MNI INTERVIEW: Italy Northern Front Head Seeks Early Euro Exit

--Salvini Seeks Revised EU Treaties, New Banking Rules, Flat Tax

--Populist Aims At Spearheading Centre-Right Coalition to Win Next Elections

By Silvia Marchetti

     ROME (MNI) - Matteo Salvini, leader of Italy's populist Northern League,

has pledged to push for a revision of all existing European treaties, for a flat

tax and an exit from euro if his party wins next year's general election.

     In an exclusive interview with Market News, Salvini announced that

"manoeuvres" are already underway with other centre-right parties to form a wide

coalition that would boost his chances of victory. The populist leader is

currently touring Italy to promote his electoral program and rally support.

     "The Northern League is in talks with former premier Silvio Berlusconi's

Forza Italia party and the minor Fratelli d'Italia group to join forces at the

upcoming elections. We are preparing a 3-party summit in early September to

discuss possible alliances," Salvini said.

     Italian voters will go to the polls March or April 2018. According to

polls, following recent victories in municipal elections, support for the

Northern League has risen to 15%, while Forza Italia is stuck at 14% and

Fratelli d'Italia, a former fascist party, at 4%.

     Salvini believes consensus for the centre-right will further grow to 40% in

coming months, as the Democrats of former premier Matteo Renzi appear to be on

the slide amid rising internal disagreement and waning poll support.

     Salvini, whose party was founded in 1994 as a small local northern group

supported by just 4% of voters, requires that all potential allies agree on all

points of his electoral program. His controversial agenda looks at major

overhauls in several areas and reforms adopted by previous governments.

     "We've already defined the pillars of our program. These are the

introduction of a 15% flat tax to tackle tax-dodging and raise state revenues, a

revision of pension reforms, the abolishment of Renzi's Jobs Act labour reform

which has turned out a disaster, and a new immigration policy that remains our

core battle," he said.

     The Northern League supported Berlusconi's various governments in the past,

but then often pulled out of alliances on various policy disagreements,

triggering political crises. The picture has changed now, as the Norther League

aims to be the senior coalition partner. In a 3-party centre-right government,

Salvini could hold the majority position.

     Salvini's agenda for government also contains a revision of all European

fiscal and banking rules, along with Italy's definite exit from the eurozone.

     "The Europe of today is at a crossroads. That's why it is essential to

revise all existing EU treaties, some which are 25 years old and badly need a

makeover to tackle the union's current challenges," he argued.

     Salvini wants to overcome not just the strict Fiscal Compact rule on public

debt reduction that binds all EU member states to reach the medium-term

objective (MTO) of a structural balance. He also wants to amend the Schengen

agreement and the Lisbon treaty, both of which in his view have damaged rather

than benefitted the European project.

     To exit the euro, he explained, no referendum would be needed but just a

unilateral move by Rome's government. Salvini has denied that leaving the

exclusive euro club could trigger a sovereign debt crisis in the country, even

though Italy faces a soaring public debt. It has the euro-zone's second-largest

in volume after Greece.

     "There will be no cataclysm, simply because two-thirds of Italy's debt are

in the hands of the Italian people anyway, so it wouldn't really change the

picture if we abandon the euro," he said.

     "It doesn't matter what we call our next currency. But we need to abandon

the euro fast," he warned.

     "The single currency will not have a long life. It is doomed to failure.

Therefore ditching the euro is an emergency exit decision, which could

paradoxically be taken even by Germany first. Berlin has so far gained the most

advantages from the eurozone, but maybe now it is no longer convenient for it to

stay,", Salvini argued.

     The new Bank Recovery and Resolution Directive (BRRD), that has introduced

bail-in rescue rules as of this year, should also be abolished according to

Salvini.

     "The bail-in must be revised, it clashes with protecting savers and

bond-holders. Years ago we were the first party to vote against the new banking

rules, and today, even the government and the Bank of Italy finally realise the

negative aspects and call for a timely revision" of the BRRD, he added.

     On the hot topic of immigration, with Italy currently bearing the heaviest

burden among its peers, the Northern League leader has called for the

introduction of a fixed quota scheme for incoming migrants and for the transfer

of Italian boundaries "beyond the Mediterranean by putting up migrant

identification centres in North Africa".

     "Everyone has always defined our stances on immigration as extreme and

xenophobic, but we were just farsighted. Today, even Renzi calls for migrant

quotas and acknowledges that a hard line is needed if you want to avoid a

biblical invasion from Africa, which has already started," Salvini argues.

     Despite a weakening of the populist front across Europe following Marie Le

Pen's defeat in the French presidential elections and Geert Wilders' defeat in

the Netherlands, Salvini is confident that support for populism is far from

dying-out.

     "On the contrary, populism is the only force able to create an alternative,

better Europe and I am sure its consensus is set to grow among European voters

in the short-run," he said.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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