What Giorgia Meloni’s government means for Europe

Opinion piece (Encompass)
24 October 2022

Giorgia Meloni, the right-wing firebrand leader of Brothers of Italy is now Italy’s Prime Minster – notably the first woman to hold the role. She heads a coalition government together with Matteo Salvini’s League and former prime minister Silvio Berlusconi’s Forza Italia.

Italy’s partners in the EU and beyond will watch Meloni’s next steps carefully. Her right-wing coalition won September's election promising more spending and cuts in taxes, which, if implemented, would put Italy’s economic credibility at risk. The cost of financing Italy’s debt, which stood at over 150 per cent of GDP in 2021, would rise further, potentially sparking a financial crisis. There are also concerns about the future trajectory of Rome’s foreign policy, particularly towards Russia, given the pro-Putin statements that both Salvini and Berlusconi have made. Finally, Italy’s partners worry that Meloni could embark on a course of confrontation towards the EU, complicating the Union’s functioning.

A more turbulent period lies ahead for Italy’s relations with Brussels, but Rome’s European and international policies are likely to change less than its partners fear. Meloni is aware of the economic constraints that her government faces and knows that a loose fiscal policy could immediately cause her government big problems. During the election campaign she shifted towards a fiscally conservative stance and watered down some of the coalition’s promises, for example on introducing a flat tax on income. She also tried to persuade technocrats to accept the post of economy minister in her government. Although she failed, the fact that she tried is reassuring, as is her eventual choice of respected League moderate Giancarlo Giorgetti as economy minister.

Most of the right-wing coalition’s pre-election economic promises are likely to remain on the drawing board, or to be extensively watered down. Meloni will also face strong incentives to continue with the economic reforms that Draghi has begun as part of Italy’s recovery plan, given that disbursements from Italy’s near €200 billion share of the EU Recovery Fund are tied to reforms being fully implemented. Meloni cannot afford to look like she is losing the funds. Still, there could be disagreements with the EU over whether the specific conditions to disburse funds have been met. Meloni also wants to try to persuade the Commission to change part of the recovery plan to re-route some of the funds to countering high energy prices. That may be another source of tension.

In foreign policy, Meloni will more strongly emphasise the concept of Italy’s national interest. But fears that Italy’s foreign policy will shift in a significant way are likely to prove misplaced. Meloni has made clear at every turn that she is a staunch supporter of Ukraine’s sovereignty and that she is strongly pro-NATO. Her choice of Antonio Tajani, a leading Forza Italia member and former European Parliament President, as foreign minister is designed to dispel concerns about Italy’s foreign policy trajectory – as is the appointment of Brothers of Italy’s co-founder Guido Crosetto as defence minister.

Within this broader picture, Berlusconi and Salvini’s admiration for Putin and Salvini’s unexplained dealings with Russian officials are troubling – but not particularly consequential. Salvini and Berlusconi have always sympathised with Putin, but this did not mean that they were willing to do him any favours, like vetoing EU sanctions. Both Forza Italia and the League were part of Mario Draghi’s government and backed tougher EU sanctions. It is even less likely that they would veto sanctions now, as the pressure to maintain them is much greater and doing so would wreck relations with Italy’s partners. Nevertheless, the weakness of Italy’s economy, combined with Salvini and Berlusconi’s sympathies for Putin mean that Italy will join the ranks of those EU states sceptical of imposing additional sanctions on Moscow.

Meloni’s government is unlikely to embark on a course of open confrontation with the EU. First, Italy’s economic weakness means that confrontation with the EU would lead to investors taking fright and would therefore have the same effect as adopting a loose economic policy. Second, there is limited appetite in Italian public opinion for open confrontation with Brussels. Public perceptions of the EU have shifted with the introduction of the Recovery Fund. Polls indicate that while in 2020 only 44% of Italians would have voted to stay in the EU, now 58% would do so. Although Meloni remains Eurosceptic at heart, she understands that Italy has no alternative but to work through the EU to pursue its interests.

Still, Meloni will want to look and sound tough in her dealings with the Union, to show she is asserting Italy’s interests more strongly. In practice, rhetoric on EU issues is likely to be more transactional, and there could be tensions on second-order issues such as migration, with Rome demanding solidarity from other member-states. The new government in Rome will also mean there is yet another member-state in the EU that is unwilling to push countries like Hungary hard on respecting the rule of law. Meloni's government, with its attachment to national sovereignty, will also further complicate discussions about treaty change or about EU reforms like expanding the use of qualified majority voting. That means that in the near future any further EU integration and enhanced co-operation is likely to place at an intergovernmental level.

Meloni is likely to govern more moderately than many of Italy’s partners fear. She cannot afford to pursue irresponsible economic policy or embark on a confrontation course with Brussels. Meloni’s government may also not last very long. She will have to steer Italy through a difficult winter, and there are already signs of infighting within her coalition. These will only increase as high energy costs and spiralling inflation hit Italians.

Luigi Scazzieri is a senior research fellow at the Centre for European Reform.