Mamma mia, here we go again. Another Italian political crisis. Except this time, it wasn’t supposed to happen like this. Mario Draghi took on the leadership of his home country in February 2021 in order to bring stability, not throw Europe into the upheaval it now faces as a consequence of his resignation. He would argue he had no choice. As he put it, “The majority of national unity that has sustained this government from its creation doesn’t exist any more”.

With an election due by February 2023, his coalition had already started to fracture as MPs jockeyed to gain ground ahead of the poll. The former leader of the insurrectionist Five Star Movement, Luigi Di Maio, left his own party to start a new one in June. With Five Star plunging in the polls, its leader, Giuseppe Conte, then decided he couldn’t back Draghi’s government. Ostensibly this was due to environmental concerns over a new garbage incinerator in Rome, but really Conte hoped to pressure Draghi into accepting a wider list of reforms that would buoy support for his own party. Draghi called his bluff, arguing that “A government does not work with ultimatums, it loses the point of its existence”. So now we are all in, no more stick and twist, les jeux sont faits, with Draghi punting the issue back to the Italian voter.

It’s a big gamble, not just for Italy, but for all of us. The three biggest right-wing parties are polling around 45% between them, and they have all historically taken a sympathetic stance towards Russia. Leader of The League, Matteo Salvini, described Putin in 2019 as “one of the best men in government in the world” while Silvio Berlusconi of Forza Italia enjoyed a bottle of wine with Putin on a tour of annexed Crimea in 2015. Salvini even tried to visit Moscow in May with the Russian embassy paying for the flights, claiming it was a “peace mission”.

His party is struggling in the polls however, having gone from topping them at 24% when Draghi took over to half that level now. The League has been replaced in the top spot by the main opposition party, the one that refused to join Draghi’s National Unity Government, the Brothers of Italy. Their history is rooted in fascism but the party has gone through many iterations since then. Since Russia’s invasion of Ukraine, their stance has shifted. With their leader Georgia Meloni likely to become the next Prime Minister, she has said that “Italy cannot risk being the weak link in the Western alliance…[The West] needs to know they can count on us; I would not tolerate any ambiguity on this point”.

But she will need to cooperate with the League and Forza Italia to form a working majority. As Draghi discovered, compromises must be made and ultimatums will be delivered. Disputes won’t just arise over Ukraine. Brothers of Italy has a policy programme that includes blaming the EU for austerity and opposing such measures; it plans to decrease taxes whilst simultaneously investing more in public infrastructure; it is heavily anti-immigration and focuses much of its rhetoric on supporting local Italian business, suggesting a “flat tax” reduction purely for companies that base their production in Italy and employ locally. Although it has moved away from advocating for Italy to abandon the Euro, these policies are a serious threat to the Eurozone, not least at a time when disbursement of the pandemic-related recovery funds depends on pursuing what Brussels would consider to be prudent fiscal policy. And that’s before we throw in the ECB’s new Transmission Protection Instrument which stipulates that the central bank can only buy the bonds of a country that is pursuing ‘sound and sustainable macroeconomic policies’.

The outcome of the upcoming election is even more unpredictable than usual, for three reasons:

1. Elections are almost never held in the autumn. This is the time when the Italian Budget is usually agreed. With the election taking place on 25^th September and coalition negotiations to follow in its aftermath, Italy will be without its new government while monetary resolutions hang in the balance.
2. Constitutional reform means the number of MPs is being reduced at this election: from 630 to 400 in the Chamber of Deputies and from 315 to 200 in the Senate. That introduces its own uncertainty over how the distribution of seats will turn out.
3. Electoral reform also means the voting age will now be the same for both houses – it had been 25 for the Senate but now comes down to 18 – which also adds an element of unpredictability.

One thing is abundantly clear: political risk for Italy has gone through the roof. A new government of right-wing populists is about to take over just as the inflation crisis intensifies, war becomes protracted, and the ECB attempts new ways to manage its incomplete monetary union. Draghi’s gamble is that the unstable mess created by this election will give way to the return of a more sensible government at the next one. Let’s hope he’s right, or it’s Mamma Mia, here we go again…