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Italy's election result could see its ties to Europe change dramatically

  • Italy's election result showed a seismic shift in the country's political identity that could affect its ties to Europe.
  • Traditional parties like Silvio Berlusconi's Forza Italia and the ruling Democratic Party (PD) fell short of expectations.
  • Both M5S and Lega, winners in the election vote, are ambivalent towards Europe.

Italy's election result showed a seismic shift in the country's political scene with both the anti-establishment Five Star Movement (M5S) and right-wing Lega party seeing strong gains in the vote Sunday.

Meanwhile, parties like Silvio Berlusconi's Forza Italia and the ruling Democratic Party (PD) fell short of expectations, prompting PD leader and former Prime Minister Matteo Renzi to resign.

Italy's former Foreign Minister Giulio Terzi di Sant'Agata told CNBC Monday that the vote had "significant meaning" for Italy's relationship with its neighbors.

"It's been a clear indication that the majority of Italian voters want a change. They want a change that is significant in relation to a number of issues which are considered a high-priority now by at least 60 percent, and perhaps more, of Italian voters."

Immigration and culture

The election debate in Italy has been dominated by immigration — Italy has seen a large influx of migrants, mainly from Africa, in recent years — and the economy, with unemployment sticky at 11.1 percent and much higher in the south, where youth unemployment is as high as 57.2 percent in Sicily, according to Eurostat data.

"For sure, the priorities are immigration, the control of borders, of Europe, (the issue of) cultural identities and the understanding of how the Italian society should move ahead in a globalized world," Terzi di Sant'Agata said, following the Italian election result which pointed to a hung parliament where no one party or coalition gained a majority of the vote that would allow it to govern alone.

He said other issues included national security, crime and "the huge issue of economic growth and development, the big question is the unemployment among the younger generations."

"The relationship of Italians with the EU, over the last year since we've seen some economic growth, it's not been sufficient and satisfactory enough to create confidence among the majority of the population. So this is something to take into account when looking at the future relations of the new government that will be produced (in Italy) and European institutions," Terzi di Sant'Agata remarked.

"So all these elements are coming in to the picture when you look at Italy's relationship with the European Union," he added.

Euroskeptic flavor

M5S and Lega, which is part of a center-right coalition, on Monday ruled out forming a "broad coalition" but both parties said they are willing to talk.

Something they share in common is a certain agnosticism when it comes to Italy's relationship with, and place in Europe and the euro zone, in particular.

M5S used to have a strong euroskeptic flavor to their manifesto but this has softened recently under new leader Luigi Di Maio, whereas Lega too has had an ambivalent stance towards the euro. Lega leader Matteo Salvini repeated on Monday that the single currency "was, is, and remains a mistake."

Alexander Pohl/NurPhoto via Getty Images

Terzi di Sant'Agata, who now works as an Italian diplomat and is affiliated to the euroskeptic, right-wing party Fratelli d'Italia, said the vote could direct inter-relations between Rome and Brussels in a valuable way.

"There are elements that are very critical for the euro zone and the EU 27 (members of the EU excluding Britain), elements which have to be addressed quickly and they've been kept unresolved over the last two or three years — things like the banking union and budgetary resources … And fiscal policy," he said.

Lega view

The election result was surprising to political analysts as it saw the Lega party overtake Forza Italia, its center-right coalition partner, in terms of vote share giving it more influence in the coalition and potentially at a national level.

The party, formerly Lega Nord (Northern League) used to campaign for independence for Italy's northern regions but has now focused on national matters, particularly immigration.

Party leader Salvini said Monday that a referendum on the euro was not a possibility but said people, rather than bureaucracy, needed to be at the heart of Europe. He also repeated his criticism of the single currency, signaling that the party, if it forms part of a coalition government which could do, might be openly critical of the euro zone's political direction at a national level.

Lega's Deputy Leader Lorenzo Fontana told CNBC Monday that the party would like to change its relationship with Europe. Fontana explained what changes he'd like to see.

"Our position remains that the European Union has enforced economic boundaries for our citizens and people. Europe can be strong if it remembers that there are a vast amount of populations with different identities, traditions and cultures," he said, speaking after Lega's election success.

"There isn't an issue with creating a deal between the various people, but pushing forward the economy ahead of the people is incorrect. We have seen in the past this hasn't worked; we want to change Europe's perspective, we aren't against Europe."

Fontana repeated his leader Salvini's view on the euro, saying "our view is that the euro is a currency that was created incorrectly."

"It is a hybrid created to give certain countries an advantage and others, such as Italy, a disadvantage," he said.