Italian War Games: Who Really Stands to Gain From Snap Vote?

(Bloomberg) -- From the corridors of the Rome parliament to Milan trading floors, the war of words between rivals-turned-partners Matteo Salvini and Luigi Di Maio has ignited speculation that Italy’s populist experiment could blow up, with an early election this year.

An online news site founded by popular TV anchor Enrico Mentana floated Friday what it called “the extreme hypothesis” -- a snap vote in late May, on the same day as elections for the European Parliament. The post said the office of President Sergio Mattarella is studying the possibility. Mattarella’s spokesman didn’t respond to a request for comment.

The head of the government relations at a state-owned firm said rumors of a coalition collapse intensified as both Salvini’s rightist League and Di Maio’s anti-establishment Five Star Movement are determined to stick to their guns on a disputed $10-billion rail link to France. The League says it’s vital for business. Five Star sees it as environmental vandalism.

To avoid the coalition from blowing apart, over the weekend Prime Minister Giuseppe Conte tried to hedge his position, allowing tenders to start, but asking for the French-Italian consortium building the infrastructure to refrain from any action that could bind Italy legally and economically.

The move kicks the can down the road, with the two sides likely to clash again on the matter in a few weeks time. Speaking during an event Sunday, Di Maio said Italy’s government will last four more years.

Here’s the talk and strategy options in the key players’ war rooms:

1. Five Star: How Do We Seize The Initiative Back?

Di Maio’s Five Star faces a dilemma. Either it stays in government with coalition partner Salvini, watching its rating in opinion polls decline. Or it decides enough is enough, insists the rail project must be blocked, and risks a collapse of the government.

Italian War Games: Who Really Stands to Gain From Snap Vote?

Forcing a crisis could turn Five Star’s fortunes around, according to an opposition lawmaker. Remaining firm on the rail link would allow Five Star to claim it’s taken a moral stand, proudly faithful to the party’s roots on an issue central to its DNA.

Support for Five Star was at 22.1 percent in a SWG poll published March 4, a hemorrhage compared to the 32.7 percent it scored in last March’s general election. The center-left Democratic Party is also showing signs of new life in polls, biting into the left-wing Five Star electorate.

2. The League: Should Salvini Make a Power Grab?

As ever, Salvini put it colorfully. “We are in the hands of the good Lord,” he told reporters Friday when asked how long the government will last. Divine intervention aside, Salvini has to decide whether an early election, possibly after the European vote, would allow him to capitalize on his ascent in opinion polls. After Conte’s decision, Salvini was reported as saying "Conte can’t stop it. We can talk about it, but the project will go ahead."

The rail plan is as much of a red line for Salvini as it is for Di Maio. He’s likely to stick to his guns, betting that Di Maio will cave in as usual, and that if he doesn’t the League will be the big winner from any vote.

An election victory for the League looks very likely, but patching up a new coalition with a parliamentary majority is a headache for Salvini. The League leader is wary of returning to the embrace of ex-premier Silvio Berlusconi, who is widely-seen as a part of a discredited ruling class.

3. President And Premier: How Do We Guarantee Stability?

It’s for different reasons, but both President Mattarella and Premier Giuseppe Conte want the government to last. Mattarella prizes stability for the sake of Italy’s economic prospects among others; those count for Conte too, but of course the longer the government lasts, the longer he keeps his job.

Although they are at the pinnacle of the Italian state, their hands are tied. If there is a government crisis, Mattarella’s task is to first seek an alternative parliamentary majority by consulting party leaders. If that fails, he’s likely to call early elections.

Conte, a Florence law professor picked by Five Star for the premiership, has served as a de facto mediator, squeezed between Salvini and Di Maio. Trouble is, Conte has no political base to call his own. On Thursday, he criticized the rail link for the first time, which could undermine his relationship with Salvini, and therefore his ability to keep the government on track.

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