Italy's President took risks by vetoing Savona's appointment as finance minister, yet ultimately prevailed when the League and the 5S came back to the negotiating table and accepted that he would have to be moved to another ministry.
The new government is a hybrid of populism and technocracy, with 3 non politicians as ministers, including a minister from Monti's government as foreign minister.
The new government is eurosceptic, not europhobic. The League is very critical of €, but does not call for Italy's exit from the EU. 5S has defined itself as pro-European, and tried to join the ALDE group in the EP. The coalition contract calls for more the powers for the EP.
What can we expect from the new government? 1) Eurozone reform more difficult. Lega and 5S toned down idea of immediately implementing 'flat tax' and universal basic income. But they will increase Italy's deficit and challenge the Commission. This makes €zone reform harder
2) Italy will be more sympathetic towards Russia. However, unlikely to remove sanctions: drains political capital badly needed in economic sphere and harms relations with the US. Likelier that Rome will maintain sanctions while boosting political and trade ties with RU
Despite this, Italy could yet play a constructive role in the coming years. Much still depends on how the views of the 5S evolve. It has no experience of national government and has not yet had to articulate positions on many policy issues.
Migration is one key area where the EU could engage with Italy. Italian officials want Brussels to invest in signing readmission agreements with African countries, making available funds of the same order of magnitude as the €6 billion the EU has pledged to Turkey
On Eurozone reform, European leaders could work towards a small eurozone budget to stabilise shocks – perhaps the limit of what is currently politically possible.
The coming years will be crucial for the EU. If the EU does not do more to convince Italians that the EU benefits them, the new government, and Italians, will become more eurosceptic – in a few years leaving € or EU may no longer seem unthinkable.
