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November 13, 2018

Peak Salvini?

Despite some recent failures, opinion polls have their uses if read correctly, meaning not just as a tool to confirm one's own entrenched biases. After a long period in which Italy’s Lega Nord has managed almost to double its support after each election, the Lega’s stratospheric ratings are now beginning to fall back to earth. An Ixe poll in the Huffington Post recorded a Lega fall from 30.7% previously to 29.8%, while Five Star is up from 25.9% to 27.1%. With the usual polling uncertainty, what this means is that the two parties are within each other’s error margins - in effect indistinguishable. There were other recent polls showing the Lega as high as 34%. It will be interesting to see what will happen to those.

The two parties together broadly maintain their support. This is not yet an anti-government sentiment. We have noted before that the strategy of the government - including that of disorderly conduct inside the monetary union - is not sustainable and is likely to meet its resolution at some point. This will eventually register in the polls, but much later.

For once, the economy is likely to disappoint in 2019, a development that will highlight the fundamental lack of sustainability of the country’s fiscal policy. One accelerator will be the rising interest rate. We note the lead story in Il Solve 24 Ore this morning, according to which Unicredit has raised its mortgage rates between 10 and 30 basis points for fixed-rate mortgages, and 20 basis points for variable-rate ones. This is poisonous for an economy that experienced a sharp economic slowdown recently.

Another factor weighing down on the coalition are the now permanent squabbles between the two parties, including over a high-speed train link in Northern Italy. Massimo Franco writes that anti-Europeanism is the only glue that holds the coalition together. We disagree somewhat with this statement. There is a broader anti-establishment sentiment in Italy that is not only about Europe, but the honeymoon period is clearly over.

The conflict between the two parties is partially overshadowing Italy’s foreign diplomacy, and specifically the Libya summit in Palermo which is an attempt by Italy to secure its commercial and security interests in its former colony. France and Germany are represented by junior officials. As Spiegel Online notes, this summit is another instance of European countries pursuing their own national interests. Emmanuel Macron earlier this year held his own Libya summit without Italy’s presence. The two countries have long had competing interests in the Libyan oil market. 

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November 13, 2018

Protest uberisation

Networks and spontaneous disruption are common phenomena of today's world. Last year Emmanuel Macron disrupted the political system in France. On November 17 he will now face his equivalent in protest movements, an uberisation - as Cécile Cornudet puts it - of road blockages against his diesel tax plans. 

The gillet yaunes (yellow jumpers) are the first protest movement that is organised using the internet as a coordination platform with no intermediate structure. No trade unions or parties called for these protests, just fed-up citizens. It all started with some 100 facebook users who spontaneously got together to organise local blockages, and from there it is spreading through social media like a wild fire. It is now the most discussed subject on those platforms. This grassroots initiative already gathered some 800,000 signatures for a petition. The interactive map showing all the planned local blockages looks quite dense. Still, since it is all spontaneous, we still do not know what it means until we see it on Saturday.

The main focus of the protests is the rise in diesel/petrol taxes. As of next January the tax will rise by 6 cents on diesel and 3 cents on petrol. But there are secondary objectives too. The working people in the provinces are rising up against the elites in Paris, or against the government in general and its reforms. It is an amalgam of frustration and projection. 

Will there be a massive mobilisation? Will it block the roads in the country? If so, for how long? No one knows. There is backing from the more institutionalised sectors too. There are some professions calling now to join the protests, including taxis and hauliers. Parties on the left and right may join in, too. The Socialists and La France Insoumise may have some difficulty doing so, as they are in principle for a carbon tax to help slow down climate change. However, they argue that the tax causes excessive harm to purchasing power and that the revenues are not earmarked for environmental projects. The parties on the far right will go along for sure. The Republicans are protesting, but not blocking. So it looks like the whole opposition will be there in some form or other.

These events raise a number of questions: How can you confront a protest without a leader? How to negotiate a compromise? Will the concessions for poorer households help? Or are the motives too diffuse and the frustrations too large? How can they evaluate the risks? How to stop the movement from going viral? What if they are successful, is that then the end of Macron's reforms?

What we do know is that Macron and his government did not see this coming. 

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