June 21, 2018 / 3:26 PM / a year ago

Breakingviews - Cox: Italy’s new Caesars have outdone Donald Trump

NEW YORK (Reuters Breakingviews) - Donald Trump has many fans among the world’s great democracies. He has admirers in the parliaments of France, the Netherlands, Germany and Japan. But no government of a developed country has mimicked the U.S. president’s iconoclastic communications style, broken conventions and put forward radical economic, trade and immigration policies like the new Caesars ruling Italy.

The Italian flag waves in front of The "Altare della Patria" also known as "Vittoriano" downtown Rome, Italy, March 23, 2016. REUTERS/ Stefano Rellandini

In less than a month the odd-couple coalition backing Prime Minister Giuseppe Conte has outdone even Trump. Leaders of the right-wing League and quixotic 5-Star Movement have insulted neighbours and cast away migrants. The derisory English term “fake news” rolls off their tongues more fluently than “buongiorno”. Like Trump, the Italian government has even managed to pick a fight with Canada.

But making Rome great again, as it were, is proving difficult. In the weeks since the new government was approved by President Sergio Mattarella, Italians have become poorer. The FTSE MIB index of Italy’s top stocks has lost more than 10 percent of its value since early May. The Italian state, companies and consumers must now pay more to borrow money. The gap between 10-year German and Italian government bonds is about 100 basis points wider than it was before Conte took charge.

Nonetheless, Deputy Prime Minister Matteo Salvini, the League leader also serving as interior minister; and Deputy Prime Minister Luigi Di Maio, the 5-Star chief who runs Italy’s labour and economic development ministries, aren’t softening their Trumpist approach to governance. If anything, they seem to be doubling down.

Consider the ways in which, deliberately or by accident, the new Italian government is imitating its American counterpart:

*Economics: The new government is considering a radical reform of Italy’s tax code, with two flat rates of 15 percent and 20 percent for individuals, households and companies. As with the Trump tax bill passed late last year, Italy’s tax reforms would largely benefit upper-class earners. It would also cost the government around 50 billion euros a year in lost revenue.

Yet the League legislators say they would oppose a planned increase in the value added tax to help pay for the cuts. As one of the party’s elected representatives told Breakingviews recently, “It would be a mistake to increase sales taxes at the same time. It would be like opening a window to the cold in the hospital when the patient - the economy - is still recuperating in bed.” The details of the tax bill are still being worked out. “Like a baby, we will need at least nine months to develop,” the legislator added. In the meantime, concerns about rising spending and a widening budget deficit has been one of the factors pushing up Italian borrowing costs.

*Trade: While Trump wants to protect U.S. steelmakers with tariffs, Italy’s new government is all about defending cheese. Within weeks of parliament approving Conte’s cabinet, his agriculture minister threatened to reject the European Union’s free trade agreement with Canada, whose leader Trump recently castigated on Twitter.

Agriculture Minister Gian Marco Centinaio, also a League politician, told La Stampa newspaper the Comprehensive Economic and Trade Agreement is insufficient for “protected designation of origin” products, like Parmigiano Reggiano cheese and Prosciutto di Parma ham. By not ratifying the deal, Italy threatens a double whammy of Trumpism: against both free trade, and Canada.

*Foreign policy: Even before his inauguration, Trump upset American allies - including Mexico and Australia - over the telephone, and overturned foreign policy conventions. Salvini has managed the same. He instantly created a diplomatic row with Tunisia by claiming the African nation, a key security ally in the Mediterranean, “isn’t exporting gentlemen, it seems more often they’re exporting convicts”. His comments came days after 48 migrants drowned off the Tunisian coast, and sparked a rebuke from Tunis.

Salvini also overturned diplomatic protocol when he held a friendly telephone call with Viktor Orban, the Hungarian prime minister whose advocacy for “illiberal democracy” has pitted Budapest against the EU. Normally, a new prime minister fields such calls. It was reminiscent of President-elect Trump upending three decades of American policy towards China by speaking with Taiwanese President Tsai Ing-wen.

*Immigration: Both Trump and Rome’s new government are emphatic in their desire to curb unwanted migrants, and given to symbolic, even cruel, gestures to prove it. Days into his tenure Salvini, whose ministry oversees immigration, refused to allow a boat with 600 migrants to dock at an Italian harbour. In April, the U.S. government instituted a policy at the Mexican border that has led to some 2,300 children being separated from their parents.

*Generalised grievances: Trump regularly derides his Democrat and Republican predecessors for doing deals that were bad for the United States, such as the North American Free Trade Agreement in the 1990s. League politicians are no different, though the primary source of their ire is the supposedly inflated exchange rate at which Italy swapped the lira for the single European currency two decades ago. In both cases, there is no acknowledgement of the benefits either decision brought their respective nations over the years. Trump is renegotiating NAFTA. Italy’s new government says it’s committed to the euro.  

The similarities continue, from the bashing of democratic institutions like the independent judiciary, the press, and other officials accused of subverting the will of the people. But Italy is not the United States. Its economy is one tenth as large. It has no currency of its own. And many of its rules are circumscribed by EU membership. If Italians want their new government to follow Trump’s path, they need to prepare for its logical conclusion. Hint: it won’t include the euro.


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