President tasks Conte to form new govt
5-Star, PD still need to agree on shared policy platform
ROME, Aug 29, (RTRS): Italy’s head of state gave two former political enemies the chance to form a new government on Thursday, capping an extraordinary three weeks that could mark a turning point in its frayed relations with the European Union.
President Sergio Mattarella handed Giuseppe Conte a fresh mandate to put together a new coalition of the 5-Star Movement and opposition Democratic Party (PD), a presidential official said.
Conte resigned last week after the far-right League party withdrew from its coalition with the 5-Star, forcing Mattarella to consult with all Italy’s main political parties to try to find a way out of the political crisis.
Both 5-Star and the PD told the president on Wednesday they were willing to lay aside their long-standing animosity and try to form an administration with Conte, an academic considered close to 5-Star, at the helm.
The two sides still need to agree on a shared policy platform and team of ministers, but 5-Star chief Luigi Di Maio and his PD counterpart Nicola Zingaretti said they had pledged to find common ground for the good of the country.
“We love Italy and we consider it worthwhile to try this experience,” Zingaretti told reporters on Wednesday. Speaking shortly afterwards, Di Maio said: “We made commitments to the Italians...and come what may we want to fulfil them.”
In an early, basic draft of a coalition policy platform, the two sides would ask the EU for flexibility on the 2020 budget deficit to “reinforce social cohesion” in the country, financial daily Il Sole 24 Ore said on Thursday.
The EU imposes budget rules on member states with the aim of ensuring financial stability in the bloc. It has had a testy relationship with Rome under the outgoing administration, with League leader Matteo Salvini blaming the EU rules for impoverishing Italians.
The prospect of a new administration led by Conte has buoyed markets, which are betting that Italy will get a fiscally prudent government that will avoid confrontation with Europe.
Before Mattarella mandated Conte to form a new administration Italian government bonds had maintained their recent rally into Thursday.
Traded
The yield on 10-year debt traded at around an all-time low it touched the previous day, and . the spread between Italian and German 10-year debt was at 166 basis points, it’s tightest since May 2018.
Italian stocks rose 1.33% to hit their highest level since Aug. 2
The previous coalition made up of 5-Star and the far-right League collapsed this month when League leader Matteo Salvini withdrew from the alliance hoping to trigger an early election and cash in on his surging popularity.
But his move backfired when Conte refused to resign immediately, giving 5-Star and the PD time to try to overcome their fierce mutual animosity and agree to a government that had previously appeared impossible.
“The only thing that unites them is their hatred of the League,” Salvini said bitterly after meeting President Sergio Mattarella in an effort to convince him to call elections.
“Millions of Italians are being held hostage by a hundred parliamentarians who are looking to cling onto their posts.”
The prospect of a new administration led by Conte, an academic who is considered close to the 5-Star, has buoyed markets, which are betting that Italy will get a fiscally prudent government that will avoid confrontation with Europe.
The League is highly eurosceptic and had promised swingeing tax cuts for 2020 that economists warned could put unsustainable pressure on Italy’s towering debt mountain.
However, a coalition pact is not yet a done deal. The tentative accord could still unravel with 5-Star and the PD yet to agree on other top government posts, besides the prime minister’s position, or reveal a common policy platform.
Unexpectedly, the founder of the 5-Star Beppe Grillo issued a statement late on Wednesday saying the ministers should be technocrats and not elected politicians – a suggestion that is unlikely to gain traction with the PD.
In an added complication, 5-Star has said it will put any deal with the PD to an online vote of its members. Many 5-Star supporters have taken to social media to denounce a pact with the centre-left and a ‘yes’ vote cannot be taken for granted.
As negotiations went down to the wire, one of the posts still in play was that of deputy prime minister. The PD wants this job for one of its own, now that it has agreed to Conte staying on as prime minister.
“The problem is that if there is a premier from the 5-Star it is fair that his deputy is from the PD,” PD deputy leader Andrea Orlando said on Twitter.
Conte, a virtually unknown lawyer when he was chosen by the League and 5-Star to lead their new government last year, was seen as a voice of reason within the outgoing coalition and has good relations with Mattarella.