Italy Gets a Slapdown at Davos From EU Partners

(Bloomberg) -- Italy has been picking public fights with France and Germany. In Davos, its government got a dressing down from European colleagues.

Many did not take kindly to Prime Minister Giuseppe Conte’s attack on Brussels and its institutions from the podium at the World Economic Forum, especially after his deputies took turns at making barbed comments about Italy’s closest trading partners.

EU’s Commissioner for Economic Affairs Pierre Moscovici had this to say to Italy’s ruling coalition: “Changing Europe is one thing, destroying Europe is another thing. And that’s the difference between reform and populism, between pro Europeanism and nationalism.”

Italy seems to be on a campaign footing, which helps explain the ratcheting up of anti-EU rhetoric that is straight out of the populist playbook. Its ruling coalition has an anti-establishment and an anti-immigration party that are increasingly at odds, jostling for the upper hand and possibly seeking to engineer early elections, as the country flirts with recession.

Its finances also are not in great shape and the government will struggle to deliver on ambitious spending promises based on unrealistic economic predictions of growth.

‘Fairly Angry’

Dutch Prime Minister Mark Rutte could barely suppress his annoyance at Italy being let off the hook with its budget violations. “People start to ask me questions -- if Italy, and in the past France, can get away with not implementing what they have collectively agreed,” Rutte told a panel. “Why should we?”

In a subsequent television interview he told Bloomberg News he’s “fairly angry” about the situation as it shows a “lack of trust” between the north and the south in the bloc.

The EU’s executive arm decided against launching a disciplinary procedure against Italy in December after the country’s populist government pledged to rein in some of its spending plans. While the Italians put off some of their more ambitious projects, the commission turned a blind eye to their failure to lower the structural deficit this year.

Chancellor Angela Merkel’s successor as leader of the Christian Democratic Union party was asked n a Bloomberg Television interview if she thought Italy could “break” the bloc. Annegret Kramp-Karrenbauer used a German expression to say Italy was going to be “a hard nut to crack.”

Italy, she said, is “certainly a double challenge, given the fact that in the government we have populist forces from the right and from the other political side.”

©2019 Bloomberg L.P.