Italian Coalition Wobbles as Rail Link Enrages Five Star’s Base

(Bloomberg) -- Italy's Five Star Movement rode to victory in March's national elections with three environmental promises close to its supporters hearts.

Despite joining a populist coalition government, it's already failed to halt a gas pipeline across the Adriatic and to close a dioxin-belching steel mill in the south. Now the party's opposition to the TAV high-speed rail tunnel to France is also wavering and its base is on the brink of mutiny.

Activists plan demonstrations in the Alpine valley where the link will be built on Nov. 3 and Nov. 10. Five Star leader Luigi Di Maio warned fellow Deputy Premier Matteo Salvini that his party could implode if it suffers another defeat, La Stampa reported Monday.

While Five Star is, in theory, the senior partner in the two-party coalition, it's been consistently outmaneuvered by Salvini's pro-business League, which wants to deliver infrastructure for its supporters in the executive class of northern Italy.

Read More: Italy Says TAP Pipeline Will Go Ahead in Blow for Five Star

Salvini has won widespread support for his campaign against illegal immigration while 32 year-old Di Maio is casting around for an issue that resonates with voters. His poll numbers are sliding and the rank-and-file are growing restless.

With the Transport Ministry due to decide in weeks whether the rail link should go ahead, the Five Star leader on Friday ditched his environmental objections and tried to make an economic case against the tunnel.

"We're not against high-speed rail per se, we're against wasting money that could be used elsewhere," Di Maio said Friday in a Facebook Live video. "The TAV is not a priority at the moment. We don't need it. It was planned 30 years ago when money used to be wasted."

EU Funding

The 8.6 billion-euro ($10 billion) rail-link will connect the industrial center of Turin with Lyon, France's second-biggest city. The European Union will cover half the cost of the project with the rest split between Paris and Rome, meaning the bill for Italy will be roughly 2.5 billion euros.

With extensive preparations already completed and contracts signed for additional works, walking away would cost Italy 2 billion euros, according to the project administrators. Italy's business lobby warned Tuesday that it would cost an additional 9 billion euros in lost business and 52,000 potential new jobs.

The fight over the rail link illustrates the fundamental difference between the two tribes governing Italy. The Five Star Movement emerged a decade ago when anarchists and environmentalists began to rally behind comedian Beppe Grillo's tirades against the corruption of the establishment. The League, formerly the Northern League, draws most support from Italy's industrial heartlands and for most of its history wanted to cut loose from the much poorer south.

Political Liability

The prospect of power brought the two groups together in an unlikely alliance after an inconclusive election. But Five Star activists are increasingly convinced that their inexperienced leader is being shortchanged by his partners in the cabinet.

Activists in Apulia, where the Adriatic gas pipeline will make landfall, burned Five Star flags last weekend in protest at what they see as a sellout by the party.

For Five Star, opposing the TAV rail project was a natural way to attract left-leaning voters in the region of Piedmont -- not the party's natural stronghold -- and it may have helped the Movement capture the City Hall of Turin, the regional capital, in 2016.

Now that position is looking like a potentially fatal liability for the government.

--With assistance from Lorenzo Totaro.

To contact the reporter on this story: Chiara Albanese in Rome at calbanese10@bloomberg.net

To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net, Ben Sills

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