Icon: enlarge
Government headquarters in Rome: one crisis meeting after another
Photo: CLAUDIO PERI / EPA-EFE / Shutterstock
Rome is going through hectic days.
Since Wednesday afternoon, President Sergio Mattarella has been receiving the country's most important politicians every hour.
In parliament, in party headquarters and government palaces, there is one crisis meeting after another.
The newspapers discuss scenarios that change on a daily basis as to how and with whom a new government could come about.
Some of the most important actors in the current political drama in Italy are not based in Rome, but at the International Monetary Fund (IMF), in major rating agencies and the EU Commission in Brussels.
Their analyzes show what the power struggles that have been going on for weeks are actually about: the desolate economic situation in Italy.
After the start of the pandemic, the country's debts climbed to their highest level since the post-war period: According to the IMF, they are likely to rise to 159.7 percent of gross domestic product this year;
In 2019 it was 134.6 percent.
Italy brings up the rear among the largest economies
Italy brings up the rear among the largest economies.
The International Monetary Fund has just revised its growth forecasts for Italy downwards.
For comparison: Spain, which was also hard hit by the pandemic, is expected to grow twice as fast, according to economists.
The fact that Italy can still finance itself is mainly thanks to the European Central Bank (ECB), which buys massive amounts of Italian government bonds.
"We are comfortably warm under the protection of the ECB," writes the business newspaper "Il Sole 24 Ore".
Thanks to the central bank, "money fell from heaven like manna" in Italy.
But you have to be realistic: "The ECB cannot protect Italy forever."
The EU reconstruction fund is supposed to save the day
The historic reconstruction fund of the EU is now supposed to bring the rescue, of which Italy wants to collect the largest share with 209 billion euros.
At its core, the government crisis now revolves around who is allowed to distribute the money, how and to whom.
Icon: enlarge
Italian politicians after the consultations with President Mattarella: New scenarios every day
Photo: ALESSANDRO SERRANO / POOL / EPA-EFE / Shutterstock
But time is running out.
By the end of April, Rome has to explain to the EU how it intends to guarantee fast and efficient investments.
It took the government of Prime Minister Giuseppe Conte, who resigned on Tuesday, excruciatingly long months to present at least a first draft of the Italian reconstruction plan to the EU - although the ailing country could use billions in European investments much more quickly than other member states.
"We should have been among the first to present the reconstruction plan to the EU Commission," says Carlo Cottarelli.
The economics professor from Milan almost became prime minister instead of Conte in 2018.
All other southern European countries had submitted their plans to Italy in Brussels: "We have no more time to lose."
The EU is concerned about the government crisis in Italy
Power struggles, unstable government relationships, possible new elections - all of this has raised acute doubts in Brussels.
"What is happening in Italy is extremely unpleasant and irresponsible," warned Johannes Hahn, the EU Commissioner responsible for the reconstruction fund, in a recent interview.
Rating agencies like Fitch are also threatened with trouble.
"If Italy does not manage to use the EU funds, the ratings can come under pressure," the Fitch analysts wrote a few days ago.
If the pandemic subsides, the European Central Bank is also likely to reduce its commitment.
The ECB and the Italian central bank Banca d'Italia hold a total of around a third of Italy's debt, the rest is in the hands of international investors.
Financial investors fear a horror scenario
And they could get nervous if the ECB reduces its protective shield.
A new cabinet could lead the country out of the euro and devalue the national debt in lire, is the hitherto unlikely horror scenario of investors.
EU Commissioner Hahn, on the other hand, does not want to give up hope.
New elections could have "serious consequences" for Italy, he said, "political uncertainties would be a disaster."
But the Italians have a lot of experience in dealing with government crises.
The Austrian commissioner even liked the first drafts of the Italian reconstruction plan.
"What we have seen from Rome so far about the reconstruction plan is rather promising," he said - "in view of previous experiences".
Icon: The mirror