It’s the Wrong Way to Tackle Merkel

Gough WhitlamIn 1975 Australia’s Prime Minister, Gough Whitlam, was dismissed by Governor-General Sir John Kerr, Australia’s de facto President. (although formally the Queen’s official representative, the Palace was clear that this was a sovereign issue, as indeed is the appointment of Governor-Generals in reality). The Australian government didn’t have enough Senate support to get its budget passed which would mean no funding for public services, so a new election became necessary. Kerr appointed the opposition leader, Malcolm Fraser, to head an interim government provided he promised to call new elections to both houses of parliament immediately. Australian Labour Party supporters demonstrated their outrage but the ALP lost by an overwhelming margin – the people were not behind Whitlam.

Sergio MattarellaIn Italy this week President Sergio Mattarella effectively dismissed the people’s choice of government by refusing approval of a key eurosceptic minister and appointing an EU-compliant replacement as Prime Minister. This will need Parliament’s approval, which will presumably be refused so elections will be required. Fair enough if the electorate then agrees with the President but it looks like the ‘populists’ are even more popular than before the last vote. Kerr was faced with the certain breakdown of government but did his best to find an agreed solution: Mattarella unilaterally decided he didn’t like the possibility that the proposed government might leave, or threaten to leave, the eurozone. But how unilateral was his decision, unlike the Australian dismissal were a lady’s hands actually pulling Sergio’s strings?

Wrong-1

Nobody can say that I have put obstacles to the so-called government of the change,” said Mattarella, but the proposed economy minister would, “have probably, or more likely inevitably, led to the exit of Italy from the euro.” Obstacle courseIt is the principal duty of the Italian President to protect the constitution but euro-exit was not the policy of either party in the proposed coalition, though it was a consequential risk of permitting them to take office. However, protecting citizens from the consequences of their unwise choices (by imposing wise government from above or reversing referendums) is regarded by the EU as an essential duty of all wise leaders – obviously more important than any constitutional obligations. Matteo Salvini, the Lega’s leader, said “It is a very serious matter that Mattarella chose the markets and EU rules over and above the interests of the Italian people”, whilst his Five Star partner, Luigi Di Maio, called for the impeachment of the President.

Salvini-Di Maio

This Italian rebellion is far more serious for the EU than Brexit. A successful Brexit might encourage others to exit the EU so must be made to appear a really bad choice. If Italy introduced an internal currency (which was the coalition’s plan), saving its euros where it can, why wouldn’t Greece and Spain do likewise? The ex-finance minister of Greece, Yanis Varafoukis, proposed this solution to extricate his own country from its financial straitjacket. “You have to swear allegiance to the god of the euro in order to be allowed to have a political life in Italy. It worse than a religion”, said Lega’s economic spokesman, Claudio Borghi, “You are very lucky in the United Kingdom that you still live in a free country.”Merkel grumpy

Maybe, but the dark lady’s strings are plainly visible in Britain’s case and plainly pulling against the interests of Europe’s citizens. Barriers to EU-UK trade are mutually damaging to their wealth and freezing out Britain’s security involvement is a danger to their security.

Wrong-2

UPDATE

Since we posted this Lega and Five Star have agreed to nominate a less euro-hostile economics minister, Mattarella has accepted and the coalition government will take office. Italian governments since WWII have lasted about 15 months on average, plenty of time to cause havoc for the EU, the ECB the Italian economy and global markets. The immediate effect of the compromise has been a recovery of the euro and Italian equities; the Italian electorate is now the most eurosceptic in the EU so the avoidance of an election with an even more overwhelmingly ‘populist’ vote is a relief. But the Italian economy is still in deep trouble and another nominated chief has put the Union’s interests above his people’s choice.

If they think it’s all over …

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