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Across Europe, many pro-EU politicians and bankers suspect that the 19-nation eurozone is an incomplete currency union whose fragility would be mercilessly exposed in another financial crisis. These strategists regard Italy’s political and constitutional deadlock with dread. The risk-sharing reforms believed necessary to protect the eurozone against future turbulence — changes of the kind proposed by Emmanuel Macron, France’s president — will be off the agenda, as long as the spectre of radical economic experiment stalks Italy.
Germany and other eurozone governments will shrink from pooling more resources and decision-making power in a union whose third-largest member, Italy, is falling under the influence of political forces opposed to the union’s fiscal and economic orthodoxies. Arguably, the Germans and their allies were never that keen in the first place on sharing more risk. But the Italian turmoil gives them an ironclad case for conceding as little ground as possible. In the debate over eurozone reform, Mr Macron cuts an isolated figure.
Should Italy return quickly to the polls, no one would be happier than the anti-establishment Five Star Movement and the far-right, anti-immigrant League. They sense that they are on a roll. They emerged victorious in Italy’s March 4 legislative elections, and they are still riding high in opinion polls. [...]
For the moment, however, the insurgent parties have been denied their opportunity to govern Italy. On Sunday Sergio Mattarella, Italy’s president, vetoed Paolo Savona, the parties’ 81-year-old nominee as finance minister. Yesterday, the head of state named Carlo Cottarelli, a non-partisan former International Monetary Fund director, as interim prime minister. Like some besieged medieval Italian city-state, the establishment is feverishly shoring-up its defences against the hostile forces massed at its walls.
Mr Mattarella argues that the presidency’s powers, though limited under Italy’s constitution, include an obligation to protect the nation’s place in the eurozone. He justifies his veto of Mr Savona on the grounds that the octogenarian economist might have taken unconventional steps jeopardising that membership. Whether or not Mr Mattarella stands on firm legal ground, it remains a fact that no previous head of state in the country’s post-1945 democracy wielded his powers in this way to block the formation of a government.
This makes Mr Mattarella vulnerable to the charge that he is obstructing the will of parties that won a free and fair election in March. It raises the prospect that Five Star and the League will seek to turn a snap election into an existential choice for Italy. [...]
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