Luigi Di Maio, leader of the Five Star Movement, speaks at a news conference following a meeting with Italy’s President Sergio Mattarella at the Quirinale Palace in Rome, Italy (Photographer: Alessia Pierdomenico/Bloomberg)  

Now We Find Out How Bad EU Populism Really Is

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Almost exactly a year after Europe breathed a sigh of relief at Emmanuel Macron’s victory over Marine Le Pen in France, the worst-case scenario flagged by so many investors is happening. Populists are taking power in the heart of Europe.

Following 10 days of intense negotiations, Italy’s two populist groups today sealed a coalition agreement for the euro area’s third largest economy, unveiling a radical policy program that flies in the face of EU orthodoxy.

There’s a 100 billion-euro plus package of tax cuts and benefits spending and demands to end the sanctions against Russia and review EU deficit rules. There’s even a first step toward setting up a parallel currency inside the euro area.

The coming together of the anti-establishment Five Star Movement and the anti-immigrant League in an anti-European alliance marks a decisive rejection of the policies seen during decades of stagnation in Italy. But now comes the moment of truth.

The two parties have risen to prominence on the basis of what they reject. Now they have to show voters what they have to offer.

Global Headlines

Europe's shifting political mood | It’s hard to imagine Angela Merkel and Vladimir Putin ever becoming friends: She grew up in in a Lutheran household in communist East Germany, he’s a former KGB agent who spied on her fellow citizens, and she drove European sanctions on Russia after its annexation of Crimea. But the chill might thaw just a little when they meet in the Black Sea resort of Sochi today, Patrick Donahue and Ilya Arkhipov report. And they have U.S. President Donald Trump to thank.

Buying access | China’s second-largest state-owned bank offered wealthy clients the chance to attend a May 31 dinner with Trump in Dallas for $150,000 a ticket, spurring the president’s re-election campaign to raise a federal complaint. It’s illegal for U.S. political campaigns to accept donations from foreign nationals or corporations. Trump officials said they had no knowledge of the offer before Bloomberg News asked about it.

Fragile victory | Prime Minister Narendra Modi’s hold on the southern Indian state of Karnataka looks increasingly tenuous, with the top court asking his Bharatiya Janata Party to prove it can muster enough lawmakers to govern following Tuesday’s indecisive election outcome. A win in the state would give the Hindu nationalist party momentum for 2019 federal polls and shatter the Congress party’s hopes of a revival.

China’s trump card | North Korea may turn out to be Chinese President Xi Jinping’s greatest ally in negotiating a trade deal with the U.S. As Trump heads toward a high-stakes June 12 summit with Kim Jong Un, China’s ties to Pyongyang are giving it leverage in the parallel talks on trade. Click here for the latest on Trump distancing himself from National Security Adviser John Bolton.

What to Watch

  • The Trump administration will propose new rules to bar Planned Parenthood and other health-care providers from performing abortions at facilities that receive federal family planning funds.
  • The latest round of U.S.-China trade talks could wrap today in Washington as China cast doubt on reports it had offered to reduce its annual trade surplus with the U.S. by $200 billion.

And finally …  In a surprise move, Prince Charles will walk Meghan Markle down the aisle to marry his son Harry. The royal wedding had been clouded by unpleasant tabloid fodder about the bride's father staging photos and then being hospitalized. But in one gallant move, the heir to the British throne saves the day. The monarchy has had its share of ups and downs. At times seen as out of touch. But not tomorrow at least.

©2018 Bloomberg L.P.

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