Italy’s populists aim to challenge EU on debt and migrants

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Luigi di Maio of Five Star (L) and Matteo Salvini of The League Image copyright EPA
Image caption The Five Star Movement of Luigi Di Maio (L) and Matteo Salvini’s League hope to finalise their deal on Wednesday

Italy’s two populist parties will try to reach a deal on Wednesday on forming a government, and a draft proposal is to demand billions in debt relief from the European Central Bank.

The draft, seen by HuffPost Italia, calls for €250bn (£220bn; $295bn) of Italian bonds bought by the ECB to be cancelled.

Italy has the second highest public debt in the eurozone.

The two party leaders have accused the EU of interfering in the talks process.

Right-wing League leader Matteo Salvini condemned “unacceptable interference from the EU” while Luigi Di Maio of the anti-establishment Five Star Movement spoke of “continuous attacks… from Eurocrats”.

Mr Di Maio also targeted the UK’s Financial Times for a story headlined “Rome opens its gates to the modern barbarians“.

The paper warned that Italy was on the verge of forming “the most unconventional, inexperienced government to rule a western European democracy since the EU’s founding Treaty of Rome in 1957”.

What do the two parties want?

The draft stretches to 39 pages and the parties say it is still being worked on. But some of the details will alarm the European Union.

Five Star and The League want billions in bonds bought up by the ECB as part of its quantitative easing programme to be scrapped. This would lower Italy’s public debt, currently at 130% of national output.

There is also a demand for “radical change” to EU’s stability and growth pact, which has strict rules on keeping budget deficits below 3% of economic output.

The two parties are planning a budget worth tens of billions of euros, with plans for a minimum universal income and a flat tax of 15% for low and middle earners.

They are still discussing how they want to tighten immigration which they denounce in the leaked draft as “unsustainable for Italy”. Their plans could also challenge EU rules.

There is still no word on who the parties want to lead the government. Neither Mr Di Maio nor Mr Salvini want the job of prime minister.

How is this going down in Brussels?

Already on Tuesday two European commissioners made clear that rules were rules.

“I don’t see any signs that member states would like to change the rules at least any time soon or give exemptions to any member state,” said Commission Vice-President Jyrki Katainen.

Another vice-president, Valdis Dombrovskis, made clear that the Commission still expected Italy to bring down its debt.

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