When it was all said and done, Matteo Salvini’s League garnered more than 34% of the Italian vote in the EU ballot over the weekend. That’s double the party’s tally from the general election.
If 30% was the bare minimum Salvini needed to make a power grab, he cleared the bar. Five Star, on the other hand, logged just 17% of the vote, a third-place finish, underscoring the notion that Luigi Di Maio is destined for has-been status and also casting further doubt on the viability of the country’s tenuous coalition government.
To be sure, Salvini’s plans for a nationalist wave in the EU elections didn’t pan out. Populists ended up securing an expected 25% of the seats in Europe’s Parliament, up from 20% five years ago, but well short of a tally that anyone would deem surprising. EPP will remain the largest party with a projected 178 out of 751 seats.
(Goldman)
In the months ahead of the vote, Salvini presented himself as the would-be leader of a pan-European nationalist alliance. It wasn’t entirely clear whether the political figures Salvini assumed would eagerly fall under his umbrella movement were thrilled about being forcibly relegated to minion status. “So much for Salvini’s pan-European ambitionsâ€, Sofia Ventura, professor of political science at the University of Bologna, told Bloomberg. “Italy appears to be an exception with populists advancing, but now his hopes of leading an international nationalist pact are looking pretty weak.â€
Granted, but whether Salvini actually cared all that much about how populists polled in other locales is debatable. Sure, he would have celebrated a resounding victory for euroskeptics, but it seems highly likely that his assertion of dominion over Europe’s motley crew of nationalist/populist parties was at least partially designed to bolster his larger-than-life persona domestically.
Read more: Matteo Salvini And Europe At The Crossroads
Boilerplate assertions about the indissoluble character of the League-Five Star alliance notwithstanding, Salvini now talks about Italian fiscal policy as if Di Maio and Conte don’t exist. “If we need to break some limits, we’re ready to go ahead”, he told reporters two weeks ago, adding that “until we arrive at 5% unemployment, we will spend everything that we should, and if someone in Brussels complains, that won’t be our concern.”
As we wrote at the time, that he would say something that unequivocal seemingly without regard for how Di Maio or Conte would have answered the same question, is indicative of the fact that, one way or another, it will be Salvini who makes these decisions down the road. League’s election performance seals the deal.
Salvini was quick to insist that the current coalition will remain intact, but he always says that. Now, that assessment is seemingly contingent on his fiscal agenda being implemented. Tax cuts will be prioritized. Di Maio said on Monday that he supports slashing taxes and is prepared to chat about a flat tax plan with League. It’s good that Di Maio is on board, precisely because it doesn’t matter if he isn’t.
In addition to tax cuts, Salvini said Monday that the election results give him a clear mandate to push back on austerity. “Salvini interpreted the preliminary result as an endorsement to Lega’s view of the need for a change of the European fiscal rules to pursue a more expansionary fiscal policy stance”, Goldman writes, adding that “political uncertainty is high and more clarity on the longevity of this government should emerge in coming days.”
“The time has come to totally re-discuss old and outdated rules that have hurt Europe. Otherwise a vote like this cannot be explainedâ€, Salvini told a news conference in Milan.
For their part, Barclays isn’t sure what Salvini plans to do next when it comes to the government. “The League is already the leading government party without needing to risk a return to the ballot box”, the bank said Monday, adding that eschewing a snap vote would allow League to “avoid having to accept potentially costly, from a political standpoint, pre-electoral agreements on single-party candidate allocations in first-past-the-post constituencies, especially with Forza Italia, which remains critical for the League if it is to contend 5SM constituencies in some regions of the South.”
Still, the bank acknowledges that Salvini could conceivably pull the plug from a position of strength. “We do not rule out that [he] may try to engineer either a reshuffle within the current coalition or a policy rebalancing in favor of League”, the bank says.
From a market perspective, remember that one-man rule by Salvini (and please, spare me the hyperbole accusations – Italy is now, basically, under his thumb and if you know anything about him, the idea that all decisions wouldn’t ultimately be his in a situation where League engineers a shakeup is laughable), wouldn’t be the worst thing for markets, even if it would be a disaster for myriad other reasons.
As for Di Maio, he told reporters in Rome that he “had [a] conversation with Beppe Grillo, Davide Casaleggio, Alessandro Di Battista and others representing the different expressions of the [Five Star] movement and nobody asked for my resignation.”
The fact that Di Maio has to say that does not bode particularly well – for him or for Five Star.
