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Italy’s government is still weak, despite election blow to rival Salvini

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Via CNBC

Italian Deputy Prime Minister and Interior Minister Matteo Salvini gestures as he speaks during a press conference in the Lega headquarters in northern Milan following the results of the European parliamentary elections, on May 27, 2019.

MIGUEL MEDINA | AFP | Getty Images

Italy’s fragile coalition government is breathing a sigh of relief after Matteo Salvini, a prominent right-wing politician, failed to win a closely-watched regional election at the weekend.

But the vote has exposed the weak dynamics underpinning the government in Rome.

The opposition anti-immigration Lega party, led by Salvini, lost in the vote in Emilia-Romagna to the incumbent center-left Democratic Party (PD) on Sunday.

With most of the votes counted Monday morning, the PD’s candidate Stefano Bonaccini was seen with 51.4% of the vote and his Lega-backed rival, Lucia Borgonzoni, with almost 44% of the vote. The candidate for the populist Five Star Movement (M5S) had secured less than 5% of the vote, according to preliminary results from the region.

Although the result is something of a reprieve for Italy’s fragile coalition government, made up of the PD party and M5S, Salvini’s Lega party is leading national voter polls and has performed well in several other key regional elections, including an election in the southern region of Calabria on Sunday in which Lega, along with other center-right parties, garnered a majority of the vote.

In the meantime, the M5S has been polling badly in regional elections and last week, its leader Luigi Di Maio resigned, calling into question the future of the movement, and its place in the coalition government.

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‘Shaky foundations’

Against this backdrop and despite Lega’s defeat in Emilia-Romagna, the new PD-M5S coalition led by Prime Minister Giuseppe Conte is as weak as before, according to political analysts and economists.

“In the aftermath of Salvini’s defeat in Emilia-Romagna — where he has campaigned tirelessly across the whole region since mid-November — the risk of snap general elections is lower,” Wolfango Piccoli, co-president of Teneo Intelligence, said in a note Monday.

“However, the likely thin margin of the center-left win in this traditionally leftist stronghold shows once again that Conte’s PD-Five Star Movement (M5S) coalition government rests on rather shaky foundations,” he noted.

Loredana Maria Federico, chief Italian economist at Unicredit, said in a note Monday that “political tensions are likely to keep lingering, as several conflicts within the ruling coalition will likely remain.”

Conflicts mainly relate to the difficulty the governing majority has in moving forward with judicial reform, how to proceed in the case of the ailing Ilva steel plant and differences of opinions over how to manage motorway operators following the collapse of a Genoa bridge which killed 43 people in 2018.

These conflicts are those in which M5S, PD and smaller coalition partners will find it hard to find common ground, Federico said, adding that as a result, cabinet meetings and processes of approval in Parliament will be monitored particularly closely in the coming few months.

Short sigh of relief

The vote in Emilia-Romagna, seen as a leftist stronghold as the center-left have governed the region since World War II, was seen as a litmus test of the center-left’s resistance in the face of a seemingly increasingly successful Lega party and Salvini, who wants to be Italy’s next prime minister.

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Salvini and his Lega party had been in a coalition government with M5S, but Salvini pulled out of the alliance last summer in a move that was seen as part of a strategy to undermine and bring about the collapse of the government.

The coalition had got into trouble with Brussels for budget-busting spending pledges; Lega, in particular, is also known for its antagonistic stance toward the EU.

Analysts at Barclays said that the Emilia-Romagna result could galvanize the PD-M5S alliance to establish a more solid political platform and restart the clock on the durability of the second Conte-led coalition, although risks included uncertainty over M5S’ new leader and possible defections to the opposition, weakening M5S, and the government further.

As such, Sunday’s result was effectively a “a short sigh of relief” as more regional elections and a crucial referendum (on reducing the number of lawmakers) are on the horizon.

“Regional elections are likely to continue to shake the national government as six more are scheduled to take place in May/June 2020,” economists at Barclays said in a note Monday.

“Salvini is likely to continue concentrating his efforts on securing as many regional successes as possible to undermine the legitimacy of the national government. Furthermore, the constitutional referendum on the reduction of the number of MPs (from 630 to 400 in the lower house and from 315 to 200 in the Senate) is also supposed to take place between mid-March and June, and could bring further political tension.”


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