Italy’s battle with Brussels is about more than money

Italy’s most recent general election, in March, triggered a political revolution. The consequences are now being felt across the continent. And revolution is the right word to describe what happened. The established parties on both left and right were simply swept aside in favour of the Five Star Movement and the League (formerly the Northern League). Neither was around when the Italian constitution was approved; neither played a role in Italy’s postwar reconstruction; and neither had a part in the foundation of the EU and Nato. Now these new forces have joined together to give voice to the deepening anxiety of the middle classes, an anxiety affecting attitudes to every type of institution, be it national, European or global.

Three things triggered this act of protest in Italy. First, economic inequality, or the impact of globalisation, which has impoverished Italy through the departure of businesses and flight of jobs abroad, – from eastern Europe to the Far East – and which has brought foreign imports to Italy at very competitive prices. Second, starting in 2015, the arrival from North Africa and the Middle East of migrants in far higher numbers than Italy – essentially white and Catholic even now – is used to receiving. Third, exasperation at the endemic corruption that has afflicted the country for generations.

Italian families found themselves trapped in a suffocating vice: globalisation was spiriting away factories and plants, migrants were competing for badly paid jobs, and corruption was as bad as ever. In 2017 some five million Italians didn’t have enough money to go on holiday, and at least 250,000 – most of them young – moved abroad. The inequality-migrant-corruption domino effect triggered a spiral of distrust that prompted protests against everything and everyone.

The traditional parties – beginning with the biggest ones, the Democratic party and Forza Italia – failed to grasp the magnitude of the discontent, so the political prize went to those politicians who could. In the south it was Luigi Di Maio’s Five Star Movement that prevailed – thanks to its “citizenship income” proposal – a benefit of €780 (£680) a month for the unemployed. In the north it was Matteo Salvini’s League, which backed two horses at the same time: the so-called “flat tax” to help out businesses in difficulty; and a tough approach to migrants. Five Star and the League have clear dividing lines – their geographic base, their economic ideas and their social makeup. But they have one thing in common: hostility to the European Union.

Five Star accuses the EU of being the root cause of Italy’s economic woes, and the League blames it for having abandoned Italy to the migrant crisis. Which explains why, for Di Maio’s supporters as much as for Salvini’s, the current battle with the European commission over the government’s proposed budget, judged by Brussels to violate agreed eurozone spending restraint, is essentially about identity. The standoff is not just about the deficit, the outlook for growth, the failure to bring down Italy’s debt and the absence of reform: its root cause is the coalition’s belief that by revolutionising its relationship with the EU, Italy will be able to win back trust, optimism and a better future.

Hence the current short-circuit between Rome and Brussels. While the commission is trying to negotiate with Giovanni Tria, the minister for the economy, to modify the Italian budget, Salvini’s and Di Maio’s interests lie in a full-frontal confrontation with Europe.

This is what makes a compromise so difficult, meaning Italy risks large EU fines. And such punishment could become the symbol of all the EU’s flaws, just as Salvini’s League and Five Star hope to play a leading role in next May’s European elections. When Di Maio promises to “sweep away this European establishment” and Salvini sees on the horizon a “quiet revolution in Europe”, what they have in mind is a repeat in the European elections of their extraordinary domestic electoral triumph, in alliance with other nationalist and Eurosceptic parties.

Right now, it is impossible to tell if they can pull this off, or whether the Five Star/League coalition can navigate the looming financial crisis. But one thing is certain. The anxiety of the Italian middle classes about inequality, migration and corruption that sparked this revolution will continue to hold centre stage in Italy and in Europe until real, strategic answers are found.