Populists given another chance to form government

ROME — Italy’s president gave populist politicians another chance Wednesday to try to form a coalition government after his naming of an interim leader roiled global markets that feared a new election would amount to a referendum on the euro.

Carlo Cottarelli, the former International Monetary Fund official tapped Monday to be a neutral, temporary premier, said “new possibilities” had emerged for a government based on the results of the March election to run Italy rather than the government of technocrats he would direct.

The two populist parties that prevailed in the March 4 vote — the euroskeptic 5-Star Movement and the right-wing League — presented their proposed cabinet over the weekend. Italian President Sergio Mattarella vetoed their euroskeptic economy minister, collapsing the deal.

Leaders of both parties signalled a willingness to try again late Wednesday. 5-Star leader Luigi Di Maio suggested they come up with a different economy minister while keeping the previous candidate, Paolo Savona, in the cabinet in a different capacity.

But League leader Matteo Salvini appeared to hold firm, saying: “Why can’t we have a minister in Italy even though the Germans don’t like him?” Germany is the economic powerhouse among the European countries that have adopted the euro as their official currency.

Mattarella nixed Savona, who has questioned whether Italy should keep the euro, on the grounds that the position needed to be filled with someone who would reassure markets and Italy’s European partners.

Mattarella’s office said it was studying Di Maio’s proposal “with attention.”

After the president turned to Cottarelli to form a neutral government that would lead Italy until an early election was held, stock markets plunged Tuesday in both Europe’s third-largest economy and around the world.

The prospect of a new vote fuelled by euroskeptic outrage spooked investors who feared the election would become a vote on whether Italy should abandon the euro, with uncertain consequences for Europe’s economy.

By Wednesday, markets had largely recovered with the news of a second chance for a longerterm arrangement.