Italy’s coalition wobbles over bank windfall tax – POLITICO

What’s driving the day in Brussels.

By NICHOLAS VINOCUR

with ZOYA SHEFTALOVICH

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POSTCARD FROM ITALY       

SUMMER POLITICAL DRAMA SPICES UP ITALY’S BEACH HOLIDAY: A few days ago, my famously diplomatic colleague Matt Karnitschnig wrote that German politics could be “paint-dry boring” for the uninitiated, so much so that one only needs to check in once per year.

At least it ain’t boring: You might say the opposite of Italy, where even on Ferragosto — a public holiday so joyously observed that complete strangers were wishing a jolly one to your Playbook author — drama abounds in the form of a split threatening Prime Minister Giorgia Meloni’s government.

Paint drying? More like pass the antipasti and refill my glass of Prosecco.

Pull up a chair: Earlier this week, Meloni doubled down on her decision to hit banks with a 40 percent windfall tax. It’s a move that Spain, Lithuania and the Czech Republic have all made in past months, but in Italy it caused a minor earthquake on the stock market.

Contropedalando: No sooner had the 40 percent tax been mooted than it was being “clarified” — aka transmogrified into a 0.1 percent tax on banks’ total assets. My colleagues Hannah Roberts and Ben Munster got the skinny on the dinner between Meloni and her coalition partner Matteo Salvini that led to the whole debacle. But if you thought that was that, you need to revise your Italian.

E allora? Per an interview Meloni gave to three newspapers: “I would do it again. This is a decision that I took alone. It’s a sensitive issue and I take full responsibility for it.” 

More where that came from: As Ben reports in this story available for POLITICO Central Banker, Competition and Industrial Policy and Financial Services Pro subscribers, two senior politicians close to Meloni hinted at further tax raids on the private sector.

Utilities, pharma, tech and so-called concessions — like privately operated beaches (gulp) — all face their own potential windfall taxes as the Meloni government scrambles to fill its coffers ahead of its end-of-year budget. “We have to now continue [with raids on profit-takers] starting with the web giants,” Fabio Rampelli, a founding member of Meloni’s Brothers of Italy party, told Il Fatto Quotidiano.

Not so fast, says Antonio Tajani, Italy’s foreign minister and deputy PM. On Tuesday Tajani — who said he hadn’t been briefed on the windfall tax plan — floated further tweaks to spare small lenders and hinted at broader differences with his governing partners. His ailing party, Forza Italia, “has a liberal history,” he told Corriere della Sera. “A statist economy is not ours … Too much state in the economy is not a good thing.”

Storm clouds: The summer spat could yet turn into a full-blown split ahead of the European Parliament election next June. Meloni’s hard-right allies want to flex muscle with stampeding raids on corporate profits. Tajani’s Forza Italia is skeptical — including on the prospect of entering a hard-right alliance in the European Parliament.

Viva l’Europa: Tajani, a former European commissioner and ex-president of the EU Parliament, sees Meloni’s government parties in a broad coalition of “conservatives, liberals and perhaps socialists in a backstage position.” Does he prefer French President Emmanuel Macron to Marine Le Pen? “For the vision of Europe, certainly yes,” Tajani said.

Al contrario: Not so his government partner Matteo Salvini, who was quoted Tuesday by Corriere as saying “there are no alliances with the socialists or Macron.” As for Meloni — she’s doing her best to keep things together, telling the same paper: “I don’t veto anyone, but it’s too early to decide.”

Beach politics: And so the summer rolls on, amid political pizzicotti (pinches), aqua-gym sessions and swigs of spritz, as politicians outbid one another in Ferragosto well-wishing posts to seem the most in tune with the country’s mood. Corriere interpreted Salvini’s choice of a pink linen shirt and seaside backdrop in his video as signaling relaxation and harmony with Meloni. The prime minister took a break from her holiday in Puglia to hop over to Albania, where she convened spiritually with the thousands of Italians who have reverse-migrated to the other side of the Adriatic this summer in search of shorter bar queues and cheaper lounge chairs. Tajani, who’s linked to the spa town of Fiuggi in Lazio, wasn’t quite so linen-casual in his own Ferragosto photo. 

Che babele: Nobody summed things up better than my new friend Marco (sorry, no last names on the beach), a hard-working municipal councillor from Rome. Having just fielded a work call on his morning trudge up to the water’s edge, he quipped to Playbook: “Even on Ferragosto, it’s a mess.”

NAGORNO-KARABAKH TENSIONS RISE       

EU MONITORS IN ARMENIA SHELTER FROM GUNFIRE: The EU’s border monitoring mission in Armenia confirmed there was gunfire in an area where its monitors were present along the border with Azerbaijan.

Botched comms: Armenian ministry of defense Press Secretary Aram Torosyan claimed in a tweet that Azerbaijani forces “discharged fire from fire arms targeting the EU observers” on Tuesday. But the EU Mission in Armenia categorically rejected those claims, labeling Torosyan’s tweet as “False” (h/t POLITICO’s Gabriel Gavin). The mission later issued a correcting statement, confirming that an EU patrol had in fact been present during the gunfire, but that no member of the monitoring team was harmed.

Wasn’t us: Azerbaijan claimed the gunfire reported by the Armenian defense ministry was “theoretically and practically impossible,” as Baku was aware of the EU patrols in the area.

UN EMERGENCY MEETING: The clash comes as the U.N. Security Council is due to hold an emergency meeting today to discuss the worsening humanitarian crisis in Nagorno-Karabakh, the disputed territory subject to a long-running conflict between Armenia and Azerbaijan. As Gabriel reports, Azerbaijan took control of a major highway in the region last year, blocking humanitarian aid.

Moscow weighs in: Russian Foreign Minister Sergey Lavrov urged his counterpart in Azerbaijan to unblock the road, which is the only route linking Armenia to Nagorno-Karabakh, according to a statement. In July, Azerbaijan complained that Russia and Armenia were not fulfilling the terms of a Russian-brokered ceasefire deal which was agreed in 2020.

**Louise Beaumont, senior vice president Global Open Banking & Open Finance at Mastercard, Peter Kerstens, adviser for technological innovation and cybersecurity at the European Commission’s DG Fisma, and MEP Ondřej Kovařík will all speak at POLITICO Live’s event “Open Finance: the battle for data” happening on September 19. Register now for onsite attendance! **

RUSSIA’S WAR       

RUSSIA TARGETS DANUBE PORTS: Kyiv this morning said a large number of Russian drones were again attempting to attack ports on the Danube river, the main export route for Ukrainian agri products since Moscow pulled out of the Black Sea grain deal.

Speaking of Russia’s drones: Washington is pushing Tehran to stop selling its drones to Russia, the FT reports this morning.

SCOOP — UK BANKS SHUN COMPANIES TRADING WITH UKRAINE: U.K. banks are forcibly closing the accounts of British firms that trade with Ukrainian counterparts due to concerns over Russian sanctions and money laundering, business leaders have warned, hampering wider efforts to support Ukraine’s war-ravaged economy. POLITICO’s Sebastian Whale has more.

Now read this: Western firms that decided to continue trading in Russia despite its war against Ukraine are realizing Putin and his cronies no longer have much to lose from seizing their assets, Sarah Anne Aarup writes. Over the past few weeks, Putin has grabbed assets from France’s Danone to Denmark’s Carlsberg.

‘GENERAL ARMAGEDDON’ UNDER HOUSE ARREST: Russia’s General Sergei Surovikin, believed to be an ally of exiled Wagner chief Yevgeny Prigozhin, has been removed from his leadership role in Moscow’s war on Ukraine and is under house arrest, according to reports circulating among Russian military bloggers and media.

Comeback time? Surovikin, known as “General Armageddon” for his aggressive military strategies in Chechnya and Syria, has not been seen in public since Wagner’s march on Moscow in June, Elisa Braun and Zoya Sheftalovich report. But while he’s currently in Russian President Vladimir Putin’s bad books, there are hints Surovikin could ultimately make a comeback.

Exhibit A and B: Quoting a person with knowledge of the situation, the VChK-OGPU blog, which is considered close to Russia’s security forces, said a decision on Surovikin’s ultimate fate “must be taken by one person, and the longer this takes, the more this person will cool down” — referring to Putin. And Viktor Sobolev, a former Russian lieutenant general who now sits as an MP in the state Duma, told News.ru that the general could be useful to the army at a later point.

BRITS BUST RUSSIAN SPY RING: Three Bulgarian nationals face criminal charges amid a British police investigation into suspected spying on behalf of Russia. London’s Metropolitan Police arrested five people in February, who have now been charged “with possession of false identity documents with improper intention,” Andrew McDonald reports.

POTENTIAL NATO CLASH: The possibility of a direct clash between Moscow and its allies and NATO is becoming “very obvious,” Belarus’ Defense Minister Viktor Khrenin said at a security conference in Moscow on Tuesday, according to Russian state media. Khrenin pointed to “intensive military preparations” in the West, which he claimed has openly named its opponents — China, Russia and their allies including Belarus.

RUSSIA’S SHAM ‘ELECTIONS’ IN UKRAINE: There will be nothing free or fair about next month’s regional and municipal “elections” in the Russian-occupied Donbas region, Harald Hartvig Jepsen and Peter Erben of the International Foundation for Electoral Systems write in an opinion article for POLITICO.

VON DER LEYEN’S CRETE HOLIDAY       

COMMISSION RESPONDS TO VDL CRETE HOLIDAY CRITICISM: If you’ve been reading Playbook this week, you’ll know that European Commission President Ursula von der Leyen holidayed as a guest of Greek Prime Minister Kyriakos Mitsotakis in Crete last weekend, raising eyebrows (backstory here). Dutch MEP Sophie in ’t Veld wasn’t impressed, noting the private trip came as the EU executive was “conspicuously silent” on numerous sensitive political issues relating to Greece.

Pressing the issue: Speaking to my colleague Nektaria Stamouli, in ’t Veld vowed to press on by writing to the Commission and the European Ombudsman and calling for a debate in Parliament on the matter. It’s the chamber’s duty to “take political responsibility and hold the Commission to account,” she said.

Too easy on Athens? “This is the same Commission that we have addressed a number of issues regarding Greece and we have never heard back,” said in ‘t Veld, checking off migrant pushbacks, the migrant boat tragedy investigation, the spyware scandal targeting the governing party’s opponents and the undermining of independent oversight bodies.

Tough words: The holiday was a “severe breach of the treaties, of political decency and neutrality,” the MEP argues. As for von der Leyen, in ‘t Veld said: “She is the enforcing authority and holidaying at one of the leaders’ villas … She is compromising her independence and credibility.”

Nothing to see here: Asked for comment, a Commission spokesperson wrote to Playbook: “This was a private trip fully in line with the Commission’s guidelines” and pointed to a series of on-record comments about the issues raised by in ‘t Veld.

IN OTHER NEWS       

ALEXANDER STUBB MAKES BID FOR FINNISH PRESIDENCY: Former Finnish Prime Minister Alexander Stubb is standing in next year’s presidential election for the center-right National Coalition Party, my colleague Elisa Braun reports. Stubb is well-known in Brussels, as a former diplomat, MEP and Commission presidency-hopeful.

The field: Stubb will enter the race against current favorite and ex-Foreign Minister Pekka Haavisto, Bank of Finland Governor Olli Rehn, former Finns Party leader Jussi Halla-aho, and foreign policy expert Mika Aaltola, among others.

THE EU’S PLAN TO TACKLE SCREEN ADDICTION: Brussels is gearing up to implement a sweeping set of rules aimed at better protecting social media users, including adolescents, from harmful material and excessive use. From the end of this month, the Digital Services Act will force big online platforms — such as Facebook, TikTok and YouTube — to open up their internal systems to scrutiny by the Commission, and prove they are doing their best to avoid harming kids. Read all about how the DSA aims to cure your teen’s smartphone addiction, by Carlo Martuscelli and Clothilde Goujard.

**In the run up to the 2024 European elections, co-decision makers rush to turn proposals into legislation. What is the future for pesticide legislation, new genomic techniques and food labeling? Find out at POLITICO Live’s Future of Food and Farming Summit taking place on September 28 in Paris. Apply to attend today!**

BRUSSELS CORNER       

TRAFFIC ON BRUSSELS RING ROAD DISRUPTED: The renovation of the Vilvoorde Viaduct has started, leading to traffic disruptions on the inner ring road. More details.

BELGIUM AMONG TOP ICE CREAM EXPORTERS: While this year’s Belgian summer hasn’t exactly had us reaching for ice cream, the country was the fifth-biggest EU exporter of the cold stuff in 2022, according to the newly released summer-oriented Eurostat figures.

The ice-cold data: The EU produced 3.2 billion liters of ice cream in 2022, which is 5 percent more than the previous year. The largest producer was Germany (620 million liters), followed by France (591 million liters) and Italy (571 million liters). 

Austrians get creamed: Where do you go to get the best value for money? Germany boasts the cheapest ice cream on the Continent, at €1.50 per liter on average; the most expensive is in Austria, at a whopping €7 per liter.

BRUSSELS-NETHERLANDS TRAIN LINK: A new train connection is planned to take you from Brussels to Amsterdam in about two hours, according to railway companies SNCB and NL. The service should be operational in 2025, NL spokesperson Anita Middelkoop told Playbook.

The good news: High-speed intercity rail services will double from 16 daily connections to 32. The trains will run between Amsterdam South and Brussels-Midi, making stops at Schiphol, Rotterdam and Antwerp Central. The trains will run 45 minutes faster, making the total journey around two hours.

Some bad news: The existing IC trains that currently run from Brussels-Midi to Amsterdam Central will terminate in Rotterdam. A number of smaller stops, including Brussels Airport-Zaventem, will therefore lose their direct connection to Amsterdam — you’ll need to switch in Rotterdam.

FOX FOOD MARKET: A new food market with a concept similar to the WOLF market has opened on the outskirts of Brussels, near the Sonian Forest. More info here.

ROGIER OPEN AIR SHOW: The Rogier Open Air Show, scheduled to take place this Saturday, has been postponed due to “circumstances beyond our control,” according to the organizers. The show, which will feature five DJs, will now take place on September 2.

BIRTHDAYS: MEP Tomasz Frankowski; Former MEP Lorenzo Cesa; DUP MLA Diane Dodds, a former MEP; POLITICO alum Paul Taylor.

THANKS TO: Elisa Braun, Playbook reporter Ketrin Jochecová, editor Jack Lahart and our producers Seb Starcevic and Dato Parulava.

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