Meloni begins to pay the consequences of its bloated public debt

Giorgia Meloni

It took barely a month in office to realise that the Roman Meloni is going to have a very difficult time in her new role as President of the Council of Ministers. It had all started in the best possible way: President Mattarella, at least according to the names in the press, had given him the "go-ahead" for the complete list of ministers, supporting him in not appointing a person from Forza Italia to the Ministry of Justice (in the end, in the hands of the prestigious magistrate of the Italian parliament), The press had also agreed that Matteo Salvini could return as Deputy Prime Minister (as he had already been between June 2018 and September 2019), but not repeat in the Interior portfolio (known as the "Viminale", the name of the palace that houses this ministerial portfolio).

Moreover, he had secured the support of a majority for his "strong man" in the Senate, the veteran Sicilian Ignazio La Russa, to become the new president of the upper house and thus take the second "carica" of the state. In the end, all of his most trusted men were in the main ministries, with Guido Croseto in Defence standing out at a key moment due to the evolution of the war in Ukraine, which continues to have no end as it draws closer and closer to a year since it began. 

But Meloni has already encountered a first problem on the table: an unexpected influx of irregular immigration in recent weeks, which has forced him to accept the landing on Italian shores of a large number of people from Central Africa. And, as has already happened to the Renzi government (2014-16) and the Gentiloni government (2016-18), the European Union refuses, in practice, to relocate this strong flow of irregular immigrants in the different countries that make up the Union. A "no" that has been led by the President of the French Republic, Macron, currently the strongest leader within the Union because the Germans have enough to deal with the energy cut-off by the Russian Federation (the consequences of having entrusted everything to the "Nordstream" and the gas that arrives from this country to Germany via the Baltic Sea); The French are playing on the trump card that their almost 60 nuclear power plants ensure energy supply regardless of what Vladimir Putin's government does; and the Spanish are increasingly on the back foot because they have not yet been able to recover pre-coronavirus GDP, their government does not have an absolute majority in Parliament and their national debt has risen the most in the last two years (from 98% to 118% at present). 

The reality is that, after Greece, Italy has the highest debt-to-GDP ratio: 152%. Although Greece's is 30 points higher, it should be remembered that the Greek economy is only 10% of the transalpine economy. Moreover, the problem has been compounded by the rising cost of living: according to the latest data, the CPI has risen by 11.6% in Germany, 12.8% in Italy and a whopping 16.8% in Prime Minister Rutte's Netherlands. The consequence of this has been a very substantial rise in money interest rates by the European Central Bank (ECB), which are already at 2% and which at the moment do not look as if they will fall, quite the contrary (they should rise to 2.50% in December, that is the initial forecast). This means that, for the most indebted EU countries (Greece, Italy, Portugal and Spain, in that order), the state has to devote more and more resources to financing the placement of sovereign debt on the markets. 

The EU authorities consider that, with the 209 billion (along with several billion more, such as the SURE fund) that Italy received in the distribution of the 750 billion in July 2020 (the famous "Recovery Fund", whose main destinations should be both the digital transition and the "green" transition), they have already been more than generous towards the eurozone's third largest economy. So they have not the slightest intention of opening their borders to the irregular immigration that is currently in ports such as Catania (Sicily), which is going to create a major problem for President Meloni. And the worst thing is that it is precisely the France of Macron, re-elected President of the Republic (and for five years) just a few months ago, with a majority (yes, simple, not absolute) in the legislature, with a not excessive debt (97%, almost forty points above the Stability Pact) and no real rivals either inside or outside his party. 

This week also saw the resounding refusal of the countries of central and northern Europe to change the criteria of the Stability Pact: states will have to keep their debt at 60% of national GDP and their deficit at 3%. This contrasts with the reality facing the Meloni government, which is that its country is more than 90 points above the Stability Pact's requirements! Although Antonio Tajani, now Deputy Prime Minister and Minister of Foreign Affairs, has very good relations with the European institutions, the reality is that he is not Mario Draghi, who, now out of the presidency of the Council of Ministers, can only lend a hand to Minister Giorgetti, Minister of Economy and Finance but with very basic knowledge of the economy, and not much more. It is true that Draghi has a cordial and close relationship with his successor at the head of the ECB, Christine Lagarde, but Lagarde, after all, is French, and we already know that if there is one thing our neighbouring country has plenty of, it is nationalism to the nth degree, so it will listen to Macron before it listens to Draghi.  

What is at risk now is that the Quirinal Treaty signed by France and Italy at the end of 2021, in which the two countries undertook to cooperate in many areas and to make a common front against the Germans, the Dutch and other countries of central and northern Europe (Austria, Denmark, Finland, etc.), will be blown up. Whatever happens, the reality is that, if Macron considered it realistic to be on equal terms with Draghi, he does not think the same of Meloni, who, after all, heads a coalition in which his two government colleagues (the League and Forza Italia) are not exactly his best allies. 

What will the new President of the Council of Ministers do in the face of this new wave of migrants? Will she do as in the days of the Gentiloni government, with Marco Minniti as interior minister, give the Libyan national authority money to block the departure of boats to their shores? Or will he dare to follow Salvini's policy, at the time, of opting for ports completely closed to boats full of migrants, or will he have no choice but to wait until the weather conditions worsen with the arrival of cold weather and the number of people who dare to try to reach Italian shores falls? We shall see, but the reality is that Meloni won many votes in the southernmost part of the country (above all, Puglia, where one of his "strong men" in the Executive, Minister Fito, comes from) and this will be the first area to rebel against a problem that has already generated significant anti-European sentiment in Italy for years and which explains why Salvini won the 2019 European elections by a wide margin.  

Meloni, moreover, must pay the consequences of having been a strong Eurosceptic for years: being the leader of "Reformists and Conservatives", her parliamentary group in the European Parliament, leaves her in a position of enormous weakness against "Populars" (where Forza Italia is), Socialists, Liberals and "Greens". Now he will have no choice but to turn towards Europeanism, and all this in an increasingly rarefied climate because his country, with a rich industrial north, is suffering particularly badly from the consequences of energy dependence, affecting not only household consumption but also factory production, and this will lead to a rise in the cost of living that will surely shake his government. This is what it is like to have wanted to be part of European integration from the very beginning and to have wanted to participate in the single currency from the start: either you comply with the established rules or you will suffer the consequences of not having done so. And this is precisely where the Meloni government finds itself.

Pablo Martín de Santa Olalla Saludes is Professor of International Relations at Nebrija University and author of Historia de la Italia republicana (Madrid, Silex Ediciones, 2021).