May 24, 2018 / 9:46 AM / a month ago

Breakingviews - Italy premier’s to-do list would tax a veteran

MILAN (Reuters Breakingviews) - The new Italian premier’s to-do list is full of hot potatoes. Newcomer Giuseppe Conte, a law professor plucked out of obscurity to lead Italy’s first anti-system government, vowed to defend national interests in all quarters in his first public speech on May 23. If confirmed by parliament, he risks immediate conflict with European Union partners on key economic and policy issues.

Newly appointed Italy Prime Minister Giuseppe Conte arrives at the Quirinal Palace in Rome, Italy, May 23, 2018. REUTERS/Remo Casilli

The choice of the unelected Conte as prime minister propels Italy into a historic new phase.  Never in its 70-year-long republican history has the EU founding member been run by a government defiant of the European order, nor by such an inexperienced leader. Backed by the radical 5-Star Movement and League, the 53-year-old practising lawyer will likely succeed in forming a new government and winning parliament support, possibly next week.

In his first brief and somewhat hesitant speech to the nation, Conte – who has no political or managerial experience – acknowledged he would need to confirm Italy’s international obligations, and respect Italy’s constitution. But what stood out were repeated vows to put Italy first.  

The incoming premier and his team will have plenty of opportunities to test the pledge. The first task will be to draft the 2019 budget. Italy must find 12.5 billion euros of savings to avert higher sales taxes. But anti-system parties want to implement tax cuts and boost benefits to please voters. Any move in this direction would clash with commitments to cut Italy’s deficit and debt, and stoke investor fears.

Another immediate headache will be deciding on the fate of insolvent carrier Alitalia. The outgoing government put it up for sale. The League and 5-Star want instead to renationalise it, which is against EU state aid rules. If the new government also decides to keep Banca Monte dei Paschi di Siena in state hands, that would also renege on a previous pledge.

Conte will also meet other EU leaders in June to discuss immigration policies and the bloc’s banking union. Italy rightly wants to reform EU rules that require immigrants to file for asylum in the country of arrival, often Italy. Rome has, too, a crucial interest in convincing reluctant Northern countries to share more banking risk. But if the new government lapses on budget discipline, partners would be even less keen to make concessions elsewhere. 

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