Three of Italy’s Top Four Political Parties Seek a New Parallel Currency
Italy’s leading opposition parties are calling for the introduction of a parallel currency to the euro, which they say will boost growth and jobs.
Three of the country’s four largest parties – the Five Star Movement, the Northern League and former prime minister Silvio Berlusconi’s Forza Italia – have proposed introducing a new currency following an election scheduled for next year.
The proposals for a parallel currency have replaced the opposition parties’ previous calls to leave the euro completely.
By settling on a dual currency, analysts say the parties hope to appeal to anti-euro sentiment in the country while avoiding, for now, the upheaval of an outright exit.
A poll by the Winpoll agency in March showed that only around half of Italians back the euro.
As the election nears, and with opinion polls currently pointing to a hung parliament, only the ruling Democratic Party is not proposing changes to the current euro set-up.
Next General Election
- M5S – Five Star Movement – Beppe Grillo, a comedian. The M5S is variously considered populist, anti-establishment, environmentalist, anti-globalist, and Eurosceptic. The “five stars” are a reference to five key issues for the party: public water, sustainable transport, sustainable development, right to Internet access, and environmentalism. In foreign policy, the M5S has disapproved military interventions of the West in the Greater Middle East (Afghanistan, Iraq, Libya) as well as any notion of American intervention in Syria.
- PD – Democratic Party – Matteo Renzi, former prime minister. The PD’s main ideological trends are thus social democracy and the Italian Christian leftist tradition.
- Northern League – Lega Nord – Matteo Salvini. Under Salvini, the party has emphasized Euroscepticism, opposition to immigration, and other “populist” policies, while forming an alliance with nationalist and right-wing populist parties such as France’s National Front, the Netherlands’ Party for Freedom and the Freedom Party of Austria at the European level.
- Forza Italia – Forward Italy – Silvio Berlusconi, a four-time Prime Minister. Under Berlusconi, FI’s long-time coalition partner was Lega Nord.
Silvio Berlusconi is prone to flip-flops and would likely do anything if it brought him back in power. However, PD + FI will likely not come close to 50%.
Italy’s biggest parties are considering a proportional system similar to the German model with a 5 percent cut-off for smaller parties, and lawmakers are due to discuss a first draft of the new law early next month. An agreement would remove any hindrance to snap elections, eliminating the need to wait for scheduled elections in early 2018.
Ultimately, it’s up to Italian President Sergio Mattarella to make the call on when to dissolve parliament. According to Italian newspapers including Corriere della Sera, Mattarella would prefer to let the government of Prime Minister Paolo Gentiloni, 62, a soft-spoken diplomat and Democratic-Party ally of Renzi’s, stay in power until next year.
While an early vote would put an end to a legislature that already saw three governments in power amid palace coups and constitutional-referendum defeats, a proportional system runs the risk of producing a hung parliament. An election this year would come at a delicate time for Italy, with its banking woes unresolved and the budget law for 2018 still to be approved.
The proposed new law “would likely not facilitate an outright victory by one of the three major political groups” resulting in a hung parliament, said LC Macro Advisers Ltd. founder Lorenzo Codogno who sees the likelihood of early elections at 60 percent.
That deal fell and I can find no other recent references regarding early elections.
An alliance of Silvio Berlusconi’s Forza Italia party and the anti-immigrant Northern League won 55% of the votes in Genoa, the northern port city that was a leftwing stronghold but which the right will now govern for the first time in more than 50 years.
PD leader Matteo Renzi, 42, who has been seeking to make a comeback since stepping down as prime minister in December, was the clear loser in Sunday’s vote.
The centre-left has governed Italy for four years, during which time the economy grew by only half the eurozone average. Three different PD premiers have struggled to shore up a banking system strangled by bad loans, and to manage half a million migrants who came by boat from north Africa.
Sunday’s vote – the second round for cities where no one candidate won more than 50% two weeks ago – is one of the last before a general election due by the end of May 2018, but it may not be a reliable indicator of what will happen then. The first-past-the-post voting system used at the municipal level, which favours coalitions, may not be replicated at a national level, where a proportional system is now in place.
Genoa is the latest of a string of defeats in the PD’s traditional strongholds. Last year it lost Turin, Italy’s fourth-largest city, and the capital Rome, both to the Five Star Movement (M5S), which was founded only eight years ago.
M5S, which opinion polls say is slightly more popular than the PD nationwide, performed very badly in the first round of voting on 11 June and made the run-off in only one of the 25 largest cities. It added eight mayors to its modest tally.
“We now have 45 mayors, up from 37 before, which is an increase of 20%,” M5S founder Beppe Grillo said on his blog. “Every damned election we are growing and that is what counts.”
M5S, NL, and FI appear likely top a combined 50%, perhaps easily. That does not necessarily mean a coalition will form.
The two things and possibly the only two things that unite the Five Star Movement, the Northern League, and Forza Italia are a desire to crush Matteo Renzi and a desire to get Italy off the Euro.
And when it comes to Berlusconi’s views on the euro, one has to question his sincerity. He has changed his position many times.
Comments from European readers appreciated.
Mike “Mish” Shedlock