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ANALYSIS

Italy has long been Europe's wild card. The coronavirus has upped the risk.

A man serves take away food in a restaurant, in Ladispoli, a coastal town some 18 miles north of Rome on Saturday, May 9, 2020.

ANDREW MEDICHINI/AP

By CHICO HARLAN AND STEFANO PITRELLI | The Washington Post | Published: May 9, 2020

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After two months of ambulance sirens, mourning and isolation, this is the damage report from Italy:

The novel coronavirus death toll has surpassed 30,000. The country is hurtling into its steepest recession in modern times. Tourism has gone bust. Many restaurants and shops lack the cash to ever reopen. The government's brittle finances are becoming ever more stretched.

All the while, many Italians feel embittered and alienated. They are disappointed in the continent's early response to the pandemic and its fallout. Anti-European sentiment has spiked. So has the uncertainty about what might happen next in Italy's topsy-turvy politics.

The coronavirus has altered almost every hard-hit country in deep and lasting ways. But the changes are particularly perilous in Italy, where the virus struck at preexisting economic frailties and played on a sense of abandonment that had started during the euro zone and migration crises.

Even before it was hit by one of the world's deadliest outbreaks, Italy was seen as the wild card of Western Europe – flirting on-and-off with populism, sometimes seeming to be only one mismanaged crisis away from becoming the continent's next Brexit or Greek-style debt disaster. Now that crisis has arrived, and what hangs in the balance is not just Italy's stability but that of Europe, as well.

"This idea that Italy can follow the U.K. in an anti-European mode is something that is concretely happening," said former prime minister Enrico Letta, now the dean of the Paris School of International Affairs. "We need empathy [from Europe], and we need complete solidarity."

In economic terms alone, Italy is in peril. On a continent facing its worst recession ever, Italy is forecast to have one of the most severe contractions of any single country, at 9.5% this year, according to European Union projections. Its debt is projected to rise to 158.9% of its gross domestic product, one of the highest rates in the world. Paolo Gentiloni, the European commissioner for the economy, said this past week that Italy's recovery is predicted "to take longer than in other member states."

Italy is vulnerable not just because of the scale of its outbreak and the length of its lockdown, but because of the nature of its economy. It depends heavily on tourism, which accounts for about 13%of its GDP. It also has a high proportion of small-business and off-the-books workers – some of the groups hit hardest by the downturn.

The risk for Europe is that inequality within the single currency zone will deepen, bringing to a boil long-simmering tensions between northern countries and those in the south, including Italy.

Already, north and south have fought over a coordinated response to the coronavirus pandemic. France and Germany were initially reluctant to share medical equipment, leaving Italy to turn to China for help. Then, last month, Germany and the Netherlands effectively struck down Italy's proposal for "corona bonds," which would have seen E.U. countries pool together debt to fund the continent's recovery.

Largely as a result, Italian distrust of European institutions has doubled from last year, to roughly 50%, according to data from polling company SWG. The percentage of Italians in favor of leaving the euro zone has jumped from 23% to 35%.

"Clearly euroskepticism has grown across the board," said Giovanni Orsina, a professor at LUISS Guido Carli University in Rome. "But Italians are waiting to find out what will transpire. My impression is that the jury is still out. Will money [from Italy or the E.U.] actually get into their pockets?"

In the early weeks of the outbreak, even left-leaning, committed pro-European politicians in Rome were sounding alarms about the future of the bloc, saying that a sluggish E.U. response had left Italy without support. But some of those same politicians now say that Europe has raced to catch up, belatedly realizing the stakes and sketching out a compromise recovery plan. Prime Minister Giuseppe Conte, after weeks of testy negotiations with other European leaders, claimed victory and hailed the European deal as a "milestone."

"The message today is that we have a shared crisis and we're putting together a shared response," Gentiloni said in an interview. "If we can do that, it is a watershed moment for Europe."

But most of the key details have yet to be worked out, including the size of the fund, whether bonds are used to raise the money, and whether money would be doled out as gifts or loans to member states. The difference for Italy is significant: Loans, the approach favored by the northern European countries, would increase national debt. Grants would not.

"Conte needs to show that Europe is helping," said Michele Geraci, a former undersecretary in Italy's economic development ministry. He described the country's governing coalition as a group whose unifying purpose is to keep the far right out of power.

Public approval ratings for Conte have risen during the lockdown, but many attribute that to a temporary, rally-around-the-flag effect. A range of European politicians, among them French President Emmanuel Macron, have warned that the pandemic could help populists across Southern Europe, including in Italy.

Discontent in the wake of the European financial crisis, and later the migration crisis, led to the first major upswing in anti-euro sentiment in Italy and began a chain of events that led to rise of Brussels-bashing, anti-migrant nationalist Matteo Salvini and his far-right League party.

The League lost its place in Italy's government last year after Salvini's attempt to vault from interior minister to prime minister backfired spectacularly. It remains Italy's most popular party, though, and many political analysts have believed Salvini would eventually stage a comeback.

But Salvini's messaging during the pandemic has swung erratically. First, he criticized Italy's lockdown for being too loose. Now, he is criticizing Italy for not reopening fully and quickly enough. Italian media outlets have started speculating on who might replace him as the party's torchbearer.

Another far-right party, the Brothers of Italy, has been siphoning support away from the League. Measured together, the two far-right parties have almost exactly the same share of support – 40% – that they did before the crisis. Anti-euro sentiment, rather than directly helping any one party, has bled across the political spectrum and has not yet fed changes in party policies.

"There is no possibility for Salvini. Zero," said former prime minister Matteo Renzi, who leads a small party that is a part of the governing coalition. "The next election will be in 2023. And in Italy, three years are an era."

Renzi argued in an interview that nationalism would decline, not surge, as a result of the pandemic. He said the very ideas sovereigntist leaders have argued for – closed borders, reduced migration – are now in place and proving to have no benefit.

"Now, we have no tourists. We have no exports," Renzi said. "And we have a lot of tensions, because Italy is a country ready to be a country of globalization. It's totally blocked and closed."

But others say the level of volatility in Italy is far higher.

"We are in a very dangerous zone," said Sandro Gozi, an Italian politician who represents France in the European Parliament. "If Europe is effective, you can even think that this can be a new era [for Italy]. It can be a new positive phase. On the contrary, if the union pretends but doesn't really act, and the economics goes really bad in Italy, Italy could shift totally on the nationalistic side. I don't think there will be a middle ground."
 

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