Italian Elections Show Emerging Challenge to German Leadership

During a campaign event Feb. 26, Peer Steinbrueck, the German Social Democratic Party's candidate for chancellor, said Italy's political instability could become a greater problem for the eurozone. He referred to Italy's Five Star Movement leader Beppe Grillo and People of Freedom party leader Silvio Berlusconi as populists and clowns. Several members of German Chancellor Angela Merkel's coalition this week called on Italian parties to restore stability and continue with the reforms undertaken by outgoing Prime Minister Mario Monti.

 

Germany’s concern is mostly political: The electoral success of Italy's Five Star Movement, which criticizes the ruling elite and rejects Germany's leadership of the European Union, could be replicated by other parties in Europe. Italy’s instability could also put Berlin in the challenging position of providing political and financial assistance to a country that has voted against the austerity measures designed by the European Union and supported by Germany. This could harm Merkel’s bid for re-election later this year. Finally, Germany faces the risk that members of the eurozone — especially from the periphery — may become more vocal in their criticism of Berlin’s leadership.