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Italy

European Union chiefs must make Italy more welcome or risk deeper crisis

Following its recent election, the bloc’s third biggest economy could too easily swerve towards another Brexit if not handled carefully and Brussels must acknowledge the mistakes it has made

Following its recent election, the bloc’s third biggest economy could too easily swerve towards another Brexit if not handled carefully and Brussels must acknowledge the mistakes it has made

PUBLISHED : Friday, 01 June, 2018, 6:32am
UPDATED : Friday, 01 June, 2018, 6:32am

Brussels needs to show tact towards Italy. The latest political crisis that has engulfed the nation, the European Union’s third-biggest economy, could too easily swerve towards another Brexit if not handled judiciously.

Anti-establishment sentiment that took two populist parties to the brink of forming the next government could surge should officials be careless. With new elections possible in a matter of months, failures have to be acknowledged, better policies pledged and Italians made more welcome.

Dow and European stock plunge over Italian threat to leave euro

Italian President Sergio Mattarella was taking a gamble at the weekend when he rejected the choice of a staunch Eurosceptic as finance minister by a coalition of the anti-establishment Five Star Movement and far-right League.

He used his constitutional prerogative, contending that March elections, which led to a hung parliament, were not a vote for withdrawal from the euro zone and the covert introduction of such a programme would harm the economy and savings.

The two parties abandoned efforts to form a government and Carlo Cottarelli, a pro-EU former International Monetary Fund official, was appointed caretaker prime minister. He has promised elections next year and is trying to bring Five Star on board but, if unsuccessful, polls could take place in September.

Carlo Cottarelli allowed to form Italian government as PM-in-waiting

The populists want Mattarella impeached and have called for protests. French President Emmanuel Macron, who with German Chancellor Angela Merkel has promised to reform the EU, sided with his Italian counterpart.

But EU budget commissioner Guenther Oettinger sparked outrage on Tuesday by contending that financial markets would teach Italians a lesson for voting for populists. Such sentiments have given the parties, particularly the anti-immigrant League, a boost in opinion polls.

The uncertainty has unhinged world markets and contagion threatens, especially in Portugal and Spain. A political crisis is not the problem; Italy has had 64 governments since the second world war and still managed to become the world’s eighth strongest economy.

What worries investors is the possibility of Italy having an anti-EU government that could leave the euro zone or even withdraw from the union.

Political crisis in Italy revives fear of a euro-zone meltdown

Frustration with EU policies on migration that left Italy dealing with the latest refugee crisis almost single-handed and a fiscal programme that has affected economic well-being helped Five Star and the League at the ballot box and there is no sign of that abating.

European leaders have to head off the possibility of a government taking power in Italy that has a mandate to confront the EU. They have to acknowledge a mishandling of the refugee crisis and provide most support in rescuing and resettling asylum seekers. Italy is a valued member of the EU; it cannot be taken for granted.