For the past week, it appeared that Italy was on the brink of a defining moment: an alliance between the anti-establishment Five Star Movement and the anti-immigrant League was about to produce a populist government that would bring the country's politics into uncharted territory. Now, the last-minute implosion of that plan has left Italy facing a potentially far bigger drama.
Having given the two parties time and space to work out a programme for government in the wake of a March election that produced a hung parliament, Italian president Sergio Mattarella used his constitutional prerogative at the weekend and refused to accept 81-year-old Paolo Savona for the role of finance minister. Citing Savona's long opposition to the euro, Mattarella defended his decision by saying Five Star and the League had not sought an electoral mandate for withdrawal from the eurozone and that he had a duty to protect Italians' interests – and their savings - at a time of increasing alarm in the markets. "Membership of the euro is a fundamental choice. If we want to discuss it, then we should do so in a serious fashion," he said.
Mattarella appears to have gambled that the would-be coalition partners would simply nominate someone else for the portfolio. Instead, Five Star and the League immediately withdrew from the process. Overnight, a political crisis became a constitutional one.
Another election is now almost certain to take place, most likely in the autumn. Far from resolving Italy's problems, it could well make them much worse. That's because, with polls showing a majority of Italians disagreeing with Mattarella's decision, Five Star and the League will hope to increase their combined majority. Matteo Salvini, the leader of the League, stands to gain most from the chaos. His support has risen throughout the negotiating process. If his party, which promises mass deportations, returns with a bigger parliamentary bloc in the autumn, he could end up as prime minister in a right-wing coalition with former prime minister Silvio Berlusconi.
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There is also a real danger that the election could become a referendum on Italy's future in the EU. The populists have cast Mattarella as a tool of the European elite and accuse him of putting the interests of the markets above the democratic will of Italians. French president Emmanuel Macron presented them a gift by publicly welcoming Mattarella's use of his veto.
The draft Five Star-League coalition agreement stopped short of calling for Italy to disengage from the EU, but both parties benefited from public frustration over EU policies on migration and fiscal policy. If the election produces a new coalition with a mandate to confront the EU and its institutions, Mattarella’s gamble will have backfired spectacularly.