Former Italian prime minister Silvio Berlusconi could play a role in next year's elections. Photo: Reuters / Remo Casilli
Former Italian prime minister Silvio Berlusconi could play a role in next year's elections. Photo: Reuters / Remo Casilli

China, Russia and other major powers in the Eurasian space will by closely watching the next Italian elections scheduled for early 2018. After five years of political and constitutional struggle, the Italian parliament is finally passing a new electoral law. However, the hybrid proportional/majority voting system promises even more of the instability and byzantine procedures for which Italian politics is notorious.

The possible outcomes of the elections are far from clear. As a steady and long-lasting Italian executive remains a distant mirage, Italy’s foreign policy is up for grabs.

Thus the 2018 Italian elections will be a crucial passage for Eurasian geopolitics, because since the postwar years Italy’s foreign-policy agenda has traditionally laid a Western bridge to the economic and cultural rifts that exist between the Euro-Atlantic alliance and the ever imposing bundle of Eurasian geopolitics.

Geographical position and demand for hard commodities indeed have always compelled Italy to play good cop whenever its Euro-Atlantic allies pushed for economic sanctions and political isolation against Russia and its strategic partners in North Africa, the Middle East and Central Asia.

Not surprisingly, China has also turned an attentive eye to Italy as the Western terminal of the ambitious Silk Roads revival, hence the recent flurry of Chinese acquisitions of Italian companies with strategic value.

Now that the European Union is following suit on US President Donald Trump’s attempt to curb China’s alleged trade distortions, Italy is once again sitting nervously on the policy fence of the West-East divide, caught between the trade-wars rock and the economic-growth hard place.

With the UK gone, Italy’s voice in the EU could grow stronger and have greater potential to champion the Southern and Eastern Euro-periphery against Franco-German hegemony. More than mere monetary lassitude and energy subsistence, however, Italy’s natural foreign policy calls for further European political integration with financial subsidiarity.

In fact, Italy has traditionally promoted larger and stronger EU institutions not only to contain the invasive French and German interests, but ultimately to upgrade the Mediterranean countries as the strategic pivot of hedge-and-engage policies toward the Eastern challengers of the US influence in the Eurasian space.

Geopolitical escalations from major-power trade wars and from the rise of an anti-Western security bloc created by Russia, Turkey, Iran and China indeed pose a significant danger to Italy’s exposed position in the crossfire of future Eurasian conflicts.

Hence the stakes on the Eurasian chessboard are high, considering the tremendous impact that disruption in the regional supply chains may have on Italy’s economic and security situation.

Nevertheless, Italian political parties are running with scissors ahead of the 2018 elections. At the time of writing, there are three distinct blocs expected each to get around 30% of the votes, with the remaining 10% going to a number of fringe parties, mostly of the radical left.

These three major blocs include a fickle right-wing coalition with the xenophobe Northern League and Silvio Berlusconi’s personal party, Forza Italia, then the erratic centrist alliance with the Democratic Party leading the incumbent government, and finally the unclassifiable (though many say populist) Five Star Movement.

With the dithering Democratic Party at the executive helm for the past few years, Italy has passively toed the EU-NATO lines virtually on all fronts, and failed to implement long-overdue structural socio-economic reforms.

As a result, the opposition parties attract votes by variously promising a radically different Italy at home and abroad. This translates into a significant switch to postures that favor a détente with Russia over further EU integration, as well as a hard line on Chinese trade distortions.

Beside Berlusconi’s nefarious connection with Russian President Vladimir Putin and diplomatic blunders with EU leaders, the Northern League has recently signed a formal cooperation agreement with Putin’s party, United Russia, all the while expediently trailing Marine Le Pen’s rhetoric of intransigence to grab media attention.

On the other hand, the little we know about the Five Star Movement’s foreign policy appears rather cursory and incoherent, going from a referendum on Italy’s membership in the eurozone to rescinding the commercial sanctions against Russia, all the while protecting the environment against the oil and gas lobbies.

The possibility of any of these contenders winning office on their own is very remote. There are some chances that Berlusconi will be back in the game with enough seats to form a government with the Democratic Party and other conservative minnows. The only alternative would be a shaky populist alliance between the Northern League and the Five Star Movement, but this is improbable, as the latter runs a platform of staunch rejection to any political alliance of any sort.

What’s in store then for Italian politics in 2018? A hung parliament to begin with, and perhaps a second round of elections resulting in an emergency grand coalition or minority government that will usher some unorthodox solution from outside the political rulebook under the unbearable pressure of financial markets and the international community.

This is precisely what happened in 2011 when the Italy-Germany bond-yield spread rose to unsustainable levels and the EU establishment facilitated former commissioner Mario Monti’s dethroning of Berlusconi. After all, Mario Draghi’s tenure as president of the European Central Bank is up in 2019.

In the meantime, Italy’s political balkanization will further mollify Mediterranean geopolitics to the detriment of a stable and peaceful Eurasian cooperation.

Dr Giovanni Di Lieto teaches international trade law in the International Business program at Monash University in Melbourne, Australia, and engages in expert analysis on the geopolitics of trade and investment for media, industry and government outlets. His professional career developed as a commercial law practitioner in Italy, and then as a global value chain specialist across the US, Europe and China.