The leaders of the Euro skeptic coalition that now runs Italy has a plan to defy the European Union if its proposed budget should quell them.
Both Deputy Prime Ministers, Luigi Di Maio of Five Star Movement and Matteo Salvini of The League, were adamant about locking horns with European Union leadership over all issues of sovereignty between now and European Parliamentary election.
Their budget proposal which included both tax cuts and universal income blew past the EU budget limit of 2.0% of GDP, coming in at 2.4%.
The point of this is to push Brussels and paint them as the bad guys to shift public sentiment back towards an Itexit position. Italy’s problems are not solvable with Germany holding the purse strings for all the EU countries.
So, the first prong of their assault on the power structure of the EU is this, challenge them on their budget while making strong statements to the rest of Europe that they are not looking to exit the Euro. If they do, it will be Germany forcing that situation.
The other prong of the assault is to remake the EU from within, which Salvini has openly stated is one of his goals.
It started more than a month ago when he met with Hungarian President Viktor Orban who agreed on a strategy of creating a ‘League of Leagues’ to unite the opposition against the current technocratic rule on the European Commission.
They were clear then that the goal was to wrestle control of the European Commission Presidency from the coalition backing current President Jean-Claude Juncker.
With the rise in the polls of Euro skeptic parties across Europe, Salvini and Orban can drive real change in the structure of the parties within the European Parliament.
The markets are beginning to wake up to the fact that this political battle is not going to go as smoothly for Germany and the Troika as it did for Greece. Salvini and Di Maio are not Varoufakis and Tsipras and Italy is simply way more important than Greece.
The Euro is weakening by the day while Italian bond yields are spiking. Populist forces within the EU are angry and their power is growing. The technocrats in Brussels still seem to think that the old rules apply but they do not.
Scare tactics will not work on these men because they know that the ultimate move is to simply make preparations for a new currency, be it the mini-BOT that has been floated previously by Salvini or a new lira.
If the Italian leadership holds the line and refuse to back down, then they call the ECB’s bluff on allowing rates to rise. The ECB has to come back in, begin buying to support the price, and the regroup for the next battle.
The size of their outstanding debt and the liabilities existent on the balance sheets of banks across Europe, most notably the nearly $1 trillion, are something Juncker, Draghi, Merkel and Christine LaGarde at the IMF simply cannot ignore.
The Duran / ABC Flash Point Political News 2018.