By Giovanni Legorano
ROME -- Italian Prime Minister Giuseppe Conte is set to resign
on Tuesday, his office said, as Europe's underlying problems of
economic stagnation and political fragmentation start to reassert
themselves amid the gruelling pandemic.
The fall of Italy's government, in office for just 17 months, is
a symptom of the continuing fissures in Italian and European
politics. Established and insurgent parties are struggling over
Europe's future, stable majorities are often elusive and leaders
are searching for ways to overcome long-term economic
underperformance -- nowhere more so than in Italy.
Rome's latest political breakdown is likely to cause concern in
the capitals of Europe's stronger economies, such as Germany, which
last year agreed to underwrite a massive European Union investment
plan for economic recovery from the coronavirus.
Italy, due to receive more than EUR200 billion in EU funds, the
equivalent of about $243 billion, is the plan's biggest
beneficiary. But Italian leaders' inability to agree on a coherent
economic strategy reduces the chances that the EU's third-biggest
economy will use the funds effectively.
At stake is not just Italy's chances of escaping from its long
economic decline, and of stabilizing its sky-high national debt,
but also the political trust between northern and southern Europe
that the euro needs for its long-term viability.
Mr. Conte decided to step down after failing to hold together
his unwieldy governing coalition, which in turn reflects Italy's
fractured political landscape. The prime minister fought with a
small coalition ally, led by former premier Matteo Renzi, over how
to spend the EU recovery funds. Mr. Renzi pulled out of the
coalition, accusing Mr. Conte of seeking personal power over the EU
funds while shutting out his small party.
Many Italians are scratching their heads over the political
squabbles at a time when Covid-19 continues to kill hundreds of
residents a day, heavy anti-contagion restrictions weigh on the
economy and daily life, the rollout of vaccinations is sputtering
and the EU is waiting to hear Italy's economic plan.
Italy's parties are now set to negotiate in search of a new
governing majority, possibly under the stewardship of Mr. Conte
once again but perhaps under a new premier. If no majority in
Parliament can be found Italy is likely to hold elections in coming
months, which would be the first in a major West European country
since the start of the pandemic.
The coronavirus seemed to have led to greater political
stability in Italy in 2020. Mr. Conte's popularity rose as
Italians, like many other Europeans, rallied behind their national
leader in a time of crisis. But the government's cohesion proved
illusory as soon as major decisions had to be made that went beyond
managing the immediate public-health crisis.
The EU's massive offer of grants and low-cost loans to support
recovery is seen in Italy as a once-in-a-generation opportunity to
revitalize the country's economy. Italy has struggled with
chronically low growth rates for the past quarter-century.
The fragmentation of European politics, where traditional
center-right and center-left parties have suffered an erosion of
their once-broad electorates, has made it harder to build
majorities to solve the continent's long-term economic problems,
which include how to boost global competitiveness, foster new
high-tech industries and sustain cherished social safety nets for
Despite Mr. Conte's popularity, many politicians, economists and
business people have questioned whether he has the vision to use
the EU funds well. The challenge of ending Italy's stagnation has
defied a number of prime ministers who had greater economic
expertise than the 56-year-old law professor.
Mr. Conte has said he was open to ideas, including from his
political critics and Italian business.
Mr. Conte's search for economic answers has also been hampered
by the deep differences within his coalition. Besides Mr. Renzi's
small centrist party, the government rests on an awkward alliance
between the establishment, center-left Democratic Party and the
upstart, populist 5 Star Movement.
Their pact, formed in 2019, was mainly tactical: aimed chiefly
at avoiding early elections, which opinion polls continue to
suggest would be won by a right-of-center alliance, led by the
anti-immigration League party.
Seen from other EU capitals, however, Mr. Conte's government was
at least pro-EU, reducing fears of rising EU-skepticism in
When German Chancellor Angela Merkel backed the EU's proposed
recovery fund last year, she bet on Mr. Conte's ability to hold his
coalition together and spend the money productively. Some other
countries in northern Europe resisted the EU funding, reflecting
skepticism about whether it would truly improve Italy's economic
performance or merely add to its debt.
Italy's political class is likely to come under pressure from
other European capitals to resolve the mess in Rome quickly and
find a solid majority for a pro-growth strategy. If snap elections
are the outcome, Berlin and Paris could anxiously face the prospect
of having promised generous financing to a more EU-skeptic
government led by the national League and its firebrand leader,
In the coming days, Italy's head of state, President Sergio
Mattarella, is expected to consult the parties in Parliament to
test whether a new governing majority can be found, averting
Democratic Party leader Nicola Zingaretti said on Twitter that
he stood "with Conte for a clearly pro-European government
supported by an ample parliamentary base that guarantees
credibility and stability to confront the great challenges that lie
ahead of Italy."
Few Italians had heard of Mr. Conte when he was appointed
premier in 2018. At first, he led a coalition between Italy's two
biggest populist parties, the 5 Star Movement and the League. When
Mr. Salvini's League pulled out of the government in 2019 and tried
to force elections, Mr. Conte instead deftly brokered a new
alliance between the 5 Star and the Democrats, showing unexpected
survival skills and leaving a frustrated Mr. Salvini in
Italy became the first Western country hit hard by the
coronavirus in early 2020. The government, after initial
hesitation, imposed the world's first lockdown of an entire nation.
Mr. Conte became a reassuring presence on television as he
explained the drastic anti-contagion measures to Italians. His
approval ratings rose.
But although the lockdown largely suppressed the virus by
summer, infections have rebounded since the fall. Renewed
restrictions on everyday life have led to widespread public
frustration as well as fears for Italy's fragile economy.
Write to Giovanni Legorano at email@example.com
(END) Dow Jones Newswires
January 25, 2021 16:28 ET (21:28 GMT)
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