Developments in Italy regarding the coalition talks there:
Antonello Guerrera @ antoguerrera
“Working on a potential euro exit for #Italy. Lifting sanctions to Russia. Asking EU auth. to write off 250 billions debt”. It’s the explosive draft of the “contract for the changement government”, the M5S-LEGA agenda. Markets are agitated, bond yields already on the rise. THREAD
1. Where this explosive draft come from? It is was discovered and published by @HuffPostItalia last night. M5S leader Di Maio and LEGA leader Salvini labelled it as “old, out of date stuff”. But it is not so old. The leaked document is dated May 14th, which is 2 days ago.
#italy
2. Anyway, here is the full M5S-LEGA document leaked by @HuffPostItalia 👉🏻 Article in Italian
It’s a draft, M5S and LEGA will negotiate on it for a few days more but it highlights quite clearly which impact a populist M5S-LEGA government may have on #Italy and Europe.
3. But Let’s analyze this agenda M5S-LEGA draft. One main issue is euro, or better, opening the door to a euro exit for #Italy, as Salvini has invoked more than once and some M5S members fantasized about in the past. The leaked draft is pretty clear. 🇮🇹
4. In the leaked file, M5S and LEGA clearly stress the necessity of “introducing specific technical procedures in order to let euro countries quit the monetary union” or to keep themselves out of eurozone “through a permanent opt-out clause” if there is a popular will.
#italy
5. This point is so tricky and contradictory. M5S and LEGA clearly state in the draft that euro isn't irreversible. Moreover, they quote the "popular will", but as I said more than once to my followers, a referendum on euro is ILLEGAL in #Italy: the Constitution forbids it 🇮🇹
6. With regard to EU, Salvini and Di Maio also wrote in the leaked document that "EU treaties must be rediscussed" and they also mention the possibility for #Italy to reduce its contribute to the common EU budget.
7. However, there are more thorny issues: at one point, page 38, in the leaked M5S-LEGA document you can see the intention to ask ECB president Draghi to write off (or freeze) 250 billions of Italy debt (bonds bought by ECB quantitative easing), reducing the sovereign debt by 10%
8. Meanwhile, BREAKING. M5S founder Beppe Grillo in an interview with @Newsweek: "We are in favor of a consultative referendum on the euro. It might be a good idea to have two euros, one for northern Europe and one for southern Europe"
www.newsweek.com/giuseppe-beppe-grillo-comedian-who-nows-head-italys-five-star-movement-talks-925307?amp=1&__twitter_impression=true
Beppe Grillo, Five Star founder and comedian, on Putin's 'clear ideas', the 'dysfunctional' EU and Italy's 'cultural and mental misfits'
9. But let's go back to the M5S-LEGA leaked agenda. Another main point is #Russia: the document sets #Italy in NATO frame, but at the same point it defines Russia "a special ally, a commercial partner, not a menace" so "all sanctions against Russia should be immediately lifted"
10. Other interesting points of the leaked M5S-LEGA draft (I don't want to bore you):
- Strong fight to corruption
- A new potential law on conflict of interest (Berlusconi?)
- More courts, more jails
- Tax fraud amnesty but tougher laws on new tax evaders
#Italy
11. Just two more points and then I'll set you free:
- There is an ambiguous passage on the tax reform and the (low) flat tax, a main promise in Salvini's agenda, which means that the two parties are still at odds on it
- The same on immigration, so still much discussion on it
12. Markets are reacting badly to this M5S-LEGA leaked agenda and that may remind the gloomy 2011 crisis.
- Milan stock exchange soon fell 0.4%
- #Italy government bonds went also down, 10-year yields above 2%
- 10-year spread over Germany up to 137.35 points (129 yesterday)
13. We'll see what happens. One thing is sure: a M5S-LEGA government would be very radical and challenging to Italy and Europe institutions. #Italy may become the first populist big country in EU. If M5S and LEGA strike a government deal, much is going to change.
THREAD ENDS
I suspect we will be hearing A LOT more about this. Of varying quality and accuracy.
Do any of the Westminstender Italians have any reflections on this?