Italy’s Government Could Fall Six Different Ways This Month
(Bloomberg) -- Italian Prime Minister Giuseppe Conte already exceeded the expectations of most of his political opponents by surviving the collapse of his first government last summer. But his second coalition is so fragile that a host of issues could trip him up as early as this month.
Conte was fished out of obscurity in June 2018 to head a coalition between the anti-establishment Five Star Movement and the right-wing populists of the League. When that agreement broke down, he helped to stitch together a fresh alliance with Five Star and Italy’s traditional center-left group the Democratic Party.
After steering the 2020 budget through parliament, 55-year-old Conte told reporters Dec. 28 that he wants to kick off the new year by negotiating a government program that will carry him through to the end of the parliamentary term in 2023.
But with the League maintaining a commanding lead in opinion polls and its head, Matteo Salvini, still bruised after his failed attempt to seize power last year, pulling that off will require all the premier’s political smarts. The fragility of the coalition has put investors on alert, with Italian bonds underperforming their euro-area peers.
Here are the main hurdles he has to face just in January:
Trials Without End
Conte has summoned coalition leaders for a Jan. 7 meeting on Five Star’s call to change the time-limits on trials for a second time. Five Star wants to alter the statute of limitations because Italy’s notoriously slow justice system means trials often run out of time before a final sentence is reached.
But the Democrats are opposed to drastic changes, and the small Italy Alive party -- led by former premier Matteo Renzi -- says it is ready to vote with the opposition to stop defendants’ rights being shredded by endless prosecutions.
Two separate referendums on electoral reform could be triggered this month, one on Five Star’s initiative -- already approved -- to reduce the number of lawmakers and another on a League proposal to introduce a British-style first-past-the-post system.
The last referendum in Italy brought an early end to Renzi’s time in office. Another one would put Conte at risk because the groups that would lose out under the new voting rules would be tempted to trigger a snap election before the new system comes into force. That risk has already unsettled investors.
Salvini is facing a possible prosecution for refusing to allow a migrant rescue ship to dock in Sicily in July when he was interior minister. A Senate commission will vote Jan. 20 on whether to block any trial for Salvini, who is also a senator, ahead of a vote by the full chamber. Salvini says he was applying government policy.
The case is another destabilizing factor for the coalition with Renzi reportedly threatening to break ranks and support the League leader.
Salvini’s center-right bloc is aiming to take control of the left-wing stronghold of Emilia-Romagna in regional elections on Jan. 26 while Five Star and the Democrats are fighting each other.
A victory for Salvini’s bloc would make him look unstoppable and would hand ammunition to Democratic Party dissidents who want to pull out of the coalition arguing that their support for Conte comes at too high a price.
Conte also has to negotiate a series of tricky business dossiers that highlight the contradictions between establishment and anti-establishment groups in his coalition.
Five Star leader Luigi Di Maio wants to revoke highway concessions from the billionaire Benetton family’s Atlantia SpA after a deadly bridge collapse in Genoa, while the Democrats want to negotiate a settlement. As the decision looms, the government took a first step to reduce potential compensation payments.
The government may also have to decide how much it’s prepared to spend to save flagship airline Alitalia.
Five Star activists also want the government to stop the pollution from a steel mill in the southern region of Puglia -- without jeopardizing the tens of thousands of jobs it supports. Di Maio and the Democrats are scratching their heads at how to meet those demands, but after a series of disappointments on environmental policy, the Five Star base is threatening to revolt unless it gets what it wants.
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