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The five biggest challenges facing the new Italian government

Giorgia Meloni has named her new government ministers. Here's a look at the most pressing issues the new administration will face and how it could deal with them.

The five biggest challenges facing the new Italian government
Giorgia Meloni and her new government will be sworn in this weekend, with a long list of pressing issues awaiting them once in office. Photo by ANGELO CARCONI / ANSA / AFP

Far-right leader Giorgia Meloni has been named Italian prime minister at a particularly difficult time, as soaring inflation and global uncertainty weigh on an already debt-laden economy.

Here are the major challenges facing the leader of the post-fascist Brothers of Italy party and her allies as they prepare to take power – and what plans the parties have to deal with them.

Energy crisis

Italy has been particularly hard hit by the energy crisis due to its dependence on gas imports.

Before the war in Ukraine, Italy imported 95 percent of the gas it consumes –  about 40 percent of which came from Russia.

This has since dropped to about 10 percent after Draghi took steps to boost gas from other producers, while also accelerating a shift towards renewable energy.

Outgoing energy minister Roberto Cingolani said earlier this month Italy’s stocks were full and “we should have a quiet winter season”.

An extended discount on petrol and diesel at the pump is among measures promised by parties expected to form Italy’s new government. Photo by MIGUEL MEDINA / AFP

But he warned the next government’s approval of a regassification plant at Piombino in Tuscany, currently facing local opposition, is vital to maintaining supply.

Over the summer, Draghi’s cabinet signed off on a series of aid packages aimed at buffering the shock.

But with energy price rises showing no signs of abating, no doubt further measures to help struggling households and businesses will be needed over the winter.

So far, the right-wing coalition hasn’t gone into much detail about how they plan to tackle the energy crisis, with parties recently squabbling over whether or not the country’s public debt should be increased to allow for a new round of financial support.

In their joint manifesto, the parties said they will support a European on gas prices and that they aim to make the country “self-sufficient” in terms of energy production – though their proposed strategy of resorting to “clean and safe” nuclear energy is as vague as it is likely to be unpopular in Italy, where the public has twice refused to accept nuclear power.

Inflation and cost of living

Inflation was up 8.9 percent on the year in September, fuelled by rising prices of food (up 11.4 percent) and energy (up 44.5 percent), causing pain for households and businesses alike.

Many countries face similar issues, and the pressures are set to send Italy into technical recession next year, alongside Germany, according to the International Monetary Fund

Outgoing Prime Minister Mario Draghi’s government has already pledged 66 billion euros ($65 billion) to help families and businesses with energy prices, using larger-than-expected tax receipts.

Business association Confindustria has called for 40 to 50 billion euros more to stop thousands of companies failing, but if economic growth slows, so will the budgetary room for manoeuvre.

In their campaign manifesto, the right-wing coalition said they plan on safeguarding families’ purchasing power by lowering VAT on all essential goods and by easing the tax burden (cuneo fiscale) on families, businesses and self-employed individuals, including with the introduction of a ‘flat tax’.

But despite the fact that such a system would actually clash with article 53 of the Italian Constitution, a flat tax set at 15 percent – that’s the rate proposed by the League’s leader, Matteo Salvini – would cost state coffers around 50 billion euros. 

The coalition hasn’t yet given any details as to where such funds would be found.

A photo taken on August 15, 2022 in Turin shows a campaign poster of the League party leader Matteo Salvini for the upcoming September general elections.

Italy’s league party has campaigned for election on promises of introducing a ‘flat tax’ at 15 percent. Photo by MARCO BERTORELLO / AFP

Employment and pensions

Shortly after taking up office, the new government will be called on to make a decision over the introduction of a national living wage – a policy which left-wing parties have been vocal about for months but that the bloc has opposed so far.

The next cabinet will also have to address the thorny issue of citizens’ income, Italy’s welfare payment for those who are unemployed or in poverty, which has been the object of countless political skirmishes since its introduction in 2019.

EXPLAINED: What will a far-right government mean for Italy?

The coalition has pledged to abolish the citizens’ income and replace it with “more effective social inclusion and job placement measures”, though no details have been given.

Finally, but perhaps most importantly to many in Italy, Meloni and her ministers will face reforming the pension system. 

As of January 1st, 2023, Quota 102 – a stopgap pension law valid for 2022 only – will expire and the dreaded Legge Fornero (Fornero Law) will return. This means retirement will only be possible at 67 years of age or after 43 years of work for men and 42 for women.

Given the relatively short time at its disposal, the new cabinet is expected to draft another ‘temporary’ pension law covering the whole of 2023, thus postponing the pension system reform to 2024.

Recovery fund

After reaching all of the targets set for the first half of 2022, Italy is ready to move on to the next phase of its National Recovery and Resilience Plan (Piano Nazionale di Ripresa e Resilienza, or PNRR), a series of major reforms tied to a EU-wide post-pandemic aid package. 

But since the collapse of Draghi’s cabinet in the middle of summer, little to no progress has been made on the 55 outstanding PNRR objectives for 2022, with the third round of funds – worth a total of 19 billion euros – currently hanging in the balance.

If the new government were to fail to meet the remaining targets by December 31st, Italy, which has received nearly 46 billion euros from the EU so far, would not receive the next round of funding.

READ ALSO: Italy’s building superbonus: How will it change after the election?

In the lead-up to the elections, the right-wing bloc said that they were planning on making “full use” of the 191.5 billion euros Italy has been allocated by the EU. But their manifesto also stated that, in view of “changed conditions and priorities”, the party leaders want to “revise” Italy’s PNRR agreement with Brussels.

No further details were given, and it isn’t yet clear what such a revision would entail.

War in Ukraine

As the war between Ukraine and Russia continues, Italy will have to convene with fellow EU states and NATO members to agree on a common approach to the conflict. 

But the new cabinet’s stance on Russia’s invasion of Ukraine might not be in line with that of its predecessor.

Matteo Salvini, Silvio Berlusconi and Giorgia Meloni at an election rally.

Meloni’s right-wing coalition includes Matteo Salvini’s anti-immigrant League and Forza Italia, led by former premier Silvio Berlusconi. Photo by Andreas SOLARO / AFP

Two of the three key members of Italy’s next government, Matteo Salvini and Silvio Berlusconi, have long been close to Russia. The former, a long-time friend of Putin’s, caused outrage last week by defending Russia’s military aggression, whereas the latter has been critical of EU sanctions against the Kremlin. 

New Italian PM, Meloni has backed European sanctions and the sending of weapons to Kyiv, though her previous support of Russia’s annexation of Crimea in 2014 raises justified doubts regarding the genuineness of her position.

The bloc’s programme emphasises party leaders’ commitment to respecting the “agreements made within the Atlantic Alliance” and supporting Ukraine. 

However, the same manifesto also states that the coalition’s foreign policy will be centred around the “protection of national interests and the defence of the motherland”.

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MIGRANT CRISIS

EU ministers hold crisis talks after migrant ship row between Italy and France

European interior ministers met in Brussels on Friday to discuss the latest migrant crisis – a move that was precipitated by Italy's controversial clash with France over the handling of refugees.

EU ministers hold crisis talks after migrant ship row between Italy and France

European interior ministers gathered for crisis talks on Friday as an ugly row between Paris and Rome over how to handle would-be refugees forced a EU migration reform back onto their agenda.

New arrival numbers haven’t yet hit the levels of 2015 and 2016, but European capitals are concerned about new pressure on sea routes from North Africa and overland through the western Balkans.

And now, with winter temperatures descending in eastern Europe and Ukrainian cities facing power cuts under Russian bombardment, the European Union is braced for many more war refugees.

The bloc has been struggling for years to agree and implement a new policy for sharing responsibility for migrants and asylum seekers, but a new dispute has brought the issue to the fore.

READ ALSO: Why are France and Italy rowing over migrants and what are the consequences?

Earlier this month, Italy’s new government under far-right leader Georgia Meloni refused to allow a Norwegian-flagged NGO ship to dock with 234 migrants rescued from the Mediterranean.

The Ocean Viking eventually continued on to France, where authorities reacted with fury to Rome’s stance, suspending an earlier deal to take in 3,500 asylum seekers stranded in Italy.

The row undermined the EU’s stop-gap interim solution to the problem, and Paris called Friday’s extraordinary meeting of interior ministers from the 27 member states.

Migrants in Lampedusa, Italy

Earlier this month, France suspended a deal by which it would take as many as 3,500 refugees stranded in Italy. Photo by Filippo MONTEFORTE / AFP

Complaints from Mediterranean countries closer to North African shores like Italy and Greece that they were shouldering too much responsibility for migrants led to the previous plan.

A dozen EU members agreed to take on 8,000 asylum seekers – with France and Germany taking 3,500 each – but so far just 117 relocations have taken place.

‘Nothing new’

After Italy refused responsibility for the Ocean Viking, France has declared that it no longer wants to not only allow ships to arrive from Italian waters but also take in thousands of other migrants.

On Monday, in a bid to revive the mechanism, the European Commission unveiled another action plan to better regulate arrivals on the central Mediterranean route.

“Obviously the meeting was set up following the spat between Italy and France over the migrants aboard the Ocean Viking,” a European diplomat said.

“The action plan that was shared with member states is perfectly fine, but contains nothing new, so it isn’t going to solve the migration issue.”

Stephanie Pope, an expert on migration for the aid agency Oxfam, dubbed Brussels’ plan “just another reshuffle of old ideas that do not work”. 

“It is a waste of time,” she said.

The plan would see a closer coordination between EU national authorities and humanitarian NGOs on rescues of migrants whose make-shift, overcrowded boats are in difficulty.

And it would see Brussels work more closely with Tunisia, Libya and Egypt to try to stop undocumented migrants boarding smuggler vessels in the first place.

READ ALSO: Italy arrests suspected trafficker over deaths of seven migrants

France would like a new framework within which NGO boats could operate – neither a total ban nor a carte blanche to import would-be refugees.

Italy, Greece, Malta and Cyprus often accuse the humanitarian charities of operating without respect to national authorities and of effectively encouraging immigration.

Migrants on a boat arriving in Italy

Italy, Greece, Malta and Cyprus often accuse NGOs of operating with disregard to national authorities. Photo by Gianluca CHININEA / AFP

Other member states, including Germany, argue that there can be no limits on humanitarian operations – all seafarers are obliged by the law of the sea to save travellers in danger. 

Ahead of the talks, the UN High Commissioner for Refugees, Filippo Grandi, warned: “With almost 2,000 people having already died or gone missing so far this year alone, urgent action is needed.”

Grandi welcomed the European Commission’s draft plan for state-led rescues and predictable ports of disembarkation, adding: “While states point fingers and trade blame, lives are lost.”

Border force

While France and Italy argue about high-profile cases of dramatic rescues in the central Mediterranean, other EU capitals are more concerned about land routes through the Balkans.

Almost 130,000 undocumented migrants are estimated to have come to the bloc since the start of the year, an increase of 160 percent, according to the EU border force Frontex.

On Thursday, the Czech, Austrian, Slovak and Hungarian ministers met in Prague ahead of the trip to Brussels to stress that this route accounts for more than half of “illegal arrivals” in the bloc.

Austrian interior minister Gerhard Karner said the EU should finance border protection and give members “a legal tool to return people who come for economic reasons”.

Diplomats said France and Italy would try to dominate the talks with complaints about sea arrivals, while Greece and Cyprus would point fingers at Turkey for allegedly facilitating illegal entries.

Central and eastern countries would focus on the Balkans route and, as one diplomat said, “Hungary and Poland don’t want anything to do with anything in the field of migration.”

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