Matteo Salvini – Strategic Culture Foundation https://www.strategic-culture.org Strategic Culture Foundation provides a platform for exclusive analysis, research and policy comment on Eurasian and global affairs. We are covering political, economic, social and security issues worldwide. Mon, 11 Apr 2022 21:41:14 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.16 Let’s Add Salvini’s Return to the Growing List of Europe’s Problems https://www.strategic-culture.org/news/2020/01/17/lets-add-salvinis-return-to-the-growing-list-of-europes-problems/ Fri, 17 Jan 2020 12:00:13 +0000 https://www.strategic-culture.org/?post_type=article&p=283906 When Matteo Salvini’s Lega won the state elections in Umbria in late October few, if any, noticed. Lega and the Brothers of Italy and Forza Italia took at whopping 53% of the vote, with Lega taking 37%.

It was this result that should have had everyone in Brussels worried. But since they had just gotten finished patting themselves on the back for maneuvering around Salvini’s attempt to force an election the month before, the news quickly moved to the back burner amongst all of the Brexit drama.

But, the result in Umbria was important because it showed Lega’s ability to turn a center-Left stronghold against history. The Democrats (PD) had held sway there for over fifty years. But no longer.

The result showed that even though Salvini was no longer in a governmental office in Rome, his popularity hadn’t waned. It’s clear that polling since then has seen Lega hold its position as the dominant party in Italy, which has Lega commanding 31-33% of the vote.

The real story, however, is the surge of the Brothers of Italy (FdL) who are picking up disaffected Forza Italia voters and held them for months now, continuing to hold a solid 10%.

In short, Italian polls haven’t moved much in months despite Salvini and Lega being ousted from the ruling coalition when coalition partner Five Star Movement (M5S) made a backroom deal with PD which has only accelerated M5S’s slide in the polls. Remember, M5S was formed to stop PD from holding onto power and challenging them on EU membership and continued adoption of the euro as Italy’s currency.

Making that deal with the establishment like that has alienated a lot of M5S’s base and it’s support is now threatening to collapse below the all-important 16% level, which once breached to the downside opens the door for someone else to gain dramatically.

And that is the backdrop against which the PD/Five Star Movement (M5S) government is dealing with.

Lega alone polls close to or better than PD/M5S together nationally. And it is the upcoming state election in Emilia-Romagna on January 26th that is their next headache. As the Financial Times pointed out in a recent article, Salvini and Lega have made serious inroads in what is a traditionally heavily left-leaning area.

Giorgio Bennetti, a 35-year-old sweets seller with a stall in Ferrara’s centre, believes that many voters are willing to switch to the right to express a general political dissatisfaction. Local issues, such as the collapse of the Ferrara savings bank — 130,000 investors lost their savings — have also given voters reason to want to punish the PD, which was in charge both locally and nationally when the rescue happened in 2015.
“This is a protest vote; people don’t believe that the left is working for them any more,” Mr Bennetti says. “My grandmother used to say that people have no problem changing their shirts from red to black if they need to.”

But similar to what Donald Trump did in 2016 and Boris Johnson just pulled off in the U.K. these nominally right-wing candidates became the champions of domestic working middle class. In Italian political terms, the former Communists in Emilia-Romagna now firmly trust Salvini to protect their futures and the jobs rather than the traditional left parties.

Current polling there has Lega with 31% of the vote, a massive 12-point rise over the last election while PD has lost even more down 20 points.

Since parties can campaign in coalitions in Italy the current center-left versus center-right numbers in Emilia-Romagna are within a couple of points. But Salvini’s guys are rising fast and it’s very possible that the polls haven’t quite caught up to the shift in sentiment leading into the election.

This happened in 2018 where Lega was polling behind Forza Italia by a couple of points and would up coming out of the election four points up and the dominant player in the center-right coalition. That paved the way for the scenario that led to the short-lived Euroskeptic coalition between Lega and M5S.

So, the probability of a center-right government coming into being in Emilia-Romagna is growing by the day. And that puts the national coalition at serious risk.

 “This coalition is already so fragile that the only thing gluing it together is their fear of Salvini,” says Erik Jones, professor of European studies and international political economy at the Johns Hopkins School of Advanced International Studies in Bologna. “If they lose it is hard to see how they make it through the spring.”

This fear is well-founded and no matter how hard they try and hold it together political forces within Italy will ultimately tear it apart. Losing Emilia-Romagna would create serious panic in the ranks of both ruling parties.

But the political establishment in Rome is dead set on keeping Salvini out of power for as long as possible. And that goes double for the traditional EU leadership in Brussels. But one thing working in Salvini’s favor here is that it has been German Chancellor Angela Merkel pulling the strings in Rome to keep the Italians in sync with German fiscal and monetary demands.

But Merkel is on the way out and there is a concerted challenge to German rule coming from French President (for now) Emmanuel Macron. Macron wants fiscal integration and the euro-zone is suffering from Merkel’s insistence on punitive austerity.

I expect the next leadership challenge in Italy will not be fought nearly as hard as in the past by the EU. Salvini either wants a stronger seat at the decision-making table for EU fiscal policy for Italy or be let out of the monetary union. In that sense Salvini is a future ally for Macron against Merkel and her successor.

I can see Macron and new ECB President Christine Lagarde not fighting Salvini’s rise to power to help them remake the EU’s fiscal structure, prevailing upon the Italian old guard like President Sergio Mattarella to allow the government to collapse and not fight new elections, which Salvini will win in a walk, likely with just the Brothers of Italy as his coalition partner depending on how the vote lays out.

At that point things get really hairy for Merkel as a Salvini as Prime Minister will be in the position to dictate terms to Germany having Lagarde and Macron on his side, tacitly.

Because, remember folks, when you owe the bank a thousand dollars it’s your problem. When you owe the bank a few hundred billion dollars it’s the bank’s problem, in this case, specifically German banks.

That’s where Salvini’s leverage lies and he knows it. But with the changing of the guard in Brussels and Strassbourg, he would finally be in a position to use it.

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Salvini Thwarted Is Not Salvini Denied https://www.strategic-culture.org/news/2019/08/18/salvini-thwarted-is-not-salvini-denied/ Sun, 18 Aug 2019 10:12:41 +0000 https://www.strategic-culture.org/?post_type=article&p=169743 Italian Interior Minister and leader of The League Matteo Salvini was thwarted in his push to get control of Italy’s fractious political landscape recently. Salvini pushed for new elections after declaring the coalition government with Five Star Movement unworkable.

His motion to bring a vote of no-confidence against Prime Minister Giuseppe Conte failed in the Italian senate after his former coalition partners entertained a proposal from the formerly-powerful Democrats.

In the end it shouldn’t have been a shock to see Five Star make strange bedfellows with the party and the political apparatus it was built to fight. Because had they backed Salvini they would have had to accept outsider status since polls have moved so far against them over the fourteen months of their working together.

It turns out that no matter how revolutionary one is supposed to be, in politics, retaining access to power becomes the over-riding concern. In general, the first goal of any organization is survival and Five Star made the Hobson’s Choice of siding with Matteo Renzi’s Democrats to stay in power rather than stand on their principles and abide by the will of the Italian people, who are clearly now behind Salvini and his League.

As I pointed out in my last article, The League is polling at levels Five Star has never reached, 38-40%, while Five Star’s support has collapsed to the high teens after taking more than 28% in March 2018’s election.

So, Salvini’s ‘betrayal’ of Five Star, who foot-dragged implementing any of Salvini’s part of their stated agenda, led directly to Five Star’s betrayal of Salvini.

But looking at the polls it’s clear that Salvini’s brand of right-of-center populism is popular. And Five Star Leader Luigi Di Maio’s decision to go against that grain will not bode well for his party going forward.

It’s clear Salvini has the population’s ear on reforms, tax cuts, infrastructure spending and ending German-led, EU-imposed austerity.

In the near term it looks like Di Maio has gotten the better of his former ruling partner. The president, Sergei Mattarella, will happily countenance a Democrat/Five Star coalition to ensure that nothing radical happens over the crucial next two years as the European Union faces the biggest challenges to its future ever.

This is especially true with it looking increasingly likely that the United Kingdom will leave the EU on Halloween without a withdrawal agreement.

But Di Maio is now in the same position that another reformer turned toady was in after he betrayed his country in 2015, Greece’s Alexis Tsipras.

To remind everyone, Tsipras is now out of a job and one of the most hated people in Greece. So complete was his sell out of the Greek people, he ushered back into power a center-right government in July.

Five Star was born out of the disgust Italians had for its leadership in Rome and the technocratic overthrow of Silvio Berlusconi’s government back in 2011.

It was a pure protest party, especially when Beppe Grillo was its figurehead. Now, it’s making deals to stay in power with those same technocrats.

Di Maio has to think very carefully about where things go from here. Remember, it was the Democrats who refused to ally with Five Star last year leading to the nominally Euroskeptic alliance between it and The League that has tried to govern since last June.

It’s true that Five Star has suffered since it teamed up with The League but that’s a self-inflicted wound as Salvini ran rings around them for not supporting him as his popularity grew.

What’s coming here is that if Five Star does a deal with Renzi and the Democrats it will be a betrayal of the same order as what Syriza under Tsipras pulled with Greece. And Salvini, cast in the role of opposition, will have a field day sniping the government at every turn as Conte, Mattarella and their pet Finance Minister Giovanni Tria sell Italy out back to Brussels.

And it will be Salvini that has the last laugh as Five Star gets nothing in return for selling out, Italy gets crushed further and the migrant caravan of George Soros re-opens. Di Maio and Five Star had their opportunity to stick it to the EU as it struggles with a sovereign debt crisis and the German financial and political system is stressed to the gills.

And it failed.

Politics at this level is all about ego. Di Maio wasn’t able to quell the leftist malcontents within his own party and because of that couldn’t deliver on promises made when the coalition formed.

He’s now set his party on the path to destruction while Salvini gets to walk away having lost nothing of note. His policies weren’t going to be implemented in a coalition with Five Star and Conte as Prime Minister.

Now he’s exposed all of them, inadvertently or otherwise, including his former partners, as the useless social climbers they are rather than the patriots and rebels they advertised themselves to be to the Italian people.

Salvini’s best move here is to continue with his plans to call for another vote. Force Five Star on record and undercut their position with the electorate further. And after that, bide his time, and work The League’s position in the European Parliament.

Because while you can manipulate events in the short-term you can’t change the overall trend. This is something both the EU and the Italian deep state have yet to learn.

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Can Salvini Beat the Italian Troika? https://www.strategic-culture.org/news/2019/08/12/can-salvini-beat-the-italian-troika/ Mon, 12 Aug 2019 10:06:40 +0000 https://www.strategic-culture.org/?post_type=article&p=164737 Italian leader Matteo Salvini is in the headlines again, now openly threatening divorce with his coalition partner, Five Star Movement (M5S).

Salvini unleashed another round of rhetorical bombs at M5S to get on them board with his part of the agenda. But that seems to have failed and he is now prepared to go to Parliament and withdraw his party, Lega, from the coalition government which will lead to new elections.

He had put off any kind of talk of new elections in the past because the opinion polling wasn’t strong enough to grant Lega the kind of majority it needed to govern without strings.

The coalition is dead but it may not matter.

The biggest problem Salvini faced, however, wasn’t M5S’s internal strife and contradictions. His biggest obstacle lies in the Troika of Technocrats that hold all the real power in Italy as it pertains to the European Union.

That Troika is President Sergei Mattarella, Prime Minister Giuseppe Conte and Finance Minister Giovanni Tria and they are the problem, as I wrote back in June.

Prime Minister Giuseppe Conti and Economy Minister Giovanni Tria are in open revolt against the coalition leaders over the upcoming budget fight with the EU.

Reuters is reporting this morning that these two are working together to undermine the internal reforms Salvini is proposing to spur economic growth from the ground up by instituting a flat tax and spending a whopping $3 billion more than Brussels wants them to on rebuilding crumbling Italian infrastructure.

Conte and Tria were essentially hand-picked by Mattarella to slow the current government’s roll and make nice with Brussels if they painted outside the lines. It was Mattarella who nixed Paolo Savona as the coalition’s pick for Finance Minister and it nearly saw him impeached for overstepping his authority.

Savona was deeply anti-euro.

Conte was also a compromise pick to get the coalition formed and deal with the fallout later. The latest threats by Salvini to take down the government is something he has been goaded into doing in the past when the polls were less definitive.

But today his threat is a much bigger one. When Lega was polling 32-34% there was no election calculus that would allow them to take control and still not be saddled with an albatross; either a spiteful M5S or a coalition of minor parties with deep state Italian ties, like Forza Italia.

Today, however, the calculus is different. Lega is polling at 38-40%.

And that puts them in a much different position. Remember that the Italian Deep State pushed forward under former Prime Minister Matteo Renzi the new election law that allocates one-third of parliamentary seats by marjoritarian, or first-past-the-post, voting. The remaining two-thirds are allocated proportionally.

Now, this was done to blunt the rise of Euroskeptic parties like M5S and create over-representation for establishment parties. But that only works if the establishment parties’ support doesn’t collapse.

Oops.

Look at what just happened in Ukraine, with a similar system. Volodymyr Zelensky’s Servant of the People took less than a majority of the votes but won more than 55% of the seats. Now, Ukraine’s internal politics are such that controlling the Verkovna Rada doesn’t that much, but it’s a good start that Zelensky won’t have to govern with a coalition partner.

I don’t have any idea of the internal, regional numbers for Italy but if Lega pulls more than 40% in a general election it is likely they will have enough seats to form a majority government without partners. That’s what Salvini is banking on. And he should be confident given he trends in polling and the frustration with M5S, who were the recipients of support out of pure protest.

Now that there is competition for that protest vote and a leader with a clear path for Italy, it’s no surprise that they have fallen and Lega risen.

The worst-case scenario I can see for Salvini would be having to coalition with the ideologically aligned Brothers of Italy (FdL).

Silvio Berlusconi’s Forza Italia (FI) is failing quickly, as is M5S, whose support has halved since last March’s election.

This election calculus creates a much more stable situation that what shook out of 2018’s election. And it is the reason why Salvini looks ready to take the fight to the Italian Troika.

The key here is President Mattarella whose job it is to keep in place people loyal to Europe and defeat Salvini in any real reforms. So, color me shocked that there’s a hit piece on Bloomberg attacking his lack of accomplishments while over-stating his promises.

Most importantly, Salvini appears more interested in his popularity than in policy. He revels in tweeting on pretty much anything – from the beer he is drinking to celebrating the birthday of the Virgin Mary – and in DJ-ing shirtless in a beach club on Italy’s coast. But when one looks at how much of the League’s program he has actually implemented, voters have little to celebrate.

Take economic policy. The League has failed to deliver on its pledge to bring in a “flat tax” to lower Italy’s notoriously high rates. Instead, the tax burden has increased in the first three months of this year to 38% of gross domestic product from 37.7% in the same period of 2018, according to Italy’s statistics office. Salvini has also failed to deliver on a law which would give greater autonomy to Italy’s northern regions – the League’s electoral base – because of opposition from Five Star, which fears losing support in the South.

Yes, Salvini has failed to deliver on his promises as the junior member of a coalition government run by inept leftists and sabotaged by his own Prime Minister, Finance Minister and President.

The writer, Ferdinando Giugliano, then states that Salvini promised to get Italy out of the euro, which he explicitly did not campaign on nor has he talked about openly since being in power. That Salvini wants to get Italy out of the euro without concessions and changes to the EU’s finance rules is well known. But it’s not something he’s agitating for.

Laying the plans for leavingh the euro through the mini-BOT? Of course.

Is that a bargaining chip to use in negotiations with Brussels? Absolutely.

If you look at what Giugliano is saying it’s clear that his opening statement is the most accurate in the entire piece. “Matteo Salvini… likes to play the long game.”

Which is exactly what he should be doing, as I’ve pointed out consistently for nearly two years now (here, here, here). At every turn Salvini must cast others as the problem if he wants to win politically, which isn’t hard because it’s the truth.

And the more he does this the higher in the polls Lega rises.

With numbers where they are Salvini is looking at the opportunity to force the Troika to back down. This was why the rumors of forcing a cabinet reshuffle sound plausible. Now that he’s calling for a new election they could all be out of jobs.

The best outcome was for Brussels to keep Salvini saddled to M5S, retaining the status quo for as long as possible. Oops.

But Salvini, in constant contact with his fellow Euroskeptic leaders like Viktor Orban in Hungary, Nigel Farage in the U.K., Marine Le Pen in France, knows that timing in politics is everything. Poking this snake now, going for a consolidation of power the people seem to want of him, while Brussels is up to its neck in Brexit, new divisions within the EU parliament, and financial markets becoming more unmoored from reality every day is the right move.

If he pulls this off he could change the face of Italian politics for a generation and the face of Europe for a century.

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Europe Won’t Admit the Mini-BOTs Are Coming https://www.strategic-culture.org/news/2019/06/25/europe-wont-admit-the-mini-bots-are-coming/ Tue, 25 Jun 2019 11:35:14 +0000 https://www.strategic-culture.org/?post_type=article&p=126149 Italy is in serious trouble financially. This is virtually common knowledge at this point. What isn’t common knowledge is its Euroskeptic government led by Lega’s Matteo Salvini and Five Star Movement’s Luigi Di Maio are preparing an assault on the foundation of the European Union itself to save Italy.

And that assault comes with the most innocuous name. Mini-BOT. Mini-BOTs were originally the idea of former Greek Finance Minister Yanis Varoufakis to assist Greece get out of the stranglehold placed on it by the euro.

What is a mini-BOT? It is a small denomination (mini) Bill of Treasury (BOT) that can be issued by, in this case, the Italian government to act as a domestic currency for settling government debts, paying taxes, etc.

It would be a parallel currency which could circulate freely domestically at a discount to the euro which would work as a medium of exchange to reflect the reality of the Italian economy better than the euro does.

The euro’s value is dominated by Germany’s economy. And, in short, by being so the euro overvalues Italy’s labor pool and undervalues Germany’s. Gresham’s Law states under-valued money is hoarded and over-valued spent. In Italy the euro is hoarded. In Germany it is spent. This is why Germany runs such a massive trade surplus against the other members of the euro-zone.

Italy (and Greece, Portugal, Spain and others) need a currency that can circulate to properly support domestic trade.

By mispricing Italian labor via the euro it keeps the goods produced in Italy uncompetitive on the world market. Italy’s central bank can only issue euro-denominated debt which trades at rates far lower than it should, enhancing Germany’s position.

The Italian economy, like Greece’s, is also strangled by the cost of servicing its national debt denominated in euros. This keeps the demand for money within the economy high for debt servicing purposes and its circulation low.

Low circulation equals low trade and a sluggish economy. The EU’s budget rules favor paying off creditors first and tending to the Italian economy second. The ‘austerity’ imposed on euro-zone members, because of this mispricing of both the debt and the euro itself, becomes doubly harsh when the euro rises, sucking the life out of the debtor nation.

As the currency rises, the value of the debt rises versus the labor it is a claim against also rises. Then the country’s creditors need a bailout, which they get. The debt gets ‘restructured’ to put the debtor on an even-longer dated hamster wheel of repayment and some of it gets paid off in the form of national assets now trading at a fraction of its real value.

The mini-BOT seeks to reverse this process by allowing the Italian treasury to issue them as interest-bearing small bills which can be used to purchase goods and services in the Italian market but which will also be redeemable to pay for government services and taxes.

Doing this bypasses the euro completely and these will trade at a discount to the euro, thereby setting a proper exchange rate for Italy’s economy relative to Europe’s as a whole and increasing money velocity.

This is what Salvini and Di Maio are in favor of and what they will likely introduce soon.

And it is imperative that you understand what this means for the European Union. It is an existential threat to the current Germany-dominated political order. The main purpose of the euro was do to exactly what we have seen since its introduction, create a structural advantage for German industry through which Germany’s political class can dominate the EU itself. It was specifically designed to roll up the wealth of the continent in this way, bankrupt countries less competitive than Germany and keep them that way trapped within this single currency regime.

Laying aside my myriad and sundry libertarian and Austrian economics-based objections to this system of debt-based fiat currency, the current structure of the euro is even more monstrous than that of the individual currencies themselves. But, the Mini-BOT is a stop-gap measure on the road back to monetary and fiscal sanity. Not perfect, but the right first step.

Italy’s sovereignty-focused government, an outgrowth of the desperation of the Italian people, understand this dynamic at a deep level. It is why Salvini and Di Maio have attacked Brussels on the issue of the budget rules, tax cuts and infrastructure spending while soft-pedaling to the Italian people their radical agenda, which is to force a reorganization of power in Brussels or, failing that, take Italy out of the euro completely.

I have been arguing for over two years now since Matteo Salvini came onto the scene as a major player in Italian politics that his best path for success is to always and consistently put Brussels into the position of the bad guy.

Breach a budget rule here, detain some human traffickers there.

Each time the EU responds in the most predictable way, Salvini gains popularity and his arguments against Brussels’ unwillingness to listen gain credence.

And what scares Brussels the most is not what they say do – an increase in Italy’s debt, unsustainable spending, etc. Italy is nearly unsalvageable under a euro-only currency regime. No, what EU leadership fears the most is that this parallel domestic currency system of the mini-BOT actually works.

Because once it does it will show the rest of Europe just how corrupt and vindictive EU leadership is. As if Brexit talks haven’t exposed this fundamental truth to them already. And once that happens, the future of the EU itself comes into sincere doubt.

From what I understand, through anecdotal evidence, Salvini and Di Maio are going to move quickly on the mini-BOT, not just as a threat but as a real thing.

And their problems now lie with who I call the Troika of Technocrats who hold the positions to block their plans – President Sergei Mattarella, Prime Minister Giuseppe Conte and Finance Minister Giovanni Tria.

These are all the epitome of the Italian Swamp. They work for the old guard political order in Italy who, like most of the political establishment in the U.K., work for Brussels.

They will try to take down the Italian government before the mini-BOT becomes more than a discussion in parliament. Conte already threatened to resign over this issue. You’ll notice he didn’t do so.

And that to me is a huge tell. Conte bluffed Salvini and lost. Because with Di Maio in charge of Five Star and the poll numbers where they are, the Troika could all easily be removed if they take down the government (see my article linked above for the tactical situation).

If Salvini did it, it would hurt him. But, again, Salvini is way too sharp an operator to fall for that trap. So it will have to come from President Mattarella and Prime Minister Conte, if it comes at all.

They have to move quickly to get the Mini-BOT in place. Europe’s finances are unraveling quickly. The ECB is looking at lowering rates again once Mario Draghi exits the stage to leave the mess for his replacement.

Deutsche Bank is looking to spin off a small portion of its bad assets into a Bad Bank while Germany’s economy continues cratering and a hard Brexit is looking more and more likely.

None of these things are euro positive and none of them help the EU in its fight to keep Italy in the fold.

Italy will need the mini-BOT once this huge move into sovereign debt is over. It is rapidly becoming the most over-crowded trade in history with nearly $12 trillion in debt now carrying a negative return.

For now, Draghi and the rest of the would-be oligarchs in Brussels are in denial about what Salvini and Di Maio are planning. They won’t be once the power struggle for Italy’s government takes center stage in September when the budget is proposed, Brussels tries to impose fines and Salvini starts selling mini-BOTs.

You shouldn’t have to wonder how the markets are going to respond to that.

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Salvini Is Positioning Italy for Confrontation https://www.strategic-culture.org/news/2019/04/10/salvini-is-positioning-italy-for-confrontation/ Wed, 10 Apr 2019 15:14:42 +0000 https://new.strategic-culture.org/?post_type=article&p=85057 First, Salvini goes into the European Parliament to disrupt proceedings and further undermine Angela Merkel’s powerbase. Second, he and Di Maio take that success back to Rome and use that to engage real EU reform of the financial system.

Italy’s Matteo Salvini is riding high right now. Having weathered a couple of cheap legal moves to derail his assault on the European Parliament this May, Salvini is working to galvanize Euroskepticism across the continent into a viable political force.

He’s got his work cut out for himself.

But, he has at least two major allies. Marine Le Pen of the National Rally in France and Viktor Orban, the leader of Hungary. Salvini and Le Pen met last week to announce they would be campaigning together for the European elections as well as a major summit in Milan soon.

This is only the beginning, however.

I’ve been saying for over a year now that Salvini needs to be the person who lays the foundation for a wholesale revolt against the European Union and Italy’s participation in the euro.

His Lega party have skyrocketed in the polls, reversing the dynamic between it and coalition partner Five Star Movement. It’s a coalition that is of the kind which frightens the political establishment in Europe because it isn’t formed on the traditional left-right false divide.

It is a populist one united on the common cause of overthrowing the corrupt, corporatist system which most western governments are fronts for.

And since coming to power last year there have been multiple attempts to drive wedges between these supposedly strange bedfellows. All of them have failed. And part of the reason for that has been the surging popularity of Lega and Salvini.

Having survived to this point and scared the EU a few times with Trump-like ‘big asks’ on the budget and immigration reform, Salvini and his partner in populism Luigi Di Maio are looking towards the EP elections as a first major test of their government.

And being able to bring together groups from all over Europe to agree on a common platform to challenge the French/German axis of power would put them in a good position in the second half of 2019 to push things farther, especially as it pertains to Italy’s insane fiscal situation.

I realized early on that Salvini was two things. He was both a radical who was also methodical. He’s not flaming out in a blaze of glory here. He’s building his case against the EU slowly, allowing history to come to him.

He’s stayed far away from the Brexit debacle, even though he knows he has the power to stop the betrayal of the vote and force the divorce. But rather than do that it’s better to let the process play itself out and reveal the ugly truth of it all while he takes notes and reloads for the next attack on the EU.

If Euroskeptics outperform the current polling which has them at around 30-32% of the seats and Salvini can rally them under one banner to become the biggest party in the EP, then that would send the right kind of message back home to Italy.

There is something big brewing between Salvini and Di Maio. First, they sign up with China’s Belt and Road Initiative, whose second major summit is later this month. This angered both Trump and Angela Merkel.

All in a day’s work.

But the bigger news, in my mind, is the Italian parliament is pushing to repatriate the nation’s gold reserves from the Bank of Italy. Two laws are under consideration:

One law would instruct the central bank’s owners, most of them private banks, to sell their shares to the Italian Treasury at prices from the 1930s.

The other law would declare the Italian people to be the owners of the Bank of Italy’s reserve of 2451.8 metric tons of gold, worth around $102 billion at current prices.

The Bank of Italy is mostly owed by Italian commercial banks who are now both insolvent and at risk of EU banking rules. This puts them at risk of seeing depositors bailed-in and the banks forcibly restructured overnight by the European Central Bank.

Don’t believe me? Go back and look at what happened to Banco Popular of Spain in 2017. It was sold off to Santander for $1 after the ECB declared it non-viable. It wiped out the shareholders over a weekend and life went on as if nothing had happened.

But it did happen and that did nothing to reassure investors that there is even a hope in hell of getting your investment back out of a European bank if that’s how the ECB can act. In some ways, why do you think it’s going to be so difficult for Deutsche Bank to raise the necessary capital ($6 to $10 billion) to merge with equally-insolvent Commerzbank?

If you had a choice between Deutsche and J.P. Morgan Chase at this point what would you do? US banking system may be corrupt but it isn’t stupid enough to toss aside the one thing that ensures safe-haven foreign capital flows, that investors come first.

I may not like Chase, but I’m putting my money on it over Deutsche any day of the week and especially not on a Sunday evening while Mario Draghi is on the scene.

If those Italian banks are dealt with similarly by the ECB as Banco Popular we could easily see their ownership transferred to their creditors and, by extension, the ownership of the Bank of Italy right along with it.

Talk about undermining national sovereignty!

And what’s the only thing of value on the Bank of Italy’s balance sheet? The gold.

Salvini and Di Maio’s government urging the Bank of Italy to sell the gold back to the government at 1930’s prices is a way to ensure that Italy’s gold reserves stay unencumbered and available to back any new version of the lira if things get to that point.

Like Brexit negotiations the nuclear option, clean divorce, must be a credible threat, i.e. a No-Deal Brexit and unilateral withdrawal from the euro.

This threat by the Italians has been simmering for a while and every time it comes up the talking points from the regime press are the same. It threatens the independence of the central bank. The gold could be sold to pay for populist spending programs. Blah blah blah.

No, the real threat is with the Italian gold owned by the Italian people the Italian government could start all over again with a new currency.

And that is what this is all about.

So, first, Salvini goes into the European Parliament with a solid voting bloc to disrupt proceedings and further undermine Angela Merkel’s powerbase. Second, he and Di Maio take that success back to Rome and use that to engage real EU reform of the financial system.

And if they don’t get what they want, if Merkel holds fast to her policy of Germany strip-mining of Europe via austerity, then they go on the offensive with 2410 tonnes of gold in their back pocket. This will be an easy sell as the European economy implodes further.

It’s not like Germany is in a position to drive a strong bargain with its economy rapidly plunging towards recession.

Any small shock at this point will cause a massive run on European assets. We’ve just seen a enormous move into safe-haven assets in the past month.

The European bond markets are ripe for a sharp reversal on any catalyst.

To pull all off their ‘revolution’ in the EP, however, Salvini and Le Pen will likely have to play nice with Poland on Russia, not pushing for sanctions relief just yet. To unite Euroskeptics over the next seven weeks will be difficult. But, Salvini has shown flexibility to this point with his own coalition.

What makes you think he’s not capable of bringing Poland on side?

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Brussels Shows Its Fear of Euroskeptics https://www.strategic-culture.org/news/2019/03/10/brussels-shows-its-fear-of-euroskeptics/ Sun, 10 Mar 2019 08:30:00 +0000 https://strategic-culture.lo/news/2019/03/10/brussels-shows-its-fear-of-euroskeptics/ Hungarian Prime Minister Viktor Orban has been under fire from the European Union for years for his opposition to German Chancellor Angela Merkel’s open immigration policy.

A policy which she herself has had to pull back on. And no matter how far Merkel has changed her stance and acceded to the reality of the damage her policy has created, Orban is still guilty of the sin of non-compliance.

Actually, he’s guilty of a whole lot more than that. Because Orban has not only stepped on the third-rail of European politics he’s stomped up and down while taking a massive dump on it.

That third-rail, of course, is naming names. Naming the very person who controls so much of EU policy through his co-opting large swaths of the European parliament.

That person, of course, is George Soros.

Now there is a push, ahead of May’s European Parliamentary elections, to kick Orban’s dominant Fidesz party out of the European People’s Party (EPP), a nominal center-right coalition and the largest single party within the EU parliament.

And with each victory over Soros Orban grows even bolder. After a successful re-election campaign predicated on the slogan, “Don’t Let Soros Win,” Orban has banned Soros’ major NGO, Open Society Foundation, as well as forced out his Central European University.

But his biggest sin was equating outgoing European Commission President Jean-Claude “When things get tough you have to lie” Juncker with Soros’ attempts to weaken Hungary’s border.

His reward for this, and building a border fence which thwarts Soros and Merkel’s tactic of tying immigrants in the host country in legal limbo for years by being inset from Hungary’s actual border, has been an Article 7 procedure opened up against Hungary for not abiding by the EU’s position on human rights.

Poland is in similar hot water with Merkel but thanks to one of the few reasonable things within the EU’s framework, each country can use the other to veto the actual censuring and concomitant removal of voting rights within the Union that comes with the full application of Article 7.

But this article isn’t really about Orban’s latest troubles with the faux democrats within the EU parliament. It’s about how scared those people are of the rise in Euroskeptics like Orban across the continent ahead of May’s elections.

Orban’s potential expulsion from the EPP is just another symptom of this fear. Recently, France’s Marine Le Pen, found out that the trial against her for tweeting out images of ISIS beheadings back in 2015, will go forward with the potential of landing her in jail for three years.

This is not much different than the kidnapping charge Sicilian prosecutors tried to bring against Italy’s Deputy Prime Minister, Leader of Lega and all-around bad boy Matteo Salvini in Italy. This was a lame attempt to split Italy’s Euroskeptic coalition and keep it focused on internal trivialities versus mounting a real challenge in May’s elections.

The same is true now for Le Pen. Her National Rally party is polling within the margin of error of President Emmanuel Macron’s En Marche with a real chance to send a plurality of French Euroskeptic MEPs to Brussels in a couple of months.

Merkel is struggling with the same thing. And even though support for Alternative for Germany (AfD) has waned in recent polling, down to just 13%, don’t underestimate the voters’ desire to send a strong message to Brussels by voting in stronger numbers for the new or alternative parties rather than how they would vote for them at home.

We’ve seen this in the past with UKIP who shocked everyone in the last European elections in 2014 with the size of the vote for them. It never translated into domestic momentum as typical prisoner’s dilemma concerns are more prevalent in Britain’s majoritarian voting system.

But for the EU parliament where the two-party system doesn’t hold sway and the direct benefits are harder to make a case to voters for, it’s much more likely voters will loosen up a little and throw their support for a smaller, less established party.

And that, along with some serious miscalculations about Brexit which I’ll get to in a minute, has the power elite in European political circles very scared. So scared that they are willing to devote serious resources in Quixotic endeavors of dubious value.

Expelling Orban from the EPP will only give him more strength. It will only give Euroskeptics more ammunition. Orban, like Salvini, revels in being the outsider. He’ll use it to rally others across Eastern Europe and pull a few more seats into that orbit.

According to the latest polling, which you can find an up-to-date tally of here, Euroskeptic parties will take between 215 and 225 seats out of the 705 up for grabs, assuming Britain actually leaves and doesn’t stand for MEP elections, which at this point doesn’t look likely.

If reports are true that Prime Minister Theresa May cut a deal with Merkel in July of last year on the withdrawal agreement. And if that agreement was structured so as to ease the way for the U.K. to rejoin the EU later are true, then there is no way Mrs. May will be able to forestall Brexit on WTO terms at this point, even if it takes another 90 days to do so.

A report from the Bruges Group, since taken down, had the details (see link above). And we’ll know if this is the case if suddenly Theresa May agrees to step aside as Prime Minister just after March 29th whether or not Britain leaves.

Because she will have either failed to scuttle Brexit and be sacrificed to save the Tories. Or she steps aside for a true Brexiteer in the event of Parliament voting for an extension.

We’ll know this was the case if she does so.

Lots of ifs, I know, but right now everyone is doing the Juncker-Two-Step, lying and cajoling to maintain the status quo and continue forward towards further European integration.

Mario Draghi at the European Central Bank did his part, going full dove for the rest of 2019 to keep markets from imploding.

And if Brexit is settled on WTO terms that opens up their worst nightmare going forward.

Watch Viktor Orban smile the smile of the just at that point.

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Italy Declares War on Merkel and the EU https://www.strategic-culture.org/news/2018/10/12/italy-declares-war-merkel-and-eu/ Fri, 12 Oct 2018 09:35:00 +0000 https://strategic-culture.lo/news/2018/10/12/italy-declares-war-merkel-and-eu/ If there were ever any doubts that the leaders of the Euroskeptic coalition that now runs Italy has a plan to defy the European Union its proposed budget should quell them. Both Deputy Prime Ministers, Luigi Di Maio of Five Star Movement and Matteo Salvini of The League, were adamant about locking horns with European Union leadership over all issues of sovereignty between now and May’s European Parliamentary elections.

Their budget proposal which included both tax cuts and universal income blew past the EU budget limit of 2.0% of GDP, coming in at 2.4%. It has put their Finance Minister, Giovanni Tria, in a difficult position because Tria doesn’t want to negotiate this budget with Brussels, preferring a less confrontational, read more pro-EU, approach.

Salvini and Di Maio, however, have other plans. And since I began covering this story last year on my blog, I’ve said that it was imperative that Salvini force the issue of the Troika’s demands – the EU, European Central Bank and the International Monetary Fund – back down their throats on debt restructuring/forgiveness.

What I meant then, and I was focused on Salvini’s emergence as the leader of this fight, was that Salvini and Italy, because they are more than technically insolvent, have all the leverage in the negotiations. The size of their outstanding debt and the liabilities existent on the balance sheets of banks across Europe, most notably the nearly $1 trillion in TARGET 2 liabilities, are something Juncker, Draghi, Merkel and Christine LaGarde at the IMF simply cannot ignore.

But, to do this Salvini and now Di Maio have to make a good faith effort to negotiate a good deal for Italy with Brussels, Berlin and the IMF. This is why the budget squeaked past the 2.0% limit and then they walked it back to 2.0% but with provisions they knew would anger the EU finance ministers.

The point of this is to push Brussels and paint them as the bad guys to shift public sentiment back towards an Italeave position. Italy’s problems are not solvable with Germany holding the purse strings for all the EU countries.

So, the first prong of their assault on the power structure of the EU is this, challenge them on their budget while making strong statements to the rest of Europe that they are not looking to exit the euro. If they do, it will be Germany forcing that situation.

The other prong of the assault is to remake the EU from within, which Salvini has openly stated is one of his goals.

It started more than a month ago when he met with Hungarian President Viktor Orban who agreed on a strategy of creating a ‘League of Leagues’ to unite the opposition to the current technocratic rule on the European Commission.

They were clear then that the goal was to wrest control of the European Commission Presidency from the coalition backing current President Jean-Claude Juncker.

With the rise in the polls of Euroskeptic parties across Europe, Salvini and Orban can drive real change in the structure of the parties within the European Parliament. The European People’s Party, which Orban’s Fidesz party is a member of, is vulnerable to losing its senior position in any coalition because of the huge change in Italy’s electoral make-up along with that in Austria with the less radical Sebastian Kurz.

But, the big swing is on the table in Germany. Alternate for Germany (AfD) is now pushing up towards 20% nationally and the next hurdle for its growth is this weekend’s Bavarian state elections. If AfD out polls the Greens and denies the CSU a path to a coalition government without them then that could have spillover effects for Angela Merkel.

The latest polls have AfD averaging around 11% versus a strong push up to 18% by the Greens. The CSU has collapsed to just 35%. How accurate these polls are are anyone’s guess at this point, but given recent history I would not be surprised to see AfD outperform their polling numbers on Sunday.

Figure 1: Source Wahlrecht.de

Figure 1: Source Wahlrecht.de

Because if they do and the CSU/Green total is less than 50%, the CSU may be forced to form a three-headed coalition to freeze out AfD. And this is assuming that the CSU and the Greens could form any workable coalition in the first place.

That would truly upset CSU leaders and the cries to break the Union with Merkel’s CDU would grow louder.

And with Merkel dealing with internal CDU disloyalty the possibility rises quickly that her national coalition could collapse amid external pressure from Salvini and Di Maio over budget and debt issues.

The markets are beginning to wake up to the fact that this political battle is not going to go as smoothly for Germany and the Troika as it did for Greece. Salvini and Di Maio are not Varoufakis and Tsipras and Italy is simply way more important than Greece.

The euro is weakening by the day while Italian bond yields are spiking. Traders do not know what to do as each statement by an official associated with this fight moves Italian debt markets by 20 basis points.

And, I shouldn’t have to say this too many times but 20 basis point moves in sovereign debt markets is the definition of ‘not normal.’

Populist forces within the EU are angry and their power is growing. The technocrats in Brussels still seem to think that the old rules apply but they do not. Scare tactics will not work on these men because they know that the ultimate move is to simply make preparations for a new currency, be it the mini-BOT that has been floated previously by Salvini or a new lira.

My read on the current state of affairs is as follows. Since the ECB is the only marginal buyer of Italian debt, which has been the case for more than a year now, any sharp rise in bond yields is a result of the ECB simply backing off that buying and market forces taking over.

This is the ECB’s biggest weapon. It will try to scare everyone by allowing Italy’s fiscal position to erode quickly making it impossible for them to issue debt at sustainable yields. But, it does so at the expense of the value of the bonds it and other European banks already hold. Because they are dropping in value, undercutting the solvency of those banks.

If the Italian leadership holds the line and refuse to back down, then they call the ECB’s bluff on allowing rates to rise. The ECB has to come back in, begin buying to support the price, and the regroup for the next battle.

That’s what we’ve been seeing for a few months now in the Italian bond market. That’s where this war is being waged as well as the headlines. And Salvini and Di Maio understand it. Because if they didn’t they would have already folded.

Instead they have doubled down on their opposition to Brussels and Berlin and added new vectors to their attacks.

This will not end well.

Photo: @NewsBreakouts

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Privatization, the EU and a Bridge https://www.strategic-culture.org/news/2018/09/29/privatization-eu-and-bridge/ Sat, 29 Sep 2018 10:25:00 +0000 https://strategic-culture.lo/news/2018/09/29/privatization-eu-and-bridge/ Andrew SPANNAUS

A little over a month ago, on August 14, a highway bridge collapsed in the middle of the Italian city of Genoa, killing 43 people, damaging the populated areas below, and interrupting a major traffic artery connecting the two sides of the city. The bridge had been built in the 1960s, with a construction technique that had been criticized by some experts over the years, and its decay was obvious; it had already undergone various repairs, and a new round of extraordinary maintenance was planned for this fall.

The maintenance didn’t come in time. As heavy rain fell in the area, cars and trucks dropped from a height of 150 feet, causing death and injury, and marking a national tragedy that has gripped the country.

Why did this happen? Italy’s highway company was privatized in 1999, and concessions were then granted to operate the roads. The largest concession-holder (with about 50% of the network) is currently Autostrade per l’Italia S.p.A., controlled by the Benetton family, founders of the eponymous fashion brand. They make a handsome profit off of highway tolls – among the highest in Europe – and they are responsible for maintenance and investments, which have stagnated even as tolls have more than doubled in the past 25 years.

Autostrade’s defense in regard to the disaster is that while concerns had been raised about the bridge, there was no indication of imminent danger. It’s a weak argument, considering that in Genoa the bridge had been the subject of public debate for years, with some seeing it as “a disaster waiting to happen.” After initial resistance, Autostrade ultimately responded to public pressure by allocating 500 million Euros (575 million dollars) to compensate the families of the victims and rebuild the bridge.

Collapsed Bridge: Privately owned. (Wikimedia Commons)

The first response from Italy’s populist government led by the Five-Star Movement (M5S) and the League, was to channel rage against the private company, using popular arguments against the neoliberal policies of privatization and budget-cutting. They are right, of course, that the disaster came on the watch of a private company, which is claimed to be more efficient than the public sector. Italy’s highway system works fairly well, but there’s no ignoring the need for upgrades to the parts of the infrastructure that were built during the economic boom of the 1950s and 60s, which have reached the end of their useful life.

Yet tolls are already high, and the private concessionaire wants to guarantee its profits; who’s going to pay for all the work that needs to be done?

The two Deputy Prime Ministers of the Italian Government, Luigi Di Maio of M5S and Matteo Salvini of the League, have led the charge against Autostrade. Di Maio has threatened to revoke the concession and re-nationalize the highways, although the institutional pushback has been strong. Salvini, on the other hand, immediately pointed the finger at European Union (EU) budget constraints: “Investments that save lives… must not be calculated by the strict, cold rules imposed by Europe”, he said on Aug. 15.

EU Hinders Infrastructure Funding

The disaster in Genoa was not a direct consequence of cuts to the public budget, since the section of the highway is run by a private company, as centrist politicians and much of the major media jumped to point out. But Salvini’s broadside pinpointed an essential issue for Italy – and many other European countries – today: massive public investment is needed, but EU budget constraints prevent it.

Salvini: Leading the charge against Autostrade. (Wikimedia Commons)

The Italian government is responsible for the public welfare, but it is unable to guarantee that public welfare. There are many reasons for this, starting with the country’s massive public debt – 131 percent  of GDP, among the highest in the world – and the inefficiency of public spending. The construction tender process is slow and complicated, and tangled bureaucracy means that even money allocated is often left unspent for years.

These are long-term problems that require legislative reforms and the reorganization of priorities. The current government has promised to streamline the tender system, and also to direct available funds to the most urgent projects.

Yet the key factor that has slowed down basic infrastructure investment in Italy in recent years has been the EU budget rules, which after originally setting a maximum deficit of 3 of GDP, now make it mandatory to fully balance the budget, although countries are allowed to move gradually towards that goal.

The Italian government is constantly under pressure to cut public spending in order to get closer to a zero deficit every year. This, despite the fact that Italy has run a primary budget surplus (i.e. before interest on the public debt) practically every year since 1992. Public investment has fallen continually over the years; by more than one-third at the national level, down to 2% of GDP, and by as much as one-half over the past ten years when it comes to local governments.

This happened in particular because in order to meet the EU budget criteria, Italy adopted something called the “Internal Stability Pact,” to go along with the European “Stability and Growth Pact.” The internal version used the budgets of municipalities, provinces and regions to help reach national budget goals. In essence, the local authorities were required to cut spending even if they had money in the bank, so that the government in Rome could count those funds to meet the EU rules.

The harsh austerity implemented from 2011 to 2014 made things even worse. After the spread between Italian and German bonds on the financial markets spiked in the summer of 2011, leading to fears of financial catastrophe for Italy and the Euro system as a whole, technocratic governments rapidly moved to slash spending even more.

This policy, dictated by the European Central Bank and the European Commission and enthusiastically implemented by neoliberals in Italy, led to a true disaster. The result was a 25% drop in industrial production, and a sharp rise in unemployment and poverty. And not surprisingly – at least to rational people – the economic contraction ended up making the public debt even larger.

Who Should Decide?

When after the bridge disaster in Genoa the government promised to rebuild the country’s road infrastructure no matter what the cost, the reaction was swift. On the one hand, EU officials such as budget commissioner Guenther Oettinger denied Europe is responsible for lack of investment in Italy, and on the other, financial markets rapidly increased the risk premium on Italy’s state bonds.

The question is: why should financial markets or technocrats decide whether Italy’s roads are safe? The populist government was elected on the promise of challenging EU austerity policies, and the coalition agreement between M5S and the League sets two main priorities in this field: increasing public aid to the poor, through a form of universal income, and simplifying and lowering the country’s high tax rates, to help both businesses and individuals.

The main fight in the government right now is if they will actually carry through on these promises, despite the pressure to toe the line on the budget criteria. Economics Minister Giovanni Tria seems cowed by the pressure from the bond markets, and clearly fears antagonizing the EU. Di Maio and Salvini insist on keeping their promises, touting the heretical, but true, argument that productive investment actually produces growth. Something has to give. The hope is that it won’t be another bridge.

consortiumnews.com

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Italy Wins First Showdown over Migrants https://www.strategic-culture.org/news/2018/06/17/italy-wins-first-showdown-over-migrants/ Sun, 17 Jun 2018 08:55:00 +0000 https://strategic-culture.lo/news/2018/06/17/italy-wins-first-showdown-over-migrants/ Only days after coming to power, Italy’s new populist government has won in an early showdown with the European Union establishment over the contentious issue of migration.

This week, Italy refused to let a search-and-rescue ship dock in Sicily with over 600 refugees onboard. The stranded people mainly from Africa had been picked up in the coastal waters off Libya and were being transported to Italy.

Italy’s interior minister Matteo Salvini pointedly refused to let the ship disembark. He said: “Saving lives at sea is a duty, but transforming Italy into an enormous refugee camp is not… Italy is done bowing its head and obeying. This time there’s someone saying no.”

After a 24-hour period of uncertainty over the destiny of the wretched passengers – including pregnant women and children – the vessel was in the end agreed to be received by Spain at its port of Valencia. One may surmise that the European Union establishment in Brussels intervened hurriedly to avert a public relations disaster from a ship crowded with refugees being stranded on the high seas.

In that way, Salvini, the leader of the League party – which is a coalition partner in the new Italian government – was fulfilling one of its main election promises: ending the flow of migrants into Italy.

Since 2104, Italy has received some 600,000 refugees who have come to its shores from the Middle East and North Africa after making perilous journeys across the Mediterranean. Thousands have died from drowning while trying to make the crossing in overcrowded and leaky boats.

When Salvini refused the docking of the vessel this week in Sicily, media reports initially portrayed the response as heartless and a transgression of international maritime law. His party is routinely described as being “far-right” and “anti-immigrant”. It seems those sinister epithets are used in the media as a way to undermine Salvini and the new government in Rome from holding their objections to the influx of refugees.

But let’s look at the issue from a broader point of view as the Italian government seeks to do.

Salvini and his coalition partner Luigi Di Maio, of the Five Star Movement (M5S), contend that Italy is bearing the burden of receiving unprecedented numbers of migrants, numbers that are way beyond what other EU countries are accepting.

Geographically, Italy sits as a frontline state on the route for refugees from the Middle East and Africa. Under EU rules, the country which is the first point of arrival is obliged to accommodate the refugees. The Italian government argues that those rules are null and void given the unprecedented numbers, and given that the 28 EU member states should allocate a fairer distribution of refugees.

Also, and this point is badly overlooked in media coverage, the vast majority of migrants are the result of wars and conflicts that have been sponsored by NATO powers, either directly or covertly, as well as by illegal human trafficking networks which have metastasized out those wars.

The context is therefore not one of a simple humanitarian dislocation being met by a heartless “xenophobic” government. It is more a question of why one, or a few, European countries should be saddled with attending to such disproportionate human needs while other EU member states close their doors. Especially when those member states like Britain and France have taken such a prominent role in engaging in illegal US-led NATO wars that have led directly to the surge in refugees to Europe.

In other words, it seems grossly unfair, not to say futile, that some countries like Italy are being obliged to cope with a refugee crisis on a national basis when that crisis has been engendered on an international basis through NATO wars in Central Asia, the Middle East and Africa.

There is also a big unasked question about illegal human trafficking. We are dealing here with systematic collusion between human traffickers, governments and so-called humanitarian NGOs which are aiding and abetting the flow of migrants to European frontline states like Italy.

This author personally learned of the plight of Ethiopian refugees who were being held in a Libyan state military camp in Sabha. The refugees ended up there after being passed on by trafficking gangs. The detainees were eventually released after families back in Ethiopia paid out ransoms – a few thousand dollars which is huge money for these people. The released migrants then end up being taken to Italy under the auspices of the UN.

In the latest episode this week, the Aquarius search-and-rescue ship with over 600 refugees onboard is co-owned reportedly by a Franco-German civic group called SOS Méditerranée and Doctors Without Borders (Medecins Sans Frontieres, or MSF). The latter is funded by the shady multibillionaire financier George Soros who seems to have an agenda of promoting large migration flows into Europe. Several other so-called rescue NGOs operating in the Mediterranean are funded by Soros’ Open Society Foundations.

Surely a question is: by what authority are self-appointed private groups picking up refugees off the coast of Libya and then transporting these wretched people to Italy?

Surely an international response must be organized to stabilize countries racked by war and other deprivations by mobilizing massive debt-free financial investment; just as importantly, where NATO powers have been involved in waging wars and conflict as in Libya, Mali, Ivory Coast, Central African Republic, and covertly in Syria, those perpetrators must be prosecuted and compelled to pay reparations.

Italy’s new government has right. Why should one country be forced to become a dumping ground for refugees from illegal wars and illegal human trafficking? In particular, when there is a collective responsibility of culprit states, like the US, Britain and France, which skulk off into the shadows.

The showdown this week between Italy and the EU establishment was an important victory. Not a victory about spurning humanitarian need, but rather about overhauling the narrative of the refugee crisis to a more accurate perspective of what it is really about, who is really to blame and who should be really held to account?

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New Italian Government to Trigger Crisis in EU https://www.strategic-culture.org/news/2018/04/07/new-italian-government-trigger-crisis-in-eu/ Sat, 07 Apr 2018 09:45:00 +0000 https://strategic-culture.lo/news/2018/04/07/new-italian-government-trigger-crisis-in-eu/ The formal consultations on forming a new coalition government in Italy kicked off on April 4. The center-right coalition led by the anti-migrant League won 37% of the vote to control the most parliamentary seats while the populist 5-Star Movement won almost 33% to become the single party with the highest number of votes. Neither of them can govern alone. It does not make great difference who President Sergio Mattarella will entrust with the task to form a coalition government: the leader of the center-right League, Matteo Salvini, or Five Star's Luigi De Mayo. The outcome will be the same – the EU will face a crisis over its Russia policy. By and large, the two are at one on the issue – they want the Russia sanctions lifted.

The Five Star is not simply Eurosceptic; it’s openly anti-EU. The movement has always been known as “part of a growing club of Kremlin sympathizers in the West”. It shares a pro-Moscow outlook with the League. “STOP absurd Russia sanctions” tweeted Matteo Salvini to make his position known. It coincides with the opinion of Ernesto Ferlenghi, the President of Confindustria Russia, a non-profit association, who asks for government’s support of Italian businesses operating in Russia. Both agree that the sanctions hurt Italian economy. Salvini lambasted his country's decision to expel Russian diplomats over the so-called spy poisoning case. In March, he signed a cooperation agreement with United Russia party.

It’s almost certain that Italy, the 3rd-largest national economy in the eurozone, the 8th-largest by nominal GDP in the world, and the 12th-largest by GDP (PPP), will question the wisdom of sanctions war. No doubt, it will be backed by a number of countries, including Greece, Austria, Cyprus, Hungary etc. If not for pressure exercised by the EU and German leadership, the sanctions would have been eased, or even lifted, long ago, especially as Great Britain is on the way out of the bloc. The Skripal scandal can delay the discussions but not for a long time. It will die away. If there were a solid proof to bolster the accusations against Moscow, it would have been presented to public without procrastination to fuel the anti-Russia sentiments. It has not been done. The scandal is doomed to fade away gradually.

The expedience of diplomats’ expulsions has been questioned in almost all EU member states, including Germany. Its newly appointed Foreign Minister Heiko Maas insists that Europe needs Russia as an ally to solve regional conflicts. According to him, “We are open to dialogue and are counting on building confidence again bit by bit, if Russia is ready to do so.”

Austria and Greece have refused to join so far but if such a big country as Italy joins them, the EU will be in a tight spot. The sanctions are to be prolonged in early fall but Rome will block their automatic extension. Italy is too big and important to be easily made kneel. This is an EU founding nation. The bloc is facing serious cracks and adding more bones of contention will put into question its very existence. Under the circumstances, gradual easing of sanctions to ultimately lift them is the best solution for the EU. That will put the US and Europe on a collision course, especially at a time the divisions over the Nord Stream-2 gas project go on deepening.

US Ambassador to the UN, Nikki Haley, has recently stated that Russia is no friend of the US. Moscow is well aware that Washington is not its friend either. It’s not about friendship but rather the need for a dialogue on equal terms to address burning issues of mutual interests.

As one can see, the US hostility toward Russia does not strengthen its standing in the world. Quite to the contrary, it makes the gap wider to alienate European allies. The relationship is complicated enough as it is. The pressure exercised by the US and the UK, its staunch European ally, to involve the EU into the anti-Russia campaign provokes stiff resistance. Its strong alliances, not disagreements with close partners that make great powers stronger.

The CAATSA law that allows punitive measures against European allies, the divisions over Iran deal to be probably decertified by the US in May, the European resistance to the US tariff policy and a lot of other things undermine the West’s alliance the US considers itself the leader of. Adding Russia to the list of European grievances hardly makes the US position in the world stronger. By ratcheting up anti-Moscow sentiments it hurts itself to make the “America First” policy much less effective than it could be, if outright hostility gave place to business-like dialogue.

Looks like those who wish Russia ill have lost an important ally. The more effort is applied to hurt Moscow, the more damage is done to West’s unity.

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