Rise in far-right populism rocks Italian polls

 Polls indicate that Italy is heading for political gridlock.

A dramatic rise in far-right populism is behind election uncertainty.

Italy’s anti-migrant, Eurosceptic 5-Star Movement is running far ahead in the polls with an estimated 28 per cent of the vote. The party is not expected to govern on its own. Despite that, leader Luigi Di Maio  is seeking four ministers in a likely coalition government.

CasaPound, a small, but growing neo-fascist party, is aiming for a seat in parliament. It already has representation in Ostia, a Rome suburb. In the past few days, police have clashed with protesters in Italy as antagonism flared between anti-fascist and far-right activists. Protesters held at least a dozen marches or rallies in several cities last Saturday.

Illustrating the concerns, the euro has slid from its mid-February heights, falling by 3.3 per cent against US dollar, 2 per cent against Singapore dollar and 1 per cent against sterling.

Italian politics have been muddled over many years and Italian investors are relatively sanguine. The Italian stock market is only 8 per cent below its January peak, despite weakness in the past week.

Deluded investors

Ten-year government bond yields are only 1.6 per cent. Market participants are ignoring the nation’s huge 2.3 trillion euros debt equivalent to 133 percent of gross domestic product (GDP).

Surveys indicate that 40 percent of potential youth voters could abstain from voting on Sunday. Italy is not far above Greece in unemployment.  Eleven percent of the working population are jobless, compared to the 7.3 percent average in the eurozone. The youth unemployment rate is as high as 32 percent.

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Italian media reports that the populace is deeply disenchanted with income, health and educational inequalities. An estimated 8.4 million Italians are poverty-stricken, according to national statistics. Nearly 5 million of those are living in “absolute poverty”. These disadvantaged people cannot even buy sufficient food and essential goods and services. Better educated people are leaving, while some 625,000 migrants from north Africa and the Middle East have arrived since 2014.

Berlusconi rises from political dead

The betting is that a centre-right alliance  could form a coalition. It It includes Silvio Berlusconi’s Forza Italia party, the far-right Lega Nord and the further-right Fratelli d’Italia.  Former prime minister Silvio Berlusconi said he would propose Antonio Tajani, current president of the European Parliament, as Prime Minister.

Mr Berlusconi can’t take office himself because of a former tax fraud conviction.

If the right doesn’t end up with a majority, commentators predict a hung parliament. Italy’s Prime Minister Paolo Gentiloni, who heads the centre-left Democratic Party, ruled out forming a coalition with Mr Berlusconi’s alliance.

“We hope this will not be the case and that the centre-left, I represent will have a majority,” Mr Gentiloni said on CNBC. He hopes that his party “will be the pillar of a possible coalition; that the populist anti-EU position will not prevail and that Italy will keep its stability”.

But if no single party or coalition emerges with a parliamentary majority, Italy’s President would probably ask parties to form a grand, cross-party coalition. Such an outcome would have a limited lifespan.

Roger Bootle, head of Capital Economics, contends that the Italian election “could have significant consequences throughout Europe”. A right-wing coalition would be predominantly Eurosceptic, he says.

“Since the euro was formed in 1999, the Italian economy has grown by a mere 8.3 percent, equivalent to only 0.4 percent per annum,” he wrote in a Telegraph article. “The Italian banking system remains highly risky, with bad and doubtful debts running at threatening rates.”

© copyright Neil Behrmann

First published in The Business Times Singapore

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