Or the Scottish referendum of 2014 or Brexit of 2016?
Euro zone has just returned to haunt financial markets again. A political crisis in Italy is threatening to blow out, and how!
In many European countries, there are groups that just do not want to stay with the European Union, thanks to the austerity measures they have been forced upon by the EU for years to keep their economies from defaulting. One of its impacts has been widespread unemployment and anger among public.
Italy’s unemployment hit 11 per cent when it went to vote this past March. Despite all austerity measures, its debt still stood at a whopping $2.3 trillion, more than its annual GDP. There is a belief among sections that staying with the EU may leave them nowhere.
Italy government's debt to GDP
The political chaos is obvious. The third largest euro zone economy produced a hung Parliament; anti-EU parties became popular but fell short of a majority. An attempt to form a coalition by two such parties has been thwarted. With re-elections likely, the euro bloc stares at uncertainty ahead.
What’s happening?
Italians voted on March 4 but none of the three major parties won a majority. Earlier this month, two of them – Five Star Movement and League – joined hands to form a coalition government and proposed a law professor, Giuseppe Conte, as prime minister.
But Italian President Sergio Mattarella blocked the move, triggering fresh political turmoil.
Mattarella didn’t favour the idea of making economist Paolo Savona, known for his anti-German and anti-euro rhetorics, the new finance minister. So he exercised his right as President to veto these appointments under the debatable Article 92.
The law gives the President the right to appoint the president of the council of ministers and, on his proposal, the ministers.
As expected, the collation government did not like the idea and prime minister-designate Conte gave up, making a case for re-election as early as July. A former IMF official Carlo Cottarelli, known for his role in public spending cuts in the past, has been tasked to form an interim government. This may bring further public anger.
League is euro-sceptic and believes in anti-globalisation. Five Star Movement, too, is critical of the European Union. The two parties received overwhelming votes in March elections. Some believed a re-election may turn into a de-facto Italian referendum.