How Italy's populist Deputy PM Matteo Salvini wants to oust Germany's Merkel as Europe's anchor

Italian DPM Matteo Salvini speaking to the media after visiting a house confiscated from the Italian mafia, in Rome on Jan 25, 2019.
Italian DPM Matteo Salvini speaking to the media after visiting a house confiscated from the Italian mafia, in Rome on Jan 25, 2019.PHOTO: EPA-EFE

ROME (BLOOMBERG) - Italy's Matteo Salvini's bold ambition is to replace Dr Angela Merkel as the cornerstone of Europe's political order, using elections in May as the sharp edge.

After riding to power last year on a populist groundswell, the deputy prime minister is now taking his campaign to remake the European Union along more nationalist lines to the next level, said his strategist Guglielmo Picchi, a former Barclays investment banker.

Mr Salvini reckons that if Europe's populists do well in the European Parliament elections in May and his far-right League party secures 30 per cent support in Italy, he'll have the leverage to bend the establishment to his agenda, said Mr Picchi. That would require almost doubling the share of the vote his party won in the last general election in March.

"Then, just as Merkel was Europe's guide for many years, now it will be Salvini," Mr Picchi, now an undersecretary at the Italian Foreign Ministry, said in an interview. "Everyone will have to talk to Salvini. His leadership will no longer be just Italian, but European too."

'INSULT ME'

Taking on Dr Merkel, French President Emmanuel Macron and what he portrays as an EU that doesn't serve Italian interests has become a hallmark for Mr Salvini, 45, who has shot from relative obscurity to dominant government partner in a politically fragmented country.

While EU government leaders wield broad powers, the new crop of European lawmakers will have a say in shaping the European Commission, the bloc's executive arm, and thus, influence policy.

Obstacles include divergent interests among Europe's populist parties and Germany's formidable economic clout, but that isn't holding Mr Salvini back. At a rally on Saturday (Jan 26), Mr Salvini blasted prosecutors in Sicily, who have opened an investigation into his refusal to let a migrant ship dock last summer.

"I'll give you my word," he told cheering supporters in Milan. "They can insult me, they can threaten me, they can put me under investigation, they can arrest me but I'll go straight ahead continuing to defend the borders of this country."

Across Europe, Mr Salvini has found some common ground with French nationalist Marine Le Pen, met Mr Jaroslaw Kaczynski of Poland's governing party and is reaching out to Alternative for Germany co-leader Alice Weidel, Sweden Democrats chief Jimmie Akesson and Dutch Party for Freedom leader Geert Wilders.

Polls suggest support for Mr Salvini's party has surged to more than 32 per cent, which compares with 17.4 per cent in last year's election and is above the threshold set by Mr Picchi.

Even so, surveys indicate populist parties across the EU will probably win less than a third of the European Parliament's seats, JPMorgan economist David Mackie said in a note.

"Due to the disparate nature of political parties, the lack of a common agenda, and the nature of the European Parliament's power, there is a limit to what populists can achieve," Mr Mackie said.

Mr Salvini says the election will be "the battle of battles" against interfering EU bureaucrats in Brussels, a failed liberal establishment and the French-German axis. Any score over 30 per cent in May would be "a sensational success" for the League, said Mr Picchi, who's a League emissary to EU populist parties.

If Mr Salvini does shine in May, he'll have a packed agenda for change, including a redoubled effort to ease euro-area fiscal rules for Italy's benefit.

"We won't leave the euro, but we want to revise the treaties, we want new rules on countries' budgets and deficit limits," Mr Picchi said. "If you're in a recession, you have to allow an expansionary budget."