Italian President Prepares Last-Ditch Attempt to Form Government

(Bloomberg) -- Italian President Sergio Mattarella will hold a new round of talks with parties next week in a final attempt to form a political government two months after inconclusive elections, a senior state official said.

Mattarella will meet party delegations at the Quirinale Palace in Rome on Monday for a single day of talks after seeing that attempts to form a government between the Five Star Movement and the Democratic Party floundered, said the official who declined to be named citing the confidential nature of the deliberations. The Presidents’ office will release the schedule of the Monday meetings later in the day on Thursday, the official said.

The 76-year old Mattarella is running out of options to solve Italy’s political impasse. March 4 elections left the country’s parliament split between three political forces that have so far been unable to find any agreement that could lead to a political majority.

If this last attempt fails, the President may have to muscle in and ask parties to back a transitional government led by a non-partisan figure, whose purpose would be to accomplish a few set goals such as approval of the 2019 budget and drafting of a new electoral law before voters can cast their ballots again.

“Italian leaders may be focused on the longer-term more than financial investors,” Citigroup analysts wrote in a note on Wednesday, in which they predicted a transitional government as likeliest outcome. “This is not necessarily good news, in our view, and we fear that investors may not be able to ignore Italian problems for much longer.”

An earlier attempt to form a government between Five Star and the center-right coalition failed after Five Star leader Luigi Di Maio refused to include former premier Silvio Berlusconi’s party in the deal, and League leader Matteo Salvini declined to strike a separate deal with Di Maio and abandon his center-right bloc partners.

Discussions between the center-left and Five Star also quickly floundered after ex-premier and former Democratic Party leader Matteo Renzi said his party’s executive should reject a deal with Five Star. The Democratic Party is meeting later on Thursday to discuss the matter.

Should final political talks fail on Monday leading to a transitional government, the country will have to vote again soon. Five Star said they want elections as early as June, though Mattarella has signalled he’d rather not vote without changing the electoral law which led to the political impasse in the first place.

©2018 Bloomberg L.P.

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