Euroskeptics cheer, markets up as Italy populists take power

Euroskeptics cheer, markets up as Italy populists take power
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ROME — Euroskeptic politicians cheered and Milan’s stock index rose Friday after Italy’s populists staved off the threat of a new election and formed western Europe’s first populist government with a last-minute compromise.

The anti-establishment 5-Star Movement and the right-wing League party are swearing in their Cabinet later Friday, capping a roller-coaster week of political and financial turmoil by agreeing to drop a proposed economy minister who had concerned Italy’s president.

Premier-designate Giuseppe Conte, the law professor who had promised to be the “defence attorney of the Italian people” in his first, failed bid to form a government, got a taste of the expectations many Italians have for his revived team as he reported for work Friday. He was confronted by a group of laid-off workers protesting outside Parliament.

“You have to trust all of us,” Conte assured them, after listening to the workers’ plight.

Milan’s stock index was trading up 2.6 per cent and Italy’s borrowing rates eased further after having soared earlier in the week when it appeared that Italy was heading into a new election that could have turned into a referendum on Europe’s shared euro currency.

But by Thursday night, 5-Star leader Luigi Di Maio and League leader Matteo Salvini found the compromise that earned them President Sergio Mattarella’s blessing to form a government. They shifted their euroskeptic candidate for economy minister to another ministry and installed a more mainstream economist in his place.

Europe’s populists and right-wingers cheered the formation of a 5-Star-League government as a slap in the face to Brussels, which embodies the 28-nation European Union. French far-right leader Marine Le Pen tweeted: “Bravo to the coalition.”

“It’s a victory of democracy over intimidation and threats from the European Union,” said Le Pen, who shares the League’s anti-immigrant stance.

Nigel Farage, former leader of Britain’s UKIP party that played a key role in the Brexit campaign for Britain to leave the EU, wished good luck to the two leaders. “Gotta stay strong, or the bully boys will be after you,” he warned.

It was a reference to EU officials, who have made clear in recent days their concerns — in occasionally undiplomatic terms — about the euroskeptic direction of Europe’s third-largest economy.

European Commission President Jean-Claude Juncker told a conference Thursday that he loved Italy, but refused to accept the frequent pass-the-buck blame by Italian politicians that Italy’s ills are the fault of the EU.

“Italians have to take care of the poor regions of Italy. That means more work, less corruption,” he said. “We will help them, as we always did. But don’t play this game.”

His comments sparked outrage in Italy, with Salvini blasting them as “racist” in his victory speech Thursday in northern Lombardy.

“With the new government, we’ll see how to make them respect the rights and dignity of 60 million Italians who want co-operation from Europe, not insults,” he said.

By Friday, EC spokeswoman Mina Andreeva said Juncker “deeply regrets” the comments and reaffirmed that he not only loved Italy, but that the EU executive was committed to working with its new government.

“We have full confidence in the capacity and willingness of the new government to engage constructively with its European partners and EU institutions to uphold Italy’s central role in the commonEuropean project,” Andreeva said.

Italy’s inconclusive parliamentary election in March produced months of political stalemate before Mattarella asked Conte, a political novice tapped by the 5-Stars and League, to try to form a government.

The bid failed after Mattarella last Sunday vetoed the proposed economy minister, Paolo Savona, who had expressed doubts about whether Italy should stay in the eurozone. Mattarella then tapped a former IMF official to head a possible interim government of technocrats to see Italy through to an early election.

But investors revolted, sending Italian stocks plummeting and increasing the cost of borrowing to cover Italy’s stubbornly high sovereign debt of 132 per cent of GDP.

In the new Cabinet, Savona heads the European affairs ministry, while the economy ministry goes to Giovanni Tria, a mainstream economist at Rome University who is considered close to the centre-right Forza Italia party of ex-Premier Silvio Berlusconi.

Conte, a university law professor who was still teaching class Thursday, has as deputy premiers his two political masters: Di Maio and Salvini.

Di Maio, who pledged to give needy Italians a basic income, takes over as economic development minister, while Salvini heads the interior ministry, the key position to enforce his pledge to expel hundreds of thousands of migrants.

Ex-Premier Matteo Renzi, whose Democratic Party suffered its worst-ever thrashing in the March election, wished good luck to the Conte government while vowing to be the “civil opposition.”

“We are radically something other than the majority that supports the government,” Renzi tweeted.

The changing of the guard Friday comes on the eve of Italy’s Republic Day, when Italians mark the birth on June 2, 1946 of the Italian republic after voting to abolish the monarchy.

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Lorne Cook and Raf Casert contributed from Brussels, and Angela Charlton from Paris.

Nicole Winfield, The Associated Press

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