Europe Politics: Clashes on Greece's border add to list of problems for EU leaders

Silvia Amaro

5-6 minutes - Source: CNBC

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Migrants clash with Greek police on the buffer zone Turkey-Greece border, at Pazarkule, in Edirne district, on February 29, 2020. - Thousands of migrants stuck on the Turkey-Greece border clashed with Greek police on February 29, 2020, according to an AFP photographer at the scene. Greek police fired tear gas at migrants who have amassed at a border crossing in the western Turkish province of Edirne, some of whom responded by hurling stones at the officers. The clashes come as Greece bolsters its border after Ankara said it would no longer prevent refugees from crossing into Europe following the death of 33 Turkish troops in northern Syria.
OZAN KOSE/AFP via Getty Images

European leaders are facing an unprecedented range of problems, from new tensions at the Greek border, trade talks with the U.K. and internal divisions over money. All of this while the coronavirus keeps spreading across the 27-member bloc and fuels fears of an economic recession.
“This is one of those situations where everyone should, and has to, hope that creativity, energy, and solidarity will rise to match the occasion,” Erik Jones, professor of European studies at Johns Hopkins University, told CNBC Monday.
Leaders of the top three European institutions are headed to Greece Tuesday to visit the border with Turkey, where migrants have been arriving since Friday in the hope they will be able to cross into EU territory. On Saturday, Greek police fired teargas toward the migrants who were demanding entry into the country and were reportedly hurling stones and shouting obscenities.
The tensions at the border come after Turkey decided to end a previous agreement with European countries and allow refugees fleeing war to try to reach Europe. Turkey has argued it has reached overcapacity with almost 4 million refugees coming from Syria, Afghanistan and other war-torn places, while also blaming the EU for not supporting its troops in Syria.
The issue is highly sensitive in Europe and brings back memories of 2015, when more than 1 million people arrived in Greece. At the time, some EU countries were reluctant to accept a redistribution of migrants and the topic was heavily used by anti-EU and anti-immigration parties across the region.
“The risk of a partial replay of the migrant crisis of 2015/2016 will ring alarm bells across the EU,” Holger Schmieding, chief economist at Berenberg bank, said Monday in a note to clients. “A major new tide of migrants, which we consider unlikely at this stage, could again boost support for latently anti-EU right-wingers in Europe,” he added.
Matteo Salvini, one of the most well-known anti-immigration politicians in Europe, has commented on the latest episodes at the Greek border, saying via a translation: “A serious European Union would preside over (guard) its borders, we risk a catastrophe.”

‘Lack of EU leadership’

In addition to the tensions at the Greek border, the EU started Monday their first talks with the U.K. over their future trading links. The negotiations are expected to be difficult given how far apart both sides are at this stage.
In the meantime, European leaders are still at odds over how to fund and spend the next EU budget — a common basket that is aimed at financing projects across the 27 countries. Some analysts have told CNBC that if leaders mishandled these negotiations, this could also boost anti-EU sentiment in various European states.
“The hope there is that Europe and the West come to Turkey’s rescue, but I would not bet on that given the lack of leadership at present in Europe, focus on Brexit and the EU budget debate and the fact that (Turkish President Recep Tayyip) Erdogan now has few allies in Europe,” Timothy Ash, senior emerging markets strategist at Bluebay Asset Management, said in a note Friday.
At the same time, the EU has seen more confirmed cases of the new coronavirus on Monday. European Commission President Ursula Von der Leyen said Monday there are more than 2,100 cases of the virus confirmed in 18 of the 27 EU countries.
Amid the spread of the virus, Berenberg bank said in a note Monday that “for companies that need a full year of revenues to make profit or break even, the prospect of more than a month of lost revenue while they continue to pay out wages and other such costs is a serious problem.”
The added pressure on the European economy comes at a time when there were already concerns about the pace of growth in the region, namely in Germany — its largest economy. The Organization for Economic Cooperation and Development (OECD) downgraded its growth forecasts for the euro zone to 0.8% from 1.1% in 2020 on Monday.

Europe Politics: Italy senate to vote on trial for far-right leader

4-5 minutos - Source: BBC NEWS

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Image copyright Reuters

Image caption Matteo Salvini has repeatedly said he wants to defend himself in court

Italy's senate is to vote on whether the far-right leader Matteo Salvini should face trial on charges of holding migrants at sea.
Mr Salvini - who previously served as Italy's interior minister - is accused of illegally keeping people on a boat off Sicily for days in August 2019.
Some 116 migrants remained aboard the Gregoretti for close to a week.
Now, senators could decide in a simple majority vote to put the head of the anti-immigration League party on trial.
The League leader has repeatedly said he wants to go to court. In a tweet (in Italian), Mr Salvini said he would tell judges that "defending the borders of my country and protecting citizens was my duty".
"I will go to that courtroom to represent millions of Italians, because I simply did what they asked me," he added.

Under Italian law, ministers have parliamentary immunity for actions taken while they were in office. But Mr Salvini was stripped of this immunity in a committee vote last month.
The senate vote result is expected by or before 19:00 local time (18:00 GMT). If successfully prosecuted at trial, Mr Salvini could reportedly face up to 15 years in jail.

What is Mr Salvini accused of?

For years, some in Italy have complained that the country has taken in a large number of migrants fleeing across the Mediterranean, and has called for other EU nations to take their share.
Mr Salvini in particular took a hard stance on migrant boats while he was in office, implementing a closed ports policy.

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Media captionThousands of migrants are still losing their lives trying to reach Europe by boat

On 25 July 2019, Italian coastguard ship the Gregoretti picked up about 140 migrants trying to travel to Italy from Libya.
While the Gregoretti allowed several people off the ship for medical attention, some 116 people remained on board for days while Mr Salvini demanded other EU countries take them in.
The decision drew an immediate backlash. Prosecutors opened an investigation into conditions aboard after reports that migrants only had one toilet between them.
After the Catholic Church and a number of states agreed to care for those on board, in a deal which then EU commissioner Dimitris Avramopoulos helped to broker, Mr Salvini eventually consented to let them dock on 31 July.

The League leader insists the decision to keep the migrants offshore had the support of Prime Minister Giuseppe Conte and the rest of the government.
But prosecutors believe he acted alone, ignoring repeated requests from Mr Conte to release them.
Italy's Populist Five Star Movement - at the time in coalition with the League - had backed Mr Salvini in previous cases, but says that in this instance he acted alone.
Later in February Mr Salvini also faces losing his immunity over another migrant case. He is accused of keeping the Open Arms migrant vessel offshore for days in August last year.
At the time, Prime Minister Conte called Mr Salvini "obsessed" with keeping migrants out of Italy.

Europe Politics: The race to be Germany's next leader is suddenly wide open after Merkel's successor steps down

Holly Ellyatt

7-8 minutes - Source: CNBC

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German Chancellor Angela Merkel
Thomas Lohnes

The next leader of Germany is in focus following the announcement Monday that Annegret Kramp-Karrenbauer, the head of the Christian Democratic Union (CDU), will stand down from the party leadership and not run for the position of chancellor.
Kramp-Karrenbauer was widely seen as the chosen successor to Chancellor Angela Merkel, due to step down from the German leadership in 2021, but a series of electoral misses, divisions over the party’s direction and an apparent lack of authority prompted the CDU leader and defense minister to step down.
A leadership race is expected to take place in summer and there are already possible contenders for the role, including several that lost out to Kramp-Karrenbauer in the party leadership election in December 2018.
Friedrich Merz (who was narrowly beaten by Kramp-Karrenbauer in the leadership vote), current Health Minister Jens Spahn and the state premier of North Rhine-Westphalia, Armin Laschet, are seen as front-runners in a forthcoming leadership race.
Markus Söder, the head of the CDU’s Bavarian sister party, the Christian Social Union (CSU) and the CDU’s Daniel Günther or Raplhp Brinkhaus are candidates with an outside chance, analysts say.

The favorites

Friedrich Merz, the pro-business, vice president of the CDU’s Economic Council and a favorite for the CDU leadership, made no reference to the news of Kramp-Karrenbauer’s departure but tweeted Monday that falling industrial production figures for Germany were a “warning sign” and that “now would be the right time to stimulate economic and financial policy measures,” he said.
“The purchasing power of private households could be increased with a reduction in the tax burden, as could the investment power of companies,” Merz, a corporate lawyer and millionaire, noted.
Florian Hense and Holger Schmieding, economists at Berenberg Bank, noted Monday that the favorites to replace AKK as party leader are Merz and Laschet.
Laschet’s experience as state prime minister of North Rhine-Westphalia would make him well suited to lead a coalition with the Greens. “He would be a candidate of continuity – which could not only be an advantage. Many in the party may regard him as too close to Merkel, though,” they noted.
Merz, meanwhile, they noted, is “well supported by those in the CDU base who look for a bigger change after Merkel’s reign. Having come only narrowly behind AKK in late 2018, he may have a slight advantage over Laschet who did not run at the time. He may be better suited to take on the right-wing AfD than the other candidates.”

Traditionalists Vs. Centrists

Analysts note that Kramp-Karrenbauer, a protegee of Merkel seen as continuing her political direction, had failed to unite a party riven with division over whether to assert its traditional, Conservative values or to remain more centrist, as it has been under Merkel and AKK.
But Jens Spahn – aged 40, gay and staunchly Conservative (and a contender for the leadership) paid tribute to Kramp-Karrenbauer, saying he had “great respect for this unexpected decision” and that she had brought the party together.
“The separation of party leadership and chancellery was a difficult situation. It is AKK’s credit for bringing the CDU and CSU together again. The cohesion of our party must now be our guiding principle,” he said.
Assessing the top candidates for the CDU leadership, J.P. Morgan Economist Greg Fuzesi said that a “new CDU leadership election may produce a less Merkel-friendly and a more fiscally-conservative leader” such as Friedrich Merz, given that Kramp-Karrenbauer was essentially an ally of Merkel.
“But, in any case, the process of replacing Kramp-Karrenbauer will involve heated and divisive debates within the CDU about the party’s direction and perhaps reduce the likelihood of significant new policy initiatives by the German government in the meantime. Other parties also still face pressures, with the new leadership team of the SPD having failed to have any impact on the polls. Hence, new elections cannot be ruled out at some point.”
Franca Wolf, Europe analyst at global risk consultancy Verisk Maplecroft, said that Spahn and Laschet would likely continue Merkel’s centrist direction, while victory for Merz would signal a return to the CDU’s “more traditionally conservative roots.”

Disunity

The departure comes after a torrid time for the CDU, in a strained coalition with its sister party, the Christian Social Union (CSU) and Social Democratic Party (SPD). The CDU has seen its popularity decline, although it continues to lead voter polls, and a series of regional elections have highlighted divisions in the party and the fragile coalition which has come close to collapse.
The recent state vote in the small state of Thuringia, which prompted a political earthquake, was seen as a deciding factor behind Kramp-Karrenbauer’s departure. The election had seen the regional branch of the CDU voted with the far-right, anti-immigration Alternative for Germany (AfD) party to elect a new state premier.
The regional CDU vote was seen as an open defiance of the party leadership in Berlin, and the breaking of a political taboo in Germany, to not associate with the AfD.
Emily Mansfield, principle economist at the Economist Intelligence Unit, said all the contenders would face “the same problem: how to reconcile differences between the state-level and federal-level positions of the party, and how to balance tough competition from the AfD (especially in east Germany) with the fact that the CDU’s next coalition partner is most likely to be The Greens,” she said Monday.
“The CDU is currently under to reinvent itself for the post-Merkel period while at the same time navigating an increasingly fragmented political scene, and the coalition-building difficulties that this leads to. The key areas of debate within the CDU as the election approaches will be immigration, defence and fiscal policy, and the party’s positioning on these with respect to the AfD and The Greens.”
Carsten Nickel, the deputy director of research at Teneo Intelligence, agreed that the Green Party could gain an advantage from the current disunity in the CDU.
“AKK’s resignation takes the CDU to where it was some 18 months ago, when Merkel declared that she would not run again for the party leadership. As discussed back then, the structural question of the CDU’s programmatic orientation post-Merkel will be more important than whether a representative of the traditional or the centrist wing presides over the party. In the meantime, the CDU’s awkward balancing act leaves the Greens with the potential to take over the political center,” he said in a note Monday.

Europe Politics: EU warns UK it will 'never, never, never' give way on its single market ahead of trade talks

Holly Ellyatt

3-4 minutes - Source: CNBC

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Lorries arrive at the Port of Dover in Kent.
Gareth Fuller - PA Images | PA Images | Getty Images

The EU will “never, never, never” compromise on the integrity of the bloc’s single market when it comes to negotiating a trade deal with the U.K., according to the EU’s chief Brexit negotiator Michel Barnier.
“There will be no compromise on the single market. Never, never, never,” Barnier said at Queen’s University Belfast Monday evening. “It is our main asset on the EU side,” he said. “Never will the EU compromise, (make) fragile or unravel the single market, never,” he said.
The EU’s single market seeks to guarantee the free movement of goods, capital, services, and labor — the “four freedoms” — within the EU. With a collective population of over 500 million people and consumers, the value of single market membership and that unfettered movement of goods and services is a boon to businesses in the bloc.
When the U.K. leaves the EU on Friday January 31, it will remain a member of the single market but only during a “transition period” until the end of 2020.
During that time, the U.K. and EU will try to strike a trade deal although the short time frame is seen as ambitious and Brussels has warned London that the trading relationship will not be the same post-Brexit.
Irish Prime Minister Leo Varadkar suggested in an interview with the BBC Monday that the EU will be the “stronger team” in post-Brexit trade talks and that striking a deal would be “difficult.” U.K. Prime Minister Boris Johnson is bullish, however, saying the U.K. can “wrap up” a deal by its self-imposed deadline of the end of 2020.

‘Be realistic’

Speaking at the William J. Clinton Leadership Institute, Barnier said the consequences of leaving the trade bloc had not been understood in the U.K.
“Leaving the EU, leaving the single market, leaving the customs union, it’s the choice of the U.K., will have consequences. And what I saw in the past, in the last year, is that many of these consequences have been underestimated in the U.K., or not so well explained to the people,” he said. “Now we have to face the reality and to be realistic.”
The EU is particularly worried about ensuring what it calls a “level playing field” when it comes to the U.K. It’s concerned that the U.K. could pursue a more active business subsidy policy, competitive tax regime and competition policy.
Meanwhile the U.K. is understandably keen to maintain the “frictionless trade” of goods and services it has so far enjoyed as a member of the EU, but Barnier said that would not be possible.
“There will be no possibility for frictionless trade between the EU and the U.K. after Brexit. At least we will have control of goods, because we have the duty, the responsibility, to protect EU consumers and EU businesses.”

Europe Politics: Pound slumps 1% as Boris Johnson raises fresh risk of a no-deal Brexit

Holly Ellyatt

6-8 minutos - Source: CNBC

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UK Prime Minister Boris Johnson gestures as he speaks to supporters on a visit to meet newly elected Conservative party MP for Sedgefield, Paul Howell at Sedgefield Cricket Club on December 14, 2019 in County Durham, England. F
WPA Pool

The pound fell more than 1% in early trade Tuesday after media reports said that the British government will make it illegal for the post-Brexit transition period to be extended, leaving little time for a trade deal to be agreed with the EU.
Local media reported early Tuesday that Johnson will add a revision to the Brexit bill (formally known as the Withdrawal Agreement Bill) that would explicitly rule out any extension to the transition period beyond December 2020. The U.K. is due to leave the EU by January 31, 2020.
The reports have raised concerns that the U.K.’s new, more empowered government under Prime Minister Boris Johnson could be steering the country towards a harder Brexit.
The legislation, if implemented, would leave only 11 months for a trade deal to be struck with the EU and many people think that is not enough time.
The pound initially fell to a low of $1.3236, down 0.7% from late Monday levels following the report by British broadcaster ITV, and later reported by the BBC and other media outlets.
Early Tuesday morning, the pound was down almost 0.4% against the dollar, at $1.3282 before weakening further to fall below $1.32.

The transition period seen as a time of adjustment for both sides post-Brexit. Crucially, it’s a time in which the EU and U.K. can negotiate a trade deal.
During the transition period, EU laws continue to apply in the U.K. as if it’s a member state, but the country would no longer be represented in the EU’s decision-making bodies. Currently, the transition period has the option of being extended for up to two years if both sides agree.
British media reports say that the Johnson’s government will try to make it illegal for the transition period to be extended in a bid to put more more pressure on the EU and to fast-track a trade deal.
Boris Johnson’s move comes from an emboldened Conservative Party which won a resounding victory in last week’s general election and gained a majority of 80 seats in Parliament. The win was seen as enabling Johnson to pursue his party’s own Brexit agenda more easily and Tuesday’s news appears to support that.
The U.K. has a vested interest in signing a speedy trade deal. It is keen to strike trade deals with other nations outside the bloc (a large part of the pro-Brexit argument was that leaving the EU would allow the U.K. to trade freely with the rest of the world) and while it can negotiate trade deals during the transition period, these cannot come into force until the transition period ends.
Experts think most countries will want to see what the U.K.’s trading relationship will be like with the EU before they negotiate their own trade deals with Britain, however.

Johnson empowered

Close follower of Brexit proceedings and J.P. Morgan Economist Malcolm Barr said that Johnson’s move was a surprise in that it was done without apparent pressure from a group of influential hard Brexit supporters, known as the European Research Group (ERG), from within the Conservative Party.
“As much as we anticipated that the possibility of extending the transition period would be removed from U.K. law, it comes as something of a surprise to us that Johnson appears to have done this entirely voluntarily, rather than as a result of pressure from amendments proposed by the ERG as the legislation came to the (House of) Commons. The signal of intent on his part is, in our view, very clear,” he said in a note Tuesday.
Following the latest media reports, Barr said the risk of a “no deal” end to the transition period stood at 25%, “a number we regard as uncomfortably high.”
“The negotiation process is path dependent and we could find ourselves on that path even though neither negotiating views it as their first preference,” he warned, although J.P. Morgan believes that some form of “deal” has a higher probability of 50%.
“Within the spectrum of probabilities, however, we are changing the numbers so that a simple (Withdrawal) Treaty amendment which changes the end date of the transition has less probability, while some form of “deal” has more. Given the commitment Johnson is now set to enshrine in law, it looks like whatever agreement is reached will be presented as a new deal, even if it takes large parts of the transition conditions and pushes them into 2021.”

Crowd-pleaser

The reported move to block any delay to is seen as a way for the government to show voters that backed the Conservative Party (many of whom doing so for the first time having abandoned the opposition Labour Party in droves) that it is determined for the U.K. to leave the EU without further delay.
Since the EU referendum in June 2016, many British voters have become frustrated with multiple instances of political deadlock. The Conservatives were seen to have performed well with much of the electorate in the election due to its mantra that it would “get Brexit done.”
The latest government move has drawn criticism from the opposition, with the Labour Party’s Shadow Brexit Secretary Kier Starmer saying it represents “reckless and irresponsible behavior we have come to expect from Boris Johnson’s Government.”
But Conservative Minister Michael Gove said Tuesday that the government was committed to securing a trade deal with the EU by the end of 2020, Reuters reported.
A weaker pound gave a little boost to U.K. equities Tuesday with London’s FTSE 100 index trading in positive territory while its continental counterparts traded lower. Maarten Geerdink, head of European equities at NN Investment Partners, told CNBC Tuesday that the latest reports from the U.K. would “produce another cliffhanger for Europe.”
“It will be another target that the market can focus on,” he told CNBC’s Capital Connection. “But I do think the fact that he (Prime Minister Boris Johnson) has such a huge majority in parliament does give him a lot more room to get the deal done.” Geerdink cautioned investors that “there is still some time to see how this plays out,” however.

Europe Politics: UK set for Brexit election with Boris Johnson hoping to retain power

Holly Ellyatt

4-5 minutes - Source: CNBC

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Prime Minister Boris Johnson and Leader of the Labour Party Jeremy Corbyn shake hands during the ITV Leaders Debate on November 19, 2019 in Salford, England.
Jonathan Hordle | Getty Images News | Getty Images

The countdown to the U.K. election has entered its final days with Britons waiting to find out who will control the country’s departure from the European Union — an event that will have profound changes on Britain for decades to come.
Prime Minister Boris Johnson remains the favorite to win on Thursday, although his lead has narrowed in opinion polls in recent weeks.
Speaking to Sky News on Sunday, Johnson said he was nervous about the narrowing polls and said he and his Conservative Party were “fighting for every vote.” The Conservatives’ lead differs between polls but numbers over the last week have given the party a lead of between nine and 15 points ahead of its rival Labour.
The “Britain Elects” poll tracker, run by the New Statesman magazine, gives the Conservatives 42.9% of the vote with the opposition Labour party, led by Jeremy Corbyn, on 33%.
The Liberal Democrats, a staunchly anti-Brexit party, are seen with 12.6% of the vote. The Brexit Party and Green Party are seen with around 3% of the vote each.
There is wariness over the accuracy of opinion polls after they did not predict the outcome of the Brexit referendum in June 2016, nor the outcome of the snap election of 2017 in which then-Prime Minister Theresa May lost her majority in Parliament.
Johnson is also looking to regain his majority in the 650-seat Parliament this election in order to see through his Brexit deal. His predecessor May fell on her sword and gave up the party leadership when her Brexit deal was rejected by Parliament three times.

Johnson’s Brexit deal is currently in limbo and has not been fully ratified by U.K. lawmakers. The EU granted the country yet another extension to the Brexit departure date, to January 31, 2020.
The U.K. departure has dominated the political campaigning of all parties, with Labour insisting that a Brexit deal would be put back to the people for a final vote. Meanwhile, Johnson told Sky News on Sunday that he would deliver a “transformative” Brexit.
When it comes to economic pledges, the Conservatives and Labour are offering radically different plans for the U.K.’s economy, the fifth largest in the world.

Labour wants to nationalize swathes of the utility and transport sector and to increase taxes for corporations while the Tories have promised not to raise income tax, value-added tax (VAT) or national insurance contributions (which entitle workers to certain state benefits).
Both parties have pledged that they will increase spending for the National Health Service (NHS) which has become a battleground between the parties.
Labour alleged that the Conservative Party will “sell off” the NHS to U.S. corporations as part of a post-Brexit trade deal. The Conservatives deny this and so does President Donald Trump, who said last week during his visit to London for the NATO summit that he wouldn’t want the NHS even if “it was offered on a silver platter.”

Paul Jackson, global head of asset allocation and research at Invesco ETFs, told CNBC Monday that a Johnson win could be a mixed blessing for markets.
“We think, based on everything we’re seeing, that the Conservatives will win a majority, perhaps not as big as we originally thought … Brexit gets done — which the markets are first thinking ‘phew, that’s out of the way,’ but secondly, Boris Johnson is not Jeremy Corbyn, so they think that’s good news,” he told CNBC’s “Capital Connection.”
“But the bad news is that then the process of getting a future trade deal with the European Union starts and the way that Boris Johnson has set this up, we could still have a no-deal outcome, and I think the markets will start to worry about that during the course of next year so I suspect sterling will come down again.”
Sterling rose to a more than two-year high against the euro following the latest opinion poll showing the Conservative Party with a 14-point lead over Labour in the final week before the election. The pound is currently trading at 1.3172 against the dollar.

Europe I Europe Politics I Italy's government seems to be at breaking point — here are 5 reasons why it's going wrong

Holly Ellyatt

7-9 minutes

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(From L) Italy’s Deputy Prime Minister and Minister of Economic Development, Labour and Social Policies, Luigi Di Maio, Italy’s Prime Minister, Giuseppe Conte and Italy’s Deputy Prime Minister and Interior Minister, Matteo Salvini on October 15, 2018.
NurPhoto | NurPhoto | Getty Images

Tensions in Italy’s coalition government appear to be growing with differences of opinion between the ruling Lega party and 5 Star Movement (M5S) becoming more pronounced.
Thrown together a year ago following an inconclusive general election, an alliance between the right-wing Lega and anti-establishment M5S had raised eyebrows from the off, but now it looks increasingly likely that the coalition could collapse and prompt fresh elections.
The ruling parties and their leaders -- Lega’s Matteo Salvini and M5S’ Luigi Di Maio who both serve as deputy prime ministers -- appeared united last year in their 2019 budget as they pledged to cut taxes and raise welfare spending.
They also appeared united in their defiance against the European Commission, which repeatedly warned Italy to rein in its spending and lower its budget deficit. The government has also clashed with Europe on immigration policy and integration.
But cracks in the veneer have appeared since then and differences of opinion, policy and ideology – and even the budget now - between the parties and leadership seem to be turning into more of a daily occurrence.
Meanwhile, the insistence from both parties’ that all is well in the coalition camp has all but disappeared and particularly so in the run up to the European Parliament elections this week in which the two parties are rivals.
Frayed tempers between the two parties prompted Prime Minister Giuseppe Conte, who was appointed by Di Maio and Salvini, to cancel a planned ministerial meeting Monday.
Somewhat optimistically, Conte has insisted that after May 27 (when European parliamentary elections have ended) the atmosphere will be “completely different.” That might be wishful thinking given the growing animosity between the Lega and M5S leadership, Lega’s Salvini and Prime Minister Conte, and government ministers and officials.
CNBC looks at five current sources of tension between Lega and the 5 Star Movement:

1) Immigration

Immigration control has always been central to the Lega’s policies and the party has wasted no time in implementing hardline anti-immigration laws once it was in government.
Informally named after Interior Minister Salvini, the “Salvini decree” (also known as the “security decree”) tightened immigration and citizenship laws, and essentially limited asylum seekers’ rights. Critics say the measures punish the vulnerable but conservative lawmakers insist they are necessary to help Italy which has struggled to cope with an influx of migrants, largely from Africa. M5S was more ambivalent about the measures and had tried to amend the decree.
Salvini, who also closed Italy’s ports to NGO-run search and rescue vessels carrying migrants rescued in the Mediterranean, expressed fury this weekend when a German NGO vessel defied an order not to enter Italian waters. He also opened a new front of tension with coalition partner M5S and Prime Minister Conte who he said had been too lenient towards migrant rescue boats.
On Friday, Salvini reportedly stated that “the premier (Conte) and the 5-Star (M5S) minister (Di Maio) don’t come into it, human traffickers won’t get to Italy any more.” Di Maio responded by saying that Italy had seen strongman leaders before “and we certainly don’t miss them,” ANSA news agency reported. Di Maio also accused Salvini of arrogance.

2) Spending

Last year, Salvini and Di Maio appeared united enough to have big spending plans for Italy, much to Brussels’ dismay. While Lega wanted to cut corporate taxes and to introduce a “flat tax” rate, M5S meanwhile had promised voters a universal basic income. Now the government is struggling to maintain campaign spending pledges with stabilizing the country’s fragile finances and economy.
The European Commission threatened to start punish Italy (which has the second largest debt pile in the euro zone after Greece) if it exceeded budget deficit targets and rules. After appearing to try to appease the commission, Lega seems bullish again about breaking the rules, making suggestions that it could cancel a planned sales tax rise and could just increase public borrowing.

Deputy Prime Minister and Labour Minister Luigi di Maio(L), Italian Prime Minister Giuseppe Conte(2L), Italian deputy Prime Minister and Interior Minister Matteo Salvini(2R) and Italian Economy and Finances Minister Giovanni Tria(R) hold a press conference on the Italian budget on October 15, 2018 in Rome, Italy.
Antonio Masiello | Getty Images News | Getty Images

This has put Economy Minister Giovanni Tria (who is not allied with either ruling party) in a difficult position. On Monday, Tria said it was “impossible” to stick to deficit and debt cutting commitments while cutting taxes and hiking spending. “The government will need to choose,” Tria said, Reuters reported.
Meanwhile, Salvini said Monday that the only way to reduce debt is to cut taxes to spur growth and that EU fiscal rules should be revised because they hamper growth. These comments, reported by Reuters, come after Salvini said last week that Italy should breach the EU’s 3% deficit limit if necessary to boost the economy and create jobs.
But last Friday Di Maio poured cold water on any M5S backing of that plan, saying the movement would not back a budget law that causes Italy’s big public debt to climb even higher.

3) Family

Another bone of contention is welfare. M5S’ Luigi Di Maio, who is also Labor minister, wants to implement a so-called ‘Family Decree’ that would give low-income families an allowance to help raise their children. Di Maio also proposes cutting nursery fees and discounts on diapers but he has clashed with Lega’s Family Minister Lorenzo Fontana over the plan; Lega wants to block the decree.
On Friday, Di Maio said the government’s future was tied to the family decree, stating, ” “We can split on everything in this government, but not on the family,” he said, adding that the “destiny and survival of the government is at stake with this decree.”

4) Corruption

While Lega’s bugbear is immigration, M5S has made anti-corruption and graft measures a key policy area. Thus, when a corruption probe was recently launched into a Salvini’s economic advisor Armando Siri, Lega did not take the move well.
Di Maio repeatedly called for Siri, who denies wrongdoing, to quit his role as undersecretary in the Transport Ministry (which is led by a M5S member) but Salvini backed his advisor and insisted he should retain his post until the probe was completed.
That was overruled when Prime Minister Conte sacked the junior minister earlier in May causing more friction with Lega’s Salvini.

5) Education

Another spat between Lega and M5S emerged last Friday but this time, it was over a teacher who had been temporarily suspended from her job because her students had compared Lega leader Salvini’s security and migrant decree to the race laws of Benito Mussolini.
Salvini called the comparison “disrespectful” while M5S said the suspension – which was ordered by Education Minister Marco Bussetti (a Lega member) - was tantamount to censorship.

Source: CNBC