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Sensemaker: Mamma mia

Sensemaker: Mamma mia

What just happened

Long stories short

  • The UK’s Labour Party surged five points in three days to a 17-point lead over the Conservatives in a new YouGov poll.
  • Edward Snowden, who fled to Moscow after leaking details of a vast US surveillance operation, was granted Russian citizenship.
  • Japan’s former leader Shinzo Abe was given a state funeral despite protests over its cost.

Quote of the day: “A strong tendency for long rates to go up as the currency goes down is a hallmark of situations where credibility has been lost.” – Former US treasury secretary Larry Summers

Mamma mia

 Italy has elected its most right-wing government since World War Two in the same month that a party with neo-Nazi roots became the second largest in Sweden. 

Europe is shifting to the right. But how far? 

Giorgia Meloni is an avid Lord of the Rings fan and leader of the far-right Brothers of Italy (FdI), which won about 26 per cent of votes cast on Sunday. That’s a six-fold increase on 2018 and puts Meloni on course to become the country’s first female prime minister.

Her party will dominate a right-wing alliance with Matteo Salvini’s League and Silvio Berluconi’s Forza Italia. It is

  • fiercely anti-immigration
  • prone to lashing out at international bankers; and
  • openly scornful of the LGBT lobby.

Meloni’s rallying cry – “I am a woman, I am a mother, I am Italian, I am a Christian and you will not take that away from me” – became a hit disco track. 

She rejects the facist label, which nonetheless clings to the FdI as tightly as the tri-coloured flame on its flag – a leftover from the party’s earlier incarnation as the Movimento Sociale Italiano, a postwar grouping of Mussolini loyalists. She’s presented herself as a pragmatist who shares Mario Draghi’s aversion to increasing Italy’s debt.

There the common ground with Draghi ends. Meloni stayed out of his national unity coalition, preserved a distinct political identity and is reaping the benefits. Enrico Letta, head of Italy’s centre-left party, says what’s happening is not a far-right surge but a shift of voters from Salvini to Meloni. “It’s not a wave – it’s her,” he told the WaPo. “Part of the country is betting on her, because she is young and new.”

At the opposite end of Europe, Jimmie Akesson’s Sweden Democrats have been growing their vote share since first winning seats in 2010, by directly addressing issues other parties tiptoed round:  

  • Immigration: As the share of the Swedish population born outside Europe grew from 2 per cent in 1990 to 11 in 2021, the party fed on voters’ unease and took votes across rural areas in particular. Swedish society’s failure to integrate refugees from poorer, Muslim countries became a subject of mainstream discussion; former PM Magdalena Andersson says Sweden has “two parallel societies”. 
  • Crime: There were at least 342 shootings last year resulting in 46 deaths (up from 25 shootings in 2015), mainly because of gang violence. 
  • Russia: Putin’s invasion of Ukraine heightened a sense of fear in Sweden, says Susi Dennison of the European Council on Foreign Relations – a fear she believes contributed to the Sweden Democrats’ success in this election. 

What next? 

Europe. It’s unclear if the Sweden Democrats will join the next government – but they can’t be ignored. They won’t change Sweden’s fundamental stance on Europe, but the national conversation on immigration could get uncomfortable. 

Italy’s relationship with Europe is harder to predict. With $200 billion of post-pandemic recovery funds due over the next four years, Meloni will be motivated to mute her criticism of the bloc. But both sides expect tension:

  • Asked about the Italian election, Ursula von der Leyen grouped Italy, one of the bloc’s six founding members and its third largest economy, in the same box as Hungary and Poland. “If things go in a difficult direction,” she said, “we have tools” – a reference to funding cuts. 
  • Meloni runs a European parliamentary group that includes Poland’s ruling Law and Justice party, the Sweden Democrats and Spain’s Vox, giving her political clout in other European capitals. 
  • She has supported Hungary’s Viktor Orbán, and Dennison says a big question for Europe’s future is the extent to which Meloni leads Italy into this group of “EU troublemakers”. 

Russia. Meloni and Akesson are both unequivocal in their support for Ukraine, although Meloni’s partners have struggled to stay on message; Berlusconi said last week that Putin only wanted to replace Zelenskyy’s government with “decent people”.

European leaders may be comforting themselves with the thought that the bloc has survived right-wing threats before. That would be a mistake. “What we need to see to get through this energy crisis is a sense of understanding a common destiny,” Dennison says. Newly elected forces in Italy and Sweden aren’t helping on that front, and winter is coming.


Growth pains
If markets thought the UK would be good for its new debts, the value of the pound and the cost of borrowing would be under control. But they don’t and they’re not. After a hell of a day, yesterday sterling is wobbling at around £1.08 this morning. The Bank of England is dithering and the chancellor says he’ll produce some new fiscal rules to bring down debt… next month. The silver lining of the weak pound is supposed to be cheap exports, but few UK exports don’t depend to some degree on the prices of imports, which are soaring. The silver bullet in the mini-budget is supposed to be the scrapping of Sunak’s planned corporation tax rise, prompting a flood of inward investment. That’s coming in the form of hostile bids for devalued British companies. Sainsbury’s owner could be Czech before we know it. The real upside of all this is a frenzy of M & A activity in the City just as the cap on bankers’ bonuses is lifted. Good for them. Meanwhile, sooner or later, rates are going up again. They could go to 6 per cent, in which case a homeowner with a £250k mortgage looking for a new fixed rate would be £800 worse off a month. As Tory backbenchers know well, 300,000 fixed rates expire each month. 


Musk to the rescue?
Elon Musk likes donning a cape. He activated his satellite broadband service, Starlink, in Ukraine earlier this year after the Russian invasion, which became a lifeline for soldiers on the ground. Now the Tesla billionaire has activated the service in Iran, where at least 40 people have been killed in protests since the death in detention of Mahsa Amini, a young woman arrested for allegedly breaching hijab rules. Last week the US relaxed sanctions on internet services operating in Iran; on Sunday Karim Sadjadpour, a senior fellow at the Carnegie Endowment for International Peace, said Musk had confirmed that: “Starlink is now activated in Iran.” But the technology needs a special terminal and satellite dish on the ground, and unlike Ukraine it is not welcomed by the Iranian government, which wants to keep its people in the dark. 

The 100-year life health, education AND GOVERNMENT

Student price tag 
As of June 2022, 43 million borrowers in the US held $1.6 trillion in federal student loans – taken out via the Department of Education to pay for college tuition. In August, President Biden announced an executive action that would cancel a significant chunk –  around $430 billion – of that debt for graduates who earn under $125,000. It comes with an equally significant price tag. The bi-partisan Congressional Budget Office reported yesterday the policy would cost the government $400 billion over the next 30 years. The Committee for a Responsible Federal Budget said it was the “most costly executive action in history” and criticised taking on the deficit bloat without Congressional approval. To remember: Biden’s Inflation Reduction Act is forecast to reduce the government deficit by $238 billion in the next decade. To think about: more than half of those with student loans are under 35, a voting bloc with typically low turnout, and midterms are around the corner. Join us next week for a ThinkIn in which we’ll try to make sense of the UK’s student loans – and if they work.

Our planet CLIMATE AND geopolitics

Storm track
For the first time in 25 years there were no named storms in August in the Atlantic. The same cannot be said for September, which has already seen four hurricanes. Twenty-one deaths have been attributed to Hurricane Fiona, which swept through Puerto Rico and the Dominican Republic, causing “catastrophic” damage and triggering a declaration of emergency by the White House. Having ravaged the Caribbean, Fiona is heading for Eastern Canada for what forecasters say could be a once-in-a-lifetime storm. Local journalist Rene Roy told CBC: “This is hands down the most terrifying thing I’ve ever seen in my life.” At the same time, Hurricane Ian is heading for Florida and is forecast to become the most intense storm of the season. Nasa has cancelled its Artemis I rocket launch for the third time, and Gov. Ron DeSantis declared a state of emergency for the whole state. Reuters says climate change is making hurricanes wetter, windier and altogether more intense. The 2022 season is one to watch, and fear. 


Putin’s nightmare
At one point the commander of Ukraine’s armed forces wanted to be a comedian, like his boss. In the end, Valeriy Zaluzhny followed in his father’s footsteps, joined the army, rose through ranks and was stunned to be promoted to the top job in the defence of his country by President Zelensky last year. He was 48 – younger than many of his senior staff. Time magazine has the first English language interview with Zaluzhny since the invasion and learns two things: Zaluzhny’s most important instinct is to delegate, trusting frontline officers to make their own tactical decisions; and his best case scenario for this war is victory – followed immediately by preparations for the next one, against the same adversary. 

And finally… you can now listen to the interview with legendary Chinese artist Ai Weiwei for the TalkArt podcast, recorded live at Kite Festival.

Jessica Winch

Additional reporting by Giles Whittell, Sebastian Hervas-Jones, Phoebe Davis and Laoise Murray.

Photographs Getty Images

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