Italy Shakes Europe’s Establishment as Political Upstarts Form Pact to Govern

A movement that channeled Italians’ rage at mainstream politicians struck a pact with a hard-right nationalist party to govern the country, a major prize for the political insurgencies that have been shaking Europe’s establishment.

The 5 Star Movement, an eclectic upstart group driven by scorn toward Italy’s ruling elites, on Sunday evening said it had agreed on the outlines of a governing program with the anti-immigration League party, clearing the way for a likely coalition government. The parties said they would slash and simplify taxes while boosting spending on pensions and antipoverty benefits. They were due to present their program on Monday to President Sergio Mattarella, who formally appoints the government.

“We are writing history and we need a bit more time,” said Luigi Di Maio, 5 Star’s leader, as he left talks with League leaders in Milan on Sunday afternoon.

Italians and the European Union will watch closely whether the pair of rebel parties can overcome the deep malaise in one of Europe’s biggest but most-troubled economies. The expected new government’s performance will show whether alternative remedies can solve the legacies of Europe’s economic and migration crises and assuage Europeans’ widespread discontent with their political class.

The old center-right and center-left parties that built today’s EU are losing popular support across most of the Continent, as new rivals seize on voter frustrations including unemployment and fears about societal cohesion amid large-scale immigration from the Middle East and Africa, which has brought 750,000 migrants to Italy since 2011. The main beneficiaries are politicians who argue self-serving elites are robbing ordinary people of their livelihood or cultural identity — a narrative political scientists call populism.

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The status quo’s most effective critics, the 5 Star Movement and League, together won just over 50% of the vote in Italian parliamentary elections in March. Italy has been without a government since then because of the parties’ tactical and policy differences. With new elections looming, the two populist groups overcame the impasse in recent days.

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“Populists are normal people,” said Alberto Bagnai, a member of Italy’s Senate for the League. “They have a defect: They love their country and look with great sorrow at the problems caused by the economic policies of recent years.” Mr. Bagnai, an economist strongly critical of the euro, said the common currency remains a bad idea — but the League won’t push to leave it. “Our top priority is growth. Exiting the euro is not at the top of our list of priorities.”

“I would expect them to focus on domestic issues rather than to embark on all-out war with European institutions,” said Daniele Albertazzi, political scientist at the University of Birmingham, U.K. Verbal attacks on EU institutions, with little action to back them up, have become common in Italian politics since Silvio Berlusconi was premier, Mr. Albertazzi said. He said the League previously served in government several times in Mr. Berlusconi’s time without challenging Italy’s European commitments, while the less-experienced 5 Star is sending strongly conciliatory signals to the EU.

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