Populist Rock Meets EU Hard Place
Things are moving quickly in Italy. The minute you try and write about what’s happening it becomes dated with the next headline. So, for this piece I want to take a step back and look at the bigger picture.
Because, once you look at it this way you’ll never look at the European Union the same way ever again.
The EU is beyond desperate. They know they cannot let Italy leave the euro. The moves to stop Five Star Movement (M5S) and The League from forming a government were as ham-fisted and doomed to failure as the Brexit negotiations are.
And the reason for this is that you cannot rule without the consent of the people. EU leadership is working hard to demoralize Britons to the seeming inevitability of Brexit betrayal. George Soros is now actively paying for a campaign to hold a second referendum.
They likely won’t like that result, should it occur, than they did the first one.
In Italy, they will run a similar playbook that they ran to demoralize Greece in their 2015 debt talks now that the two populist parties have been allowed to form a government.
But, one only need look over to the Iberian peninsula to see what strong-arming an EU-approved cartel government leads to over time. First, secession movements and violent suppression and then a political overthrow.
Spanish Premier Mariano Rajoy’s political career is now over. And the reason is because of his brutal crackdown on Catalonian independence last year, while leading a Vichy cartel-style government. Rajoy didn’t have any kind of popular mandate to rule. He simply put down the Catalonian independence movement with unbridled violence.
And that incident along with the EU’s silent consent put Spain on the path it’s on today, full-on rejection of Brussels/Berlin demands for public sector austerity mixed with full debt repayment.
But, Spain doesn’t want to be ruled by Brussels anymore than Catalonia wants to be ruled by Madrid, especially if Madrid is led by someone whose first loyalties are to Brussels.
Next Stop, Italeave
With M5S and The League forcing President Mattarella to accept reality, League leader Matteo Salvini proves he knows how to play populist politics to the hilt.
These two Euroskeptic parties cannot be divided at the first sign of push-back from the elites who everyday more Italians come to distrust. The League has doubled its support in less than five months. It now commands a block of voters as big as M5S does. And that gives them an even stronger mandate to stand up to the corruption in Rome.
Now that Mattarella has folded the next phase of Brussels’ attack on Italy has begun.
European President Jean-Claude Juncker started the lazy, Club Med narrative before new Prime Minister Guiseppi Conte was sworn in. It’s an important bit of gaslighting to assist Germany in holding the line on the ruinous austerity imposed on Italy since 2011, which has done nothing to assist the country and only hollowed it out even further while it bears the brunt of German Chancellor Angela Merkel’s ruinous immigration policy.
“But I can no longer accept that everything that is wrong in southern Italy is explained by the fact the EU, the European Commission won’t do enough,” he said in a question and answer session in Brussels.
“Italians have to take care of the poor regions of Italy. That means more work, less corruption, seriousness.
“We will help them as we always did. But don’t play this game of loading with responsibility the EU. A country is a country, a nation is a nation. Countries first, Europe second.”
These words coming from the same man that famously said, “There can be no democratic opposition to the European treaties.” Country first? I think Juncker may have had one too many before stepping in front of that microphone.
No. What happens next is that Brussels will begin the stonewalling over debt restructuring and fiscal rules. It will try to sound like it is negotiating when really nothing of the sort will occur.
There will be the inevitable ‘debt shaming’ as well as full cultural disparagement. The new government has to be immune to these tactics if they are to survive and instead implement its agenda and let Brussels stew.
Italy will, eventually, be forced to do what it needs to do, prime the market with a domestic, new currency, per the coalition’s plan for a Mini-BOT and make it perfectly clear to Italian voters that the only way to regain control over Italy is to threaten to burn down the entire euro-zone by leaving it.
There will be legal challenges. Inflammatory statements from people like Juncker, German politicians of all stripes, EU Commission President Donald Tusk and the rest. The IMF will pour salt on wounds and the European press will paint the Italians as feckless layabouts biting the hand that has kept them fed lo these last seven years.
There will be mini-panics and real ones. None of that matters. When you owe the bank trillions it’s not your problem.
It’s the bank’s.
The Hard Sell
For Salvini and Di Maio, leader of M5S, their job is to reflect these tactics and amplify them. The only reason the EU has kept Italy alive is not for Italy’s sake but for its own. Italy could have left in 2011 or the debt been written down, but no the integrity of the EU came first and Brussels orchestrated an overthrow of Berlusconi’s government to kick the can down the road to today.
They need to remind everyone what happened to Greece, which three years later still needs more debt restructuring because in an over-priced euro Greece will never be competitive on the world market.
Extend and pretend. Spray and pray.
Salvini, who will be Italy’s new Interior Minister, is the right guy to call the Brussels leadership the evil autocrats they are. He is now properly placed to reverse EU immigration rules and poke them in the eye.
The response will be more autocracy from Brussels. Expect more market ‘panics’ as Italian debt goes bidless when the ECB stops buying for a few days, like last week. These are scare tactics along with threats of lawsuits and the like.
But, that simply makes his job and that of Conte that much easier to sell an independent, sovereign Italy to voters. And, moreover, never forget who is the primary loser if Italian debt fails?
Not Italy. They can be free of it for lira on the euro.
The big loser is the ECB and the EU as they will have to deal with the losses of having bought all of this garbage thinking they could use it as future leverage to shame Italians with.
From the other side President Trump is squeezing Merkel, Juncker et.al. on tariffs. And while that may yield the positive result of pushing the EU towards Russia and China while weakening NATO, it also strengthens the hand the Visegrad countries have, since they aren’t in the Euro-zone.
Poland, Hungary and the rest will all benefit from Trump’s steel and aluminum tariffs as investment will pour in there and further weaken Merkel’s legal challenges over things like Hungary’s border wall and anti-NGO laws and Poland’s changes to its judiciary.
Juncker talks a good game about ‘country first’ but only when it furthers EU ambitions.
Even if Juncker et.al. are able to break the Italians again and keep them tethered to the euro, it will be a Pyrrhic victory. Because there is no way Germany can continue to support the entire EU without a significant revaluation and restructuring of the entire project.
And by the time they are done abusing everyone to win the day, no one will want to be governed by them anymore. They’ll save the EU by forcing everyone to drown in it. On the other hand, Salvini and the Italians will make Brussels an offer it shouldn’t refuse:
Let us go, accept responsibility for all of Europe equally or we blow it all up.