As Italy Seeks to Form a Government, Leaked Documents Stir Anxiety

The leader of the League party, Matteo Salvini, addressing the news media after meeting with President Sergio Mattarella in Rome on Monday. CreditAlessandro Di Meo/ANSA, via Associated Press

ROME — Talks between two anti-establishment parties to form a new Italian government seemed to be regaining momentum on Wednesday, even as financial markets were spooked by leaked documents that suggested the two sides shared a desire to radically change Italy’s relationship with the European Union. The leaders of the Five Star Movement and the anti-immigrant League party dismissed the leaked document Tuesday night as “old.” But the draft, which was on the negotiating table as of Monday morning, was apparently not “old” enough to avoid raising jitters. On Wednesday, investors shed Italian assets, and shares trading on the Milan stock market slipped. Current or not, the document, obtained by Huffington Post Italy, brought into focus concerns among European leaders and financial markets about what a government run by the two parties could mean for Italy and the European Union as a whole. In a series of joint statements, the two parties tried to distance themselves from the positions in the document, but in doing so only seemed to further betray their real ambitions for what they called “a rethink” of Italy’s relationship to the European Union and the common currency of most of its members, the euro. In a joint statement Tuesday night, they protested that the proposals in the leaked document had been “radically changed” in subsequent meetings. “For example, on the euro, the parties have already decided not to put in discussion the single currency,” it said.But an hour and a half later, Five Star, led by Luigi Di Maio, 31, and the League, led by Matteo Salvini, 45, released another joint statement clarifying — or perhaps muddying — their position on the eurozone.

That statement said they preferred to return to the arrangement before the Maastricht Treaty of 1992, which created the framework and fiscal rules for the euro — a time when the Italian lira was the coin of the realm.

“The structure of European economic governance, based on the dominance of the market, and the respect for rules that are stringent and unfounded from a social and economic point of view, requires a rethink with our European partners,” they said. “The spirit must be to return to the pre-Maastricht setting.” Nick Note:  Bottom line the Euro is doomed so is the Union. Why? Because when you control currency value you can screw your creditor at will by devaluing…..