Italy's Conte Fights to Form Team as Ally Threatens New Vote

(Bloomberg) -- Italy’s novice premier-designate Giuseppe Conte struggled to form a populist government throughout the weekend, stranded between a president who objects to a euroskeptic candidate for the economy ministry and a coalition ally threatening to force early elections.

Conte, 53, is working on a list of ministers to propose to Sergio Mattarella, 76, the head of state whose task it is to name the government team. The two will meet at 7 p.m. on Sunday, Mattarella’s office said in an emailed statement.

Economist Paolo Savona, 81, a candidate for the economy ministry, said in a statement on an Italian website on Sunday that he was in favor of a European political union and urged full implementation of objectives in the 1992 Maastricht Treaty. “I want a different Europe, stronger but fairer,” he said. The new government would aim to reduce public debt and the budget deficit not with taxes and austerity, but through economic growth by boosting domestic and foreign demand.

Newspaper La Stampa reported earlier that Conte, a law professor at Florence University with no political experience, will try to persuade and reassure Mattarella that Savona won’t seek a euro-exit or create problems with Brussels.

Early Vote Possible

Efforts to form a populist government could be jeopardized by a tussle over Savona between the president and Matteo Salvini of the anti-immigrant League, which is Five Star’s junior partner, and lead to early elections possibly in the fall. The populists’ pledges of fiscal expansion and tax cuts would defy European Union budget rules, and the Italy-Germany 10-year yield spread reach the widest since 2014 on Friday.

Savona, a company executive and former industry minister, has come under fire both for repeatedly calling on the government to plan for a possible euro exit and for his criticism of what he sees as German dominance of Europe. Mattarella, a former constitutional court judge, insists on his right to appoint government ministers, without pressure from outsiders.

“Either this government gets started in the next few hours and we start working, or we might as well go and vote again and get an absolute majority,” Salvini told a rally near Bergamo in northern Italy late on Saturday. “Although it would be disrespectful to Italians if this government doesn’t get started because it’s unpleasant to someone in Berlin or Brussels.”

Macron’s Encouragement

French President Emmanuel Macron was the first leader to express encouragement to Conte. Macron phoned him on Saturday to wish him “the best for the government that is about to be formed,” Conte said in a Facebook post. They discussed “European economic and social policies” and are both “confident we will be able to meet as soon as possible,” Conte wrote.

Otmar Issing, the European Central Bank’s former chief economist, urged Italian media and politicians to stop bashing the euro. “The Italians are acting now as if they were dragged into the euro against their will so that Germany could force their exports on them. That’s totally absurd,” Issing told German newspaper Welt am Sonntag.

“Above all, it shocks me with what kind of vehemence it’s being spread in the media that Germany and the euro are responsible for the misery,” Issing said.

If Conte’s attempt to form a government fails, Mattarella could revert to his original plan to pick a non-partisan figure to lead an interim government with the task of pushing the 2019 budget through parliament by the end of the year, and changing the electoral system to make it more first-past-the-post.

But both Five Star and the League have said they would oppose such an administration in parliamentary votes of confidence, which would trigger a new election.

©2018 Bloomberg L.P.

Bloomberg
Follow All The Political News In India On BloombergQuint