Italy is watching the barrel of the worst recession since World War II, which could strengthen the far right and damage the country’s romantic relationship with the European Union, analysts said.
Much will depend on how Rome handles the easing of the national foreclosure, how quickly it manages to provide liquidity to struggling businesses, and how much solidarity the EU expects from a key meeting next week.
The coronavirus emergency in Italy has fueled not only national pride but also Eurosceptic and populist stories.
This mix could play directly into the hands of Matteo Salvini, whose League party ruled Italy in coalition for a year until the summer of 2019 and who is determined to quickly return to power, to rule alone.
Italy is watching the barrel of the worst recession since World War II. Pictured: Red Cross volunteers load boxes of food to deliver as donations to families in need during the current Turin coronavirus crisis
“The economic blow is going to be extremely hard, that’s clear. But it can be extremely difficult or exceptionally difficult, “Giovanni Orsina, a professor of politics at LUISS University in Rome, told AFP.
“If people start to suffer seriously, rabies could spread all over the country … just how effective far-right propaganda becomes,” he said.
At the height of the health crisis, which killed more than 22,000 people and infected around 169,000 people, largely in the wealthy north of the country, political parties at war in Italy called a sort of temporary truce.
Prime Minister Giuseppe Conte’s popularity has reached an all time high of around 63%, according to polls.
But as preparations for the revival of parts of the economy begin, cracks have appeared in the already fragile ruling coalition of the center-left Democratic Party and the Five Stars anti-establishment movement.
The coronavirus emergency in Italy has fueled not only national pride but also Eurosceptic and populist stories. Pictured: doctors in Milan
The impact of the virus could play directly in the hands of Matteo Salvini (photo), whose League party ruled Italy in coalition for a year until the summer of 2019 and who is determined to quickly return to power , to govern alone
And opposition leader Salvini has resumed his virulent attacks against the government, as has Giorgia Meloni, leader of the small far-right party of the Brothers of Italy, which is experiencing a surge in popularity.
Bitter births broke out during the economic foreclosure, which has been extended by Conte and is expected to be lifted on May 4, after a shutdown of almost two months.
Millions of Italians are either on leave or have lost their jobs, and northern regions – bastions of the League – are about to reopen.
An aerial view of a helicopter from deserted Piazza San Marco in central Venice as the Italian lockdown continues
A delay in closing several virus hotspots in the Lombardy region, which is home to the financial capital Milan, allowed the virus to spread and sparked a feud between the government and the League – each blamed for not having acted.
The anti-populist and youth-oriented movement of the Sardines – founded last year to try to stop the rise of Salvini – is one of the many voices on the left calling Conte to submit the region to a special commission for the management of crisis.
The economic impact forecasts are staggering. The International Monetary Fund expects the Italian economy to shrink 9.1% in 2020 – the worst drop in peacetime in nearly a century.
The lobby of big Confindustria companies said that each week of the shutdown still cut 0.75% of the GDP.
Yet Conte hesitated to enter the so-called “phase two,” easing the lockdown, amidst advice from top scientists that the epidemic could break out again, forcing him to close the country a second time. .
Ponte di Rialto desert in central Venice as strict Italian lockdowns continue to be implemented
An aerial view of a helicopter from the deserted Jesolo beach just outside of Venice during the Covid-19 lockdown
He is counting on EU aid to weather the storm.
Eurogroup finance ministers approved a € 500 billion bailout to help European countries hit hard by the pandemic – but some Italians fear that cross-border solidarity will come with conditions.
Ministers have so far refused to counter a proposal from Italy, Spain and France for a joint borrowing instrument, dubbed a “coronabond”, which would have raised funds for a recovery after the outbreak.
Bonds could lower Italy’s borrowing costs, but northern countries say they are unfairly helping countries that have spent beyond their means for years.
This exasperated many Italians.
Italy also felt abandoned at the start of the crisis, with European countries reluctant to share essential medical supplies, for which the President of the European Commission offered a “sincere apology” this week.
A Tecne poll from April 9-10 found that the share of Italians who would vote to leave the EU in a referendum was up 20 percentage points to 49%, compared to a previous poll in late 2018.
An aerial image of Chioggia near Venice during the lockout shows empty freeways while people stay at home
Rome is reluctant to use the bailout package, which includes European Stability Mechanism (ESM) loans from the era of the financial crisis, despite easing of the difficult economic and fiscal reform generally associated with it.
The ESM evokes bad memories of Brussels dictating Greece’s bailout policy, and Salvini and Meloni both said that Conte would deprive Italy of its sovereignty if it used it.
They also complain that Italy is offered a fraction of the money it pays into the EU and will have to pay interest.
“He’s flying,” said Salvini, sneering at the suggestion that Italy had achieved a lot in terms of reduced conditions.
Meloni said the use of the mechanism was “worthy of a totalitarian regime” and “a point of democratic no-return”.
The government hopes to achieve a major victory over the issue of joint obligations to finance reconstruction at a videoconference meeting of European leaders next Thursday – which may allow it to avoid using the MES.
Former Italian Prime Minister Enrico Letta implored Brussels, Berlin and Paris to “not underestimate … the growing frustration of the euro” among Italians. It would be “a big mistake,” he tweeted.
Storytelling’s problems are not limited to the far right.
While the PD is in favor of using the ESM, part of the Five Stars movement is firmly opposed, the party leader Vito Crimi said in an interview on Wednesday that the post of Prime Minister of Conte was in danger.
Analysts say the Prime Minister is betting on more attractive aid from the EU if he drags his feet above the ESM.
Conte said on Wednesday that no decision would be made until the exact conditions were established and could be studied by parliament. Italy has said it will use other resources offered by the EU, such as unemployment assistance.
But it was not clear that his assurance would dampen the roar of discontent inside and outside the government.
According to political analyst Stefano Folli, a fracture like the one that currently divides the ruling majority “would generally have already overthrown the government.”
Conte has appeared “increasingly confused” in the past two weeks, and his opponents have received ammunition for his “poor handling of the emergency,” he wrote in the daily Repubblica on Tuesday.
The PM was charged with avoiding difficult decisions to lift the lock by simply extending it.
He called on the Italians to be patient, saying that financial aid was coming. But there are real fears that widespread job losses, poverty, homelessness and hunger will trigger social unrest – and a revolt against the government.
Media reports have reported an increase in domestic abuse and suicide as quarantined families break under pressure.
The Italian Minister of the Interior alerted the police. Particular attention will be paid to the poorest regions south of Rome, where foreclosure costs some 10 billion euros a month in lost productivity, according to the SVIMEZ association.
Anger is mounting there, as an area already plagued by high unemployment has not been allowed to leave early isolation, despite the relatively low number of virus cases.
“If you have a very, very troubled country, you can’t let Salvini and Meloni fan the flames,” said Orsina of LUISS University.
“You risk serious problems: very bad voting numbers for the government, people who demonstrate on the streets, people who steal from supermarkets, a furious country,” he said.
Orsina said Conte’s only option at this point would be to bring the Salvini League and Meloni’s Brothers in Italy’s party into a new government of national unity – even if it would be “an extremely complex operation.”
“I don’t think Conte can go on,” said Orsina.
Not all are so pessimistic.
Stampa commentator Ugo Magri said Salvini or Meloni are unlikely to opt for Conte’s chinstrap now, in large part because they would be blamed if the maneuver slowed or hampered the release of the lock.
“Tale will be politically untouchable throughout” Phase 2 “, so until the fall,” he wrote.
And while fellow analyst Massimo Franco thought that Italy’s anti-European forces could prevail in the short term, he told AFP that he thought the Italians would soon understand that their connection to Europe “is more and more necessary and important ”.
“Problems like pandemics require a supranational effort. And Europe, despite everything, is doing what it can for Italy, “he said.