there is reason to think that lira devaluations did more harm than good. Even if they offered an occasional competitive boost, they stood in for tougher structural reforms that would have increased productivity over the long term.

There are also some who believe that the eurozone’s fiscal and monetary framework locks Italy into weak nominal GDP growth, possibly too-low inflation, and high debt. Yet before the new government took office, Italy’s cyclically adjusted fiscal deficit – as opposed to its underlying debt position – was often rather restrained compared to the rest of the eurozone, as well as the other members of the G7 (Canada, France, Germany, Japan, the United Kingdom, and the United States).

Still, the mainstream political parties that governed Italy until this year did not deliver the nominal GDP growth that the country needs. As a result, Italians elected an unconventional coalition whose program combines the policies of the populist left with those of the populist right. While the League party promises to cut taxes, the Five Star Movement (M5S) is pursuing a form of basic income.

But what Italy needs is a broad structural reform program to improve productivity. That is the only way to achieve a higher long-term growth rate, given the country’s demographics. In addition to enacting policies to boost the labor-force participation rate among women, Italy must provide more attractive opportunities for its young people.

For its part, the EU should do more to help Italy take the tough steps it needs. The European Commission, the European Central Bank, and the German government have erred in insisting on rigid enforcement of the EU Stability and Growth Pact, particularly the 3%-of-GDP cap on fiscal deficits. Although some countries have been allowed to breach the deficit cap during challenging times, Italy is almost never afforded much accommodation, owing to its high debt levels. Yet as the experience of Belgium and Japan shows, high government debt can be reduced only through sustained economic growth.

Complicating matters further, some reforms to boost long-term productivity can actually reduce growth in the short term. Thus, any government enacting such measures will need to have the option of pursuing counter-cyclical stimulus.

Another problem concerns monetary policy. The ECB could stand to be more broad-minded in how it pursues its inflation target of just under 2%. That target, along with Germany’s own 2% target, leaves Italy locked into a state of low inflation, even when it could benefit from more monetary-policy stimulus.

Under these conditions, the EU authorities would do well not to oppose the current Italian government’s plans too aggressively. If mainstream liberals are worried about the implications of a democratically elected populist government, then they should worry even more about what could come next if economic circumstances worsen. At this stage, Italy needs stronger nominal GDP growth – plain and simple.

Some will say that it was a mistake to have allowed Italy into the eurozone in the first place, and that an optimal currency zone should have been more discriminating in its membership. But the German and French business communities insisted that the monetary union must include some of Italy’s more competitive companies. And once Italy was considered eligible, so, too, were many other countries.

At the end of the day, those with the power to set and enforce EU fiscal and monetary rules know full well that the eurozone could not survive a Greek-style crisis in Italy. It is their responsibility in the months ahead to make sure it doesn’t come to that.

(BBC) Gilberto Benetton: Co-founder of fashion chain dies

(BBC)

Gilberto BenettonImage copyrightGETTY IMAGES

Gilberto Benetton, a co-founder of the Benetton clothing firm, has died at the age of 77 after a short illness.

He, with brothers Luciano and Carlo and sister Giuliana, founded United Colors of Benetton in Italy in the 1960s.

The family is one of the most powerful in Italy, with interests in construction, transport and catering.

Gilberto is credited with diversifying the company away from the clothing business, and growing it into a multi-billion euro giant.

He was the former head of the family holding company, Edizione, which controls Italy’s biggest infrastructure group Atlantia.

A unit of Atlantia operated the bridge in Genoa which collapsed in August, leading to the death of 43 people.

His death comes just three months after that of younger brother Carlo in July. He was aged 74.

The Benettons also control roadside caterer Autogrill and Rome’s airports.

Migrants picked up by the AquariusImage copyrightSOS MÉDITERRANÉE
Image captionBenetton was criticised for the use of photos of migrants being rescued from the Mediterranean

The Benetton clothing chain’s brightly-coloured sweaters were considered most chic in the 1980s and 1990s and its eye-catching advertisements kept it in the spotlight.

An early one featured a black woman breastfeeding a white baby.

A later one, labelled “We, On Death Row”, used photographs of prisoners sentenced to death in the US.

The company continues to provoke. This summer, its advertising featuring images of migrants being rescued from the Mediterranean, was called “despicable” by Italy’s interior minister and attacked by the charity, SOS Méditerranée, for using pictures of people “in distress”.

(EUobserver) ‘I talk to sober people’ Salvini says on Juncker

(EUobserver) Italy’s interior minister Matteo Salvini has threatened to sue EU commission president Jean-Claude Juncker for damages, and accused him of pushing up the country’s cost of borrowing by likening Italy to Greece. “He should drink two glasses of water before opening his mouth, and stop spreading non-existent threats,” Salvini said on Juncker. “I talk to sober people,” Italy’s news agency Ansa reported him saying.

(ZH) Italy Defies Europe, Agrees On 2019 Budget Deficit At 2.4% Of GDP

(ZH) Despite the resistance of Italy’s finance minister Giovanni Tria who had pushed back against demands by the League and the Five Star Movement to push Italy’s budget deficit above 2% in 2019, demanding a hard stop at 1.6%, moments ago the Italian budget negotiations reached a successful conclusion, when Italy’s Deputy Premier Matteo Salvini, and League leader, said that agreement had been reached on the 2019 deficit to be at 2.4% of GDP, as he and Di Maio demanded in recent days to fund what had emerged as key sticking point, namely Universal Basic Income for the people.

Commenting on the outcome, Italy’s other deputy premier Luigi Di Maio, said he had succeeded in a “budget for the people” adding that the budget cancels poverty thanks to “citizen’s income,” at a cost of €10 billion. He added that other measures include reform of job centers, pension reform, and a €1.5 billion fund for victims of bank crises.

Salvini and Di Maio said that Italy’s government is united on the budget goal, although it was unclear if Finmin Tria would stay on after his “fiscally prudent” position had been rejected although Bloomberg reports that according to a League official, Tria had agreed with the 2.4% budget deficit target.

Attention now turns to how Brussels will respond as it will certainly not be excited. Ahead of the decision, EU Commissioner Moscovici was quoted in la Stampa, saying that Italy’s deficit must stay below 2%, while the final number is 0.4% above this.

For now, there has been little reaction in assets, with Italian debt yields unchanged on the news after getting hit earlier, while EURUSD dipped slightly and continuing to trade near session lows.

(BBG) Trump Offered Italy Bond-Buying Help, Report Says

(BBG) President Donald Trump told Italian Prime Minister Giuseppe Conte the U.S. is willing to help the country by buying government bonds next year as Italy seeks to refinance its debt, Corriere della Sera reported, citing three high-level Italian officials.

Conte is said to have told officials about the offer after returning from his meeting with Trump at the White House about three weeks-ago, the newspaper said. Conte didn’t give any details on the plan or say whether it’s feasible, Corriere added.

Italy’s bonds have been roiled in recent months by the Five Star Movement-League coalition and its plans to boost spending while cutting taxes in their September budget. The 10-year yield spread over Germany could blow out to 470 basis points — the highest level since the euro area debt crisis — from around 275 currently, should the budget break the EU’s deficit limit of 3 percent. The spread was little changed Friday.

“I laughed quite a lot, when I saw the report,” said Jan von Gerich, chief strategist at Nordea Bank AB. “I am not aware of any portfolios that he has direct control over.” Trump could probably use his clout to try to persuade domestic investors or public pension funds to buy “but that would most likely amount to something nominal rather than significant amounts.”

Trump has frequently expressed his support for anti-immigration movements in Europe and political leaders who challenge the established European Union order. League Party leader Matteo Salvini and his populist ally, Luigi Di Maio of the Five Star Movement, have been demanding the EU bend its rules on deficit targets to allow them to boost spending and cut taxes. They have also tied Italy’s EU contributions to the immigration issue, a stand that has also roiled Italian bonds.

Italy’s deficit this year is forecast to be 1.6 percent of economic output, well within the euro zone’s limit of 3 percent.

Salvini separately told Corriere that he sees signs of an economic attack against the country. He said Conte did the right thing by meeting Trump and praised the finance minister’s plan to travel to China to seek investors. “We have to be open to every scenario,” he said.

(Economist) A deadly bridge collapse points to Italy’s structural weaknesses

(Economist) Infrastructure is ageing, and the government is faulty

IT WAS the stuff of motorists’ nightmares: on August 14th, a pillar supporting a bridge over the Polcevera river in Genoa collapsed. Three heavy vehicles and up to 35 cars plunged 45 metres from the A10 motorway into the dried-up river bed and onto nearby warehouses. As The Economist went to press, 39 people were known to have died; the search for survivors was suspended for fear of further collapse.

Why did it happen? Like many in Europe and America, the bridge was old: it dated from 1967. It had been stressed by ever-heavier vehicle loads. That day, it was battered by a storm and struck by lightning. But none of that explains its collapse. One theory, advanced by Antonio Brencich, a lecturer at the University of Genoa, is that the bridge was innately flawed. It was of unusual construction: its designer, Riccardo Morandi, encased the stays holding up the deck in concrete. Only two other bridges—in Libya and Venezuela—were built in that way, both by Mr Morandi. The one in Venezuela also collapsed, but after being hit by a ship.

Italy’s populist government found others to blame. Three other bridges have collapsed in Italy with less publicity in the past three years, and the interior minister, Matteo Salvini of the Northern League, claimed the European Union’s budget-deficit limits had prevented Italy from spending enough on infrastructure. But figures suggest it may actually spend too much on patching up its infrastructure, and not enough on renewing it (see chart). Then Mr Salvini accused the franchise holders of the motorway, Autostrade per l’Italia, of failing to maintain the bridge. Sweeping aside the firm’s denials, the infrastructure minister, Danilo Toninelli of the Five Star Movement (M5S), said he had initiated procedures for revoking the company’s franchises and fining it up to €150m.

That helped deflect attention from a deep crack in the coalition: the M5S, which has a history of NIMBY-ism, has vehemently opposed infrastructure projects the League supports. Indeed, it opposed a bypass that would have relieved traffic on the very bridge that collapsed. At a rally in 2014 the M5S’s founder, Beppe Grillo, denounced the project as a waste of money; on its website, opponents of the scheme ridiculed fears that the bridge would collapse as a “fairy tale”.

(EurActiv) UN says migrants’ return to Libya by Italian boat could be illegal

(EurActiv)

Federica Mogherini (C), High Representative of the European Union for Foreign Affairs and Security Policy, arrives to Mitiga International Airport prior to her departure, in Tripoli, Libya, 14 July 2018. [Sringer/EPA/EFE]

A rescue operation in which an Italian towboat rescued more than 100 migrants and returned them to Libya earlier this week may have been in breach of international law, the United Nations said on Tuesday (31 July).

A spokesman for the UN migration agency said it could not establish the location of the rescue, which is key to establishing migrants’ rights, although some other parties involved in the case have made contradictory assertions about the incident including where it took place.

The rescue coincides with a growing perception among human rights groups that some European countries are taking an increasingly hard line in their efforts to cut the number of migrants arriving on their shores, after Italy’s new government closed its ports to charities’ rescue boats in past weeks.

According to Spanish charity Proactiva Open Arms, an Italian towboat, Asso 28, rescued 108 migrants from international waters on Monday and took them to Libya, their country of departure.

UNHCR Italia

@UNHCRItalia

Stiamo raccogliendo tutte le informazioni necessarie sul caso del rimorchiatore italiano che avrebbe riportato in 108 persone soccorse nel Mediterraneo. La Libia non è un porto sicuro e questo atto potrebbe comportare una violazione del diritto internazionale

This would constitute a breach of international law, under which people rescued in international waters cannot be returned to a place where their lives are put in danger. Both the United Nations and European Union have acknowledged that Libya is not safe.

Italy’s coast guard initially said on Tuesday that the rescue was coordinated by the Libyan coast guard, and later clarified that the operation had taken place in Libya’s so-called “search and rescue (SAR)” area.

The Libyan coast guard was not immediately available for a comment.

Libya’s SAR is not clearly defined but is widely understood to extend far beyond its national waters.

Proactiva spokeswoman Laura Lanuza said its members learnt the rescue occurred in international waters because their boat Open Arms was nearby and they could listen to radio communications between the Italian ship and the Libyan authorities.

The UN refugee agency said the operation “could represent a violation of international law,” it said on Twitter.

A spokesman for the UN migration agency said the agency was still investigating the case but confirmed the return of the migrants to Libya.

He said the Libyans first told him the rescue operation was carried out by “an unknown vessel”, then changed their version and said the rescuing boat was Libyan.

The head of mission at Open Arms, Fabrizio Gatti, contradicted the Libyan version and said a member of the Asso 28 crew told him over the phone the Italian boat carried out the rescue and was taking the migrants back to Libya. He said he had a record of the conversation.

Asso 28 is now docked in Tripoli, the Libyan capital, according to Marine Traffic, a real-time information service on ships movements.

Charities are at loggerheads with the new Italian government and its right-wing home affairs minister Matteo Salvini who has adopted a hard line to cut the number of migrants arriving on Italy’s shores.

German NGO Sea-Watch also condemned “the first pushback by an Italian vessel for years,” on Twitter.

Sea-Watch Italy@SeaWatchItaly

108 persone in fuga dalla Libia soccorse in acque internazionali da nave ITALIANA e portate a Tripoli.
Il caso segna un grave precedente e richiama la condanna dell’Italia per i RESPINGIMENTI COLLETTIVI (CEDU 2012, caso ).

Denunciamo una pericolosa regressione.

In 2012, the European Court of Human Rights ruled that Italy violated human rights by sending migrants intercepted at sea back to Libya in 2009.

The court said the practice violated international obligations to not return individuals to countries where they could be at risk of human rights abuses.

Salvini praises Libya

As NGOs expressed their dismay over the latest boat controversy, Italy’s far-right interior minister Matteo Salvini, who has closed the country’s ports to migrant rescue ships, praised the Libyan authorities.

“Over the last hours the Libyan coastguard has saved and brought back 611 immigrants to Libya. NGOs protest and traffickers lose their business? Well, we carry on with our work”, he tweeted.

Matteo Salvini

@matteosalvinimi

La Guardia Costiera Libica nelle ultime ore ha salvato e riportato a terra 611 immigrati.
Le ONG protestano e gli scafisti perdono i loro affari? Bene, noi andiamo avanti così! e

Matteo Salvini

@matteosalvinimi

Se avete 5 minuti, vi consiglio questo video sul lavoro della nostra Marina davanti alle coste libiche. Dalle parole ai fatti.

However, the speaker of Italy’s lower house, Roberto Fico, who belongs to the Five Star Movement that governs in a coalition with Salvini’s League, appeared to disagree with sending migrants back to Libya.

“Libya is not a safe place… it is clear that you cannot leave migrants there,” Fico said as he met with protesters denouncing the sale of Italian boats to Libya’s coastguard on Monday.

Several commercial ships that have tried to take rescued migrants to Italy — as was standard procedure under the former centre-left government — have found themselves blocked by Salvini’s policy and stranded for days at sea searching for a port where they can disembark.

(BBG) Cristiano Ronaldo’s Move to Italy Is a Big Score for Jeep

(BBG) Italy’s Juventus Football Club SpA is paying a total of more than $130 million to nab star player Cristiano Ronaldo from Spanish soccer giant Real Madrid Football Club. The Italian team won’t be the only one trying to cash in on the Portuguese footballer’s fame.

Fiat Chrysler Automobiles NV, whose Jeep logo is plastered across the chests of Juventus’ black-and-white-striped jerseys, could get a huge advertising boost in the deal. If Ronaldo can lead Juventus to the UEFA Champions League finals, the media exposure for that one year will be worth about $58.3 million, according to Eric Smallwood, president of Apex Marketing Group Inc. That would be quite a return on the $20 million Fiat Chrysler pays each year for its Juventus sponsorship, according to SportsPro.

Jeep, which makes the iconic Jeep Wrangler, is the crown jewel in Fiat Chrysler’s stable of auto brands. The company forecasts global sales of 1.9 million this year, more than double the 730,000 sold five years ago. Chief Executive Officer Sergio Marchionne wants to bump that to 3.3 millionby 2022, a goal Ronaldo could aid, especially with Hispanic soccer fans, said Chris Chaney, senior vice president at San Diego-based brand consultancy Strategic Vision.

“I can see the fit and where it will help strengthen things,” Chaney said. “The freedom and the adventure, the openness that Jeep represents, it’s appealing to everybody, but it’s particularly appealing to Hispanic new-car buyers.”

Both Turin-based Juventus and Fiat Chrysler are controlled by Italy’s Agnelli family. A spokesman for Fiat Chrysler declined to comment on the value of the soccer deals.

The Agnelli family, which has owned Juventus for more than 90 years, controls Ferrari NV and Fiat Chrysler through its holding company, Exor NV, which owns 64 percent of Juventus. Andrea Agnelli, the cousin of Exor CEO John Elkann, has been chairman of Juventus since 2010. Beyond Jeep, Juventus sponsors such as Adidas, Allianz and Samsung are poised to benefit from Ronaldo’s move.

Juventus in January 2017 presented a new branding strategy to expand revenue from sales of merchandising internationally. Its efforts come as some of its rivals have been sold to Chinese investors, highlighting the value of Italian soccer teams. Juventus, winner of a record seven consecutive Serie A championships, has seen its share pricerise about 35 percent since talk of a deal for the star player surfaced last week.

Ronaldo scored 451 goals in 438 games since he joined Real Madrid in 2009, helping the club to win four Champions League titles, and La Liga, Spain’s top soccer division, twice. Also the UEFA Champions League’s all-time top scorer, Ronaldo earned $61 million dollars in salary and bonuses last year, plus an extra $47 million via endorsements, according to Forbes, making him the third-highest paid athlete in the world behind FC Barcelona star Lionel Messi and American boxer Floyd Mayweather.

His value to marketers is compounded by his huge presence on social media. He has 74.5 million followers on Twitter, compared with 6 million for Juventus and less than 1 million for Jeep. On Instagram, he has 134 million followers, compared with about 10 million for Juventus.

(BBG) Ronaldo Bid Reports Send Juventus Shares to Four-Month High

(BBG) Shares of Juventus Football Club SpA surged following reports the Italian soccer club is poised to sign five-time Ballon d’Or winner Cristiano Ronaldo.

Current club Real Madrid would consider a fee of about 100 million euros ($117 million) for its record goal-scorer, a fraction of his 1 billion-euro release clause, Spanish sports website Marca reported. The 33-year-old agreed to accept a 30 million-euro salary from Juventus, Spanish newspaper As reported, saying the clubs still need to reach a transfer agreement.

Juventus shares rose as much as 9.7 percent in Milan, the biggest intraday rally since a crucial Champions League winin March for the team that would later crash out in a quarter-final defeat at the hands of its Spanish rival, sealed by a penalty goal from Ronaldo. The stock has climbed 23 percent in the last five days as speculation of a possible transfer gathered pace.

While a fee of the reported amount may seem high for a player in the twilight of his career, it would be a coup for the Turin-based side known as “la Vecchia Signora,” or The Old Lady, given Ronaldo’s global brand appeal as well as his on-field talent.

Ronaldo is a “marketer’s dream” who would entice fresh revenue to Juventus through sponsorships, full stadiums and potential broadcasting rights, Robert Wilson, a lecturer in sports business management at Sheffield Hallam University in the north of England, said by email.

The fee would top the 80 million pounds ($105.8 million) Real Madrid paid Manchester United for the Portuguese star in 2009.

Also the UEFA Champions League’s all-time top scorer, Ronaldo earned $61 million dollars in salary and bonuses last year, plus an extra $47 million via endorsements, according to Forbes, making him the third-highest paid athlete in the world behind FC Barcelona star Lionel Messi and American boxer Floyd Mayweather.

His most recent exploits came at the World Cup in Russia, where he scored a breathtaking hat-trick against Spain in the group stage before Portugal was eliminated by Uruguay in the first knock-out round.

A spokesman for Juventus declined to comment and Real Madrid didn’t respond to an emailed request for comment.

(S-E) Fiat factory workers are angry at Juventus signing Cristiano Ronaldo

(S-EThey are angry that the company, which owns shares in Juventus, have the money to sign Cristiano but not to increase their worker’s wages

After Portugal and Cristiano Ronaldo were knocked out of the World Cup by Uruguay, the striker has been the main focus in the media after being linked with a Real Madrid exit. In the last few days the idea he could end up at Juventus is gathering pace and they’ve moved ahead of other teams such as Manchester United and Paris Saint-Germain.

However, there’s a problem emerging for the Italian side. The car manufacturing giant FIAT owns 29.18% of the Agnelli family’s businesses via Exor N.V., who own the majority of the shares – 63.77% – in Juventus. In fact, Juventus’ current president, Andrea Agnelli, was one of the founding members in the mentioned company, which also includes Ferrari and The Economist Group.

Juventus are willing to pay €100m in transfer fees plus another €120m in wages across his four seasons at the club. This investment of €220m is in order to finally win the Champions League again. However this huge quantity of money has generated a problem for the workers at the FIAT car manufacturing plant. “After Higuain, now Cristiano Ronaldo is coming? It’s embarrassing. The workers at FIAT haven’t had a wage increase in ten years. With Cristiano’s wages, you could give every worker a €200 pay rise. In these ten years we’ve lost 10.7% due to inflation that we’ve never gotten back. And now Fiat Chrysler Automobiles, FCA, is spending €126m annualy in sponsorship, of which €26.5 is for Juventus,” criticised Gerardo Giannone of the DER agency.

(BBC) Italy migrant row: Move to seize two Med rescue ships

(BBC)

Lifeline ship carrying migrants in the MediterraneanImage copyrightEPA
Image captionThe two ships work for the German NGO Mission Lifeline

Italy says it will seize two migrant rescue ships in the Mediterranean, citing doubts over their legal status.

Italian authorities said the Lifeline and Seefuchs, operated by the German migrant rescue group Mission Lifeline, were “illegally” flying the Dutch flag.

The Lifeline is carrying 226 migrants rescued off the coast of Libya, Mission Lifeline said.

Separately, the UN refugee agency has reported that 220 migrants drowned in the same area in recent days.

It called for “urgent action” from EU countries.

Why is Italy seizing the ships?

Italy’s new right-wing government has taken a harder stance on rescue ships bringing large numbers of migrants to Italy, which is often the nearest port for those rescued off coast of Libya.

Italy’s Infrastructure Minister Danilo Toninelli said the ship had broken the law by taking the migrants, even though the Libyan coastguard had already intervened to rescue them.

He said Italy would seize both the Lifeline and the Seefuchs to determine their legal status, and said Italy would “once again save the migrants”.

Interior Minister Matteo Salvini initially said in a post on Facebook that the two NGO ships should “go to Holland”, as it was said to be flying under a Dutch flag, and should not dock in Italy.

Whether or not the ship is Dutch is the subject of some debate. The Dutch delegation to the EU said in a tweet that the ships are not registered in the Netherlands, and not flying under its flag.

Mission Lifeline, however, later posted an image on Twitter of a registration document it says proves the ships sail under the Dutch flag.

The group also tweeted that it had carried out another rescue overnight, though details of how many migrants were accepted- and by which ship – have yet to be released.

The NGO’s co-founder, Axel Steier, denied breaking any laws and defended his organisation’s actions.

“In this situation you can’t wait,” he said. “If you have a rescue you prevent people from dying, from drowning and then you have to make the decisions. You can’t wait until someone has a port for you – you have to act immediately.”

Mr Salvini remained undeterred, writing in a Facebook post on Friday morning that Malta should accept the Lifeline and its passengers – and reiterating that the ship should be seized.

Europe’s rescue row

The planned seizure of the Lifeline and Seefuchs comes amid a deepening row over migrant rescues after Italy’s new populist government refused earlier this month to take in a stranded rescue ship carrying 630 migrants.

The Aquarius eventually sailed to Spain after it was also turned away by Malta. It has now resumed its operations at sea.

Media captionAfter a week of being in the political spotlight, the rescue ship Aquarius is back at sea

French President Emmanuel Macron accused the Italian government of “cynicism and irresponsibility” for refusing to let the Aquarius dock.

Then on Thursday, without referring directly to Italy, Mr Macron attacked the “leprosy” of anti-EU feeling among “friends and neighbours”.

Italy’s new far-right Interior Minister Matteo Salvini hit back at the French president.

“We may be leper populists, but I take the lessons from those who open their own ports. Welcome thousands of migrants and then we can talk,” he said.

A float in Germany depicting the EU migrant crisis February 2018Image copyrightGETTY IMAGES
Image captionThe migrant crisis has caused deepening rifts between EU member states

Leaders from 10 EU member states will meet in Brussels on Sunday to discuss how best to stem the flow of migrants to the bloc.

The Italian government has said it will not sign up to any EU plan unless it makes helping Italy a priority, while Poland, the Czech Republic, Slovakia and Hungary – known as the Visegrad Group – say they will boycott the talks.

Italy’s government wants to deport half a million undocumented migrants, many of whom are housed in squalid reception centres. More than 600,000 have reached Italy from Libya in the past four years.

(BBG) Emmanuel Macron Misses a Chance to Stay Quiet

(BBG) The dispute with Italy over the Aquarius migrant ship was diplomatically inept and hypocritical.

Two weeks before a crucial meeting of EU leaders, member countries are at loggerheads again over immigration. A diplomatic spat between France and Italy’s new populist government shows how difficult it will be for the European Council to strike a meaningful deal at the end of June on topics such as relocating refugees or deepening the monetary union.

The problem is tone as much as substance. So long as politicians keep playing to their domestic galleries, the compromises Europe needs to thrive will remain elusive.

The transalpine rift started when Italy turned away a boat full of migrants, the Aquarius, after Malta had just done the same. Spain eventually said it would welcome the vessel (the boat has currently been re-routed toward the waters around Sardinia because of adverse sea conditions). But the Italian decision prompted furious reactions across the EU. In particular, French president Emmanuel Macron said it was “cynical and irresponsible.” Rome reacted angrily. Its foreign ministry summoned a senior French diplomat for a dressing down. Giovanni Tria, Italy’s finance minister, cancelled a visit to Paris.

There’s little doubt that Matteo Salvini, Italy’s new home affairs minister and leader of the anti-immigration League, used the 629 migrants stranded at sea to score cheap political points. But the reaction from Paris was clumsy – and hypocritical. France has repeatedly turned back migrants who want to cross the Italian border, hiding behind an EU rule that says asylum seekers should be processed in the state where they first enter the bloc.

Italy has punched well above its weight in rescuing migrants from the Mediterranean, receiving precious little help from the rest of the EU. However irresponsible Salvini’s behaviour – and troubling the signal about the populist government’s attitude toward migrants – Macron could have let this one pass.

His reaction was diplomatically inept too. Rome’s new rulers thrive on attacks from abroad, which Salvini and his ilk depict as insults to Italy’s sovereignty. The best course of action, as shown in a recent interview with Olaf Scholz, Germany’s finance minister, is to steer clear of public criticism and simply recall that all countries have obligations to meet. The irony here is that neither Rome nor Paris ended up offering to rescue the migrants stranded at sea. It was Madrid. Macron missed a good opportunity to shut up.

None of this is to exonerate Italy. The continuous lashing out at other countries could take a toll diplomatically. Since the formation of the government, Rome has indulged in angry spats with Tunisia, Malta and France over refugees, and relentlessly criticized Germany about the economy. Tria has been a welcome exception. The attacks may play well at home, but might be counter-productive in the long run.

A lot depends, of course, on what the populists actually want to achieve during their time in power. Maybe the Five Star Movement and League would like to provoke their European partners to such an extent that Italy is pushed out of the EU and the euro zone – creating an “Ital-exit” by the back door. But if that’s not what they have in mind, they need allies rather than sparring partners.

It’s reasonable to want to change the so-called Dublin regulation to achieve a fairer distribution of asylum seekers, but this needs the backing of other countries. On the economy, Italy requires support to bring about more financial risk-sharing across the euro zone, including a joint guarantee on bank deposits and, eventually, a euro zone Treasury. With Germany very skeptical of these plans, Italy’s best hope is Macron and his dreams of closer monetary union.

Unfortunately, the transalpine rift confirms a sad truth about the EU. While countries need each other to find answers to the problems affecting their voters, with immigration among the thorniest trans-national issues, politicians will always pander to their domestic audience. That’s how they win and lose elections.

Yet Britain’s constant sniping at the EU has already helped push that country toward its vote to leave. Without some careful leadership on both sides, this could happen again.

(Politico) Italian PM breaks with EU, backs Trump’s call for Russia to return to G8

(Politico)

LA MALBAIE, Canada — Italy’s new prime minister, Giuseppe Conte, broke sharply with the EU on Friday at his first international summit, and joined U.S. President Donald Trump’s call for Russia to be reinstated to the exclusive club of industrialized nations.

Trump called for Russia’s reinstatement as he left the White House to travel to the G7 leaders’ meeting in Quebec.

The Western powers and Japan ejected Russia from the G8 in 2014 in response to the Kremlin’s invasion, and subsequent annexation, of Crimea.

Conte posted his support for Trump’s view on Twitter, apparently between meetings with European Council President Donald Tusk and European Commission President Jean-Claude Juncker. It’s unclear if Tusk or Juncker were aware of Conte’s statement before their meetings.

At a news conference, Tusk and Juncker mostly sidestepped questions about Conte’s position, saying they expected there would be overall agreement on Russia policy. But they also pushed back on Trump’s suggestion that Russia rejoin the club.

“I see a lot of speculation about G6 plus 1 or G7 minus 1, or G7 plus one,” Tusk said. “But let’s leave seven as it is. It’s a lucky number. At least in our culture.”

Tusk added that the G7 faced enough obstacles in their quest for unified positions without adding Russia back into the mix. Juncker, meanwhile, noted that EU leaders were re-engaging Russia in other formats, such as a recent economic forum in St. Petersburg attended by French President Emmanuel Macron.

But he said Russia still had to be held accountable for its actions.

“As we see it, Russia is in violation of international law because of its annexation of Crimea, equally because of what it has done in the east of Ukraine,” Juncker said. “Over and above that, of course, there are good reasons leaving these factors aside to renew our relationship with Russia and this is something which we intend to do,” he said. “I expect that it will be something we discuss.”

“But,” he added, “we need to take a stand against an aggressive approach and aggressive action on the part of Russia.”

Since Russia’s ejection, Western nations, including the U.S. and all EU countries, have been unified in the need to maintain economic sanctions and other pressure on Russia over its military intervention in Ukraine, in Crimea and in the eastern Donbas region, where the Kremlin continues to support an armed insurgency.

Other G7 powers have not indicated any willingness to ease the pressure on Russia.

Conte’s statement adds further diplomatic chaos to the G7 leaders’ summit, which was already descending into a chaotic war of words on Twitter. Trump on Thursday lashed out at the summit host, Canadian Prime Minister Justin Trudeau, and French President Emmanuel Macron, who criticized Trump for imposing unilateral tariffs on steel and aluminum.

While Trump was still traveling, and expected to arrive late at the summit, his comment calling for Russia to be reinstated is certain to further inflame tensions in Quebec.

On the South Lawn of the White House, Trump claimed to be Putin’s worst nightmare but then said “Russia should be in this meeting. Why are we having a meeting without Russia being in the meeting? And I would recommend, and it’s up to them, but Russia should be in the meeting. They should be a part of it.

“You know, whether you like it or not — and it may not be politically correct — but we have a world to run. And in the G7, which used to be the G8, they threw Russia out. They should let Russia come back in. Because we should have Russia at the negotiating table.” It was unclear what negotiation Trump had in mind.

A spokesman for Russian President Vladimir Putin, Dmitry Peskov, who was on an official trip to China, told reporters Russia was focused “on other formats.”

Other G7 powers have not indicated any willingness to ease the pressure on Russia, and the EU’s foreign policy chief, Federica Mogherini, has worked hard to maintain unity on the issue in Brussels.

Conte’s statement will be especially problematic for Mogherini, who is Italian.

The first draft of the contract drawn up between the two parties in Conte’s government — the far-right League and the anti-establishment 5 Star Movement — contained a line calling for the end of Russian sanctions “immediately.” The text was amended in later versions.

In his first speech in the Italian parliament this week, Conte said that Italy remains a committed NATO partner but he added that “we will promote a revising of sanctions, starting with those that demean Russia’s civil society.”

Yet he didn’t indicate whether this should take place ‘immediately.” That’s because Rome has not yet decided whether to veto the rolling over of the sanctions during a meeting of EU leaders at the end of the month.

“We have to think about it,” said the League’s leader Matteo Salvini on Thursday at a reception at the Russian embassy in Rome.

Russia had been scheduled to host the G8 summit in 2014, and was planning to hold the leaders’ gathering in the Black Sea resort city of Sochi, which was also the site of the Winter Olympics that year. Instead, officials quickly rescheduled the G7 summit for Brussels, the capital of the European Union, which participates in both the G7 and the G20 but normally does not host summits. Russian remains a part of the G20.

An international investigative team led by the Netherlands recently announced that a Malaysian Airlines passenger jet, flight MH17, that was shot down over eastern Ukraine in 2014 was destroyed by a Russian missile supplied by a specific military unit in southern Russia. And France and Germany, the main architects of the Minsk 2 peace accord between Russia and Ukraine, have consistently reported no substantive progress in implementation of the agreement by Russia.

Putin has continued to deny any Russian role in the MH17 incident, in which all the passengers were killed. Putin initially denied that Russian military forces had invaded Crimea but later acknowledged that they had done so, and even bestowed awards on soldiers who participated in the operation.

(ChathamHouse) The EU Must Realize That Populism Is a Symptom of Real Policy Failure

(ChathamHouse) The reaction to the political situation in Italy is another misreading of what is at stake.

Matteo Salvini, leader of the League, speaks to the press on 14 May. Photo: Getty Images.

Matteo Salvini, leader of the League, speaks to the press on 14 May. Photo: Getty Images.

Europe is set to enter a new period of political uncertainty after two populist parties in Italy, the Five Star Movement and the League, agreed to form a new government together. After a week of uncertainty that has spooked markets, Italy, the eurozone’s third and the world’s eighth-largest economy, finds itself run by two populist parties that have in the past expressed deep scepticism of Italy’s membership of the eurozone, as well as opposing EU policies on migration.

Italy is a country where the two major EU crises of previous years cross paths. Italy has suffered both from long-standing economic malaise, made more acute in the years of the eurozone crisis, and a mounting migration crisis in the Mediterranean. In both cases, Five Star and the League have fostered the perception of many Italians that the EU not only failed to help but outright harmed Italy by imposing upon it punishing economic reforms and leaving it without help to manage the influx of refugees on its shores.

Ideally, this would concentrate the attention of EU elites on the effort to overhaul Europe’s economic governance and management of its external frontier, with an eye to developing more sustainable and equitable policies. Italy is indeed the final frontier of the decade-long governance crisis of the EU: a founding EU member, its fourth-largest country and traditionally a pro-European society, Italy faces very real policy challenges that are seen by its electorate as closely intertwined with its membership of the EU and the eurozone.

And yet the populist coalition in Rome has seemed to elicit a different kind of reaction. Political commentators across Europe were quick to frame the Five Star–League partnership as one more episode in the long march of populism in Western democracies. After the defeat of Marine Le Pen in French presidential elections last year gave way to talk that the populist wave might have ebbed, Italy’s potential new government vindicated those who argue populism, illiberalism and even authoritarianism continue to be Europe’s main problem today.

Of course, one cannot deny that these are testing times for liberal democracy in many parts of Europe. To the extent that populism has an ideological belief system, it is its understanding of democracy as a direct and majoritarian mode of political representation that supersedes institutional checks on the will of the many like independent regulators, central banks and the judiciary. Populism can indeed become a threat to democracy if populists in power undermine liberal institutions and enable the emergence of illiberal democracy that can, with time, degenerate into outright electoral autocracy.

Populism today is used not as a signal for necessary policy change but as a convenient excuse to dismiss social demands as incompatible with liberal democracy.

Yet the obsessive focus in much of the political, policy and journalistic debate on populism’s challenge to liberal democracy misses an even more important aspect to the story: that in most cases the rise of populism feeds off very real policy failures and very legitimate popular reactions to them. This is particularly true in a context of continental integration that seems to be increasingly unbalanced between a relatively prosperous and sheltered core of northern and western European states and an increasingly powerless periphery bearing the costs of adaptation to economic hardship and the migration crisis.

Again, the point is not that populism does not challenge liberal democracy in Europe. It is rather that the electoral success of populist parties is not necessarily or even primarily a danger to democracy in all cases. Often the rise of populists reflects obvious policy failures and public frustrations that EU and national elites can ill afford to ignore. After all, very few believed that Five Star and the League would or could institute an illiberal democracy in Italy, a country with a notoriously sclerotic institutional setup that would frustrate any effort at concentration of power.

EU elites and mainstream commentators have long developed the habit of painting all challengers to the European order with the same brush of ‘populism’ and ‘illiberalism’. It is obviously easier to philosophize about the future of liberal democracy from Brussels, Berlin or The Hague than to admit that, for many parts of Europe, participation in structures of economic and migration policy cooperation will soon be politically and socially untenable unless the EU seriously reforms its functioning in the direction of more burden-sharing and solidarity.

The real challenge that the populist coalition in Italy poses to the EU is one of policy, not of democracy. Yet conflating the latter with the former has long allowed EU elites and governments of Europe’s northern core to divert the conversation from their own obligations while holding the moral high ground as defenders of liberal democratic norms. Not unlike socialism in the 19th century and communism in the 20th, populism today is used not as a signal for necessary policy change but as a convenient excuse to dismiss social demands as incompatible with liberal democracy.

Given the size of its economy, popular dissatisfaction with domestic and European elites, and the urgency of the migration crisis on its shores, Italy is the biggest test yet for this elite tactic of dismissal and diversion – moving the discussion from popular frustration to an often barren and prevaricating debate about the ‘future of democracy’. The question is whether the EU can realize the stakes in time and engage with the real policy failures that lie at the heart of the current democratic malaise in Europe.

(P-S) All Eyes on Italy – Dominique Moisi

(P-S) The emergence of a populist government in Italy directly affects France and its ambitions for European reform. With a politically weakened Germany, a hostile Eastern Europe, and a largely paralyzed Spain, French President Emmanuel Macron, a firm believer in the European ideal of “ever closer union,” risks isolating his country.

PARIS – “We in France should take Italy much more seriously than we do. There is a lot we can learn from this highly successful country.”

That may sound like a quote from centuries ago, not from 2015, when France’s ambassador to Italy was praising and pleading very legitimately for the land of Dante. The following year, in the wake of the United Kingdom’s Brexit referendum, Italian journalists asked me whether their country could replace the UK in Europe’s informal “Club of Three” leading European Union member states, together with Germany and France.

Now, however, that recent mixture of confidence and hope has vanished under the crushing weight of political reality. Today’s Italy may be the leading contender for the title of “sick man” of Europe. One could even see the country as a metaphor, if not a synopsis, of everything that has gone wrong in Europe.

Italy seems to duplicate two cleavages that are currently weakening Europe: the North-South rift on economic matters, and the East-West divide on values. The North-South divide does not have only economic or cultural significance in Italy’s case. It is also reproduced on the political map of Italy itself. In the general election on March 4, support for the two parties that have just formed a government– the Five Star Movement (M5S) and the League party (formerly the Northern League) – was concentrated in southern and northern Italy, respectively.

But there is also within Italy something like an East-West division, this time not between the M5S and the League – the top two parties in March – but between them and the traditional center-left and center-right parties that they handily outperformed.

The rest of Europe – particularly my own country, France – tends to ignore Italy when things go well and to underestimate the potential consequences when things go badly. This time, however, things are going so badly in Italy it is impossible to minimize the consequences.

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For the first time, a coalition of anti-system, anti-European political forces has come to power in a founding member of the EU. Italians have crossed the political Rubicon at a time when their choice could affect – in the most negative manner – the evolution of the entire European project. To put it bluntly, if a country in Europe’s South moves to the East by following the model of Hungary or Poland, it is not only the North, but the entire West that will suffer from illiberal democracy’s gain.

Let us be clear: the danger is not that Italy is about to leave the EU, the way the British are doing. A majority of Italians are not ready for it. The danger is that, like Hungary and Poland, it will remain but ignore EU rules and flout its values.

That said, condemning Italy for its sins is neither fair nor useful. The rest of Europe, France in particular, bears at least some responsibility for the outcome of Italy’s election in March. Italians have rightly felt abandoned by their fellow Europeans when they were confronted with the arrival of masses of refugees. And they did their human duty in a dignified way, with the help of a civil society that could be considered a model for many other countries.

As a consequence, however, the men and women who were in power when Italy greeted more than 600,000 refugees lost the elections. They were punished for having done the right thing and for having done it alone, which made them look like dangerously naive idealists at best, and like inefficient bureaucrats at worst.

But getting France to recognize its share of responsibility (together with others) is one thing; acquiescing in a founding EU member’s decision to break the rules is another. A strong deterrent mechanism, such as the possibility of expulsion for members that deliberately ignore EU values and rules, does not and will not exist in Europe’s current state. When Jörg Haider’s far-right Freedom Party joined a coalition government in Austria in 2000, the EU applied sanctions for too short a time.

There is no longer any room for such indifference. What is happening in Italy directly affects France and its ambitions for European reform. With a politically weakened Germany, a hostile Eastern Europe, a largely paralyzed Spain, and now the likelihood of a populist government in power in one of Europe’s founding members, France and its president, Emmanuel Macron, a firm believer in the European ideal of “ever closer union,” risk being in a position of “splendid isolation.”

How long France would remain there is anyone’s guess. What happens in Italy today could prefigure what happens tomorrow in France, with its stronger state and a weaker civil society. The French ambassador was right: France should take Italy more seriously. But not for the wrong reasons.

(BBG) Italy’s Extraordinary $146 Billion Experiment

(BBG) Italy’s new government is one of the most extraordinary democratic experiments tried in western Europe since the Second World War.

The Five Star Movement and the League have put together a largely inexperienced ministerial team, which is promising a set of policies that seem impossible to deliver. They face formidable constraints, from Italy’s fragile public finances to the EU rules that Rome must abide by. It’s only fair that the two parties have their shot at governing, but it’s hard to see how they can succeed.

Italy will be led by a prime minister, Giuseppe Conte, whom most Italians have never heard of. His two deputies – League leader Matteo Salvini and Five Star’s Luigi Di Maio – will be his political bosses. The two anti-establishment parties have worked hard to reconcile their differences and put together a draft coalition agreement. But it’s hard to see how they won’t pull Conte in different directions on a number of issues, including whether Italy’s priority should be cutting taxes or lifting spending for the most vulnerable.

The cost of the coalition agreement is up to 125 billion euros ($146 billion), according to independent estimates. And yet, Italy’s sovereign debt is among the world’s largest. Investors and the rest of the euro zone will be watching intently when the new government presents its first budget in the autumn. Expect tensions. Italy’s financial constraints will inevitably bite and the two parties will squabble over what pet projects to prioritize.

The last-minute reshuffle of the top team has at least reassured investors and European partners. Enzo Moavero Milanesi, a seasoned law professor and EU expert, will be foreign minister. Bizarrely, for an avowedly anti-elitist administration, he has worked before in a technocratic government led by Mario Monti.

The finance minister, Giovanni Tria, is a little-known academic whose unorthodox views will raise German hackles. For example, he argued last year that the European Central Bank should pay for state funding of investment, so long as governments kept other spending under control.

However, his views on Italy’s euro membership seem more moderate than those of Paolo Savona, whom the president vetoed as finance minister and who’s been moved to EU affairs. Tria still needs to show his true colors but, unlike Savona, he has never drafted a “Plan B” to leave the euro in secret.

Other ministers are more of a worry. As minister for labor and economic development, Di Maio will take charge of Italy’s industrial policy and reforming its labor code, even though he lacks any real business or administrative experience. He has vowed to punish companies that close their Italian plants and move production abroad, but it’s unclear how. The risk is a clash with Brussels over strict rules on state aid.

The mood among investors has nevertheless improved after a rocky week; bond yields have moved sharply lower and Italian stocks higher. The chief reason is President Sergio Mattarella’s veto of Savona’s appointment as finance minister, which shows he won’t let Italy sleepwalk out of the euro without a popular mandate for an “Ital-exit.” This lessens the “re-denomination risk” on Italian assets.

Meanwhile, we avoid (for now) a fresh election that would have been seen as a referendum on Italy’s membership of the single currency. At the very least, the Five Star-League coalition contract includes no reference to quitting the euro and the party leaders have moderated their views of late.

Still, a fundamental question persists. That 125 billion euro-spending plan is entirely incompatible with existing euro zone rules and will set Italy on a collision course with Brussels and its European partners. So how will the new government react when these constraints are enforced? Will the coalition stick together or splinter? Italy has a government, but it is unclear how long it will last. The political drama in Rome will go on.