Italy's Populists Agree on Government Team, Officials Say

(Bloomberg) -- Italy’s populist Five Star Movement and League parties have reached an agreement on a government team, with economist Giovanni Tria as the leading candidate for the job of finance minister, according to party officials.

Five Star’s Luigi Di Maio and the League’s Matteo Salvini agreed on a proposed administration during a meeting at the Rome parliament on Thursday, according to officials from both parties who declined to be named discussing confidential talks. The populists had previously agreed on law professor Giuseppe Conte as potential premier.

The latest deal sees Tria, 69, as finance minister, and euroskeptic economist Paolo Savona, 81, as responsible for European affairs, according to a senior League lawmaker. The accord excludes the far-right Brothers of Italy, which had campaigned with League in a center-right alliance, from the team.

Italian bonds gained after the news, with the 10-year yield falling about 18 basis points to 2.7 percent before rising again to 2.8 percent. Previous efforts to form a populist government had spooked markets with a program that pledged a spending spree and tax cuts, challenging European Union rules.

Conte was meeting Di Maio and Salvini on Thursday evening, newswire Ansa reported. President Sergio Mattarella had on Sunday vetoed Savona as part of a Five Star-League administration, citing concerns about his stand on the euro.

The Five Star-League candidate for the foreign ministry is pro-European Enzo Moavero Milanesi, a former minister for European affairs.

Informal Talks

The head of state, whose task it is to appoint a premier and government ministers, held informal talks with premier-designate Carlo Cottarelli, a former International Monetary Fund director, on Thursday, according to a senior state official. Cottarelli could give up on his mandate to allow Five Star and the League to seek a green light from Mattarella.

Tria’s office did not immediately respond to a request for comment. Currently the head of the Economy Faculty at Rome’s Tor Vergata University, Tria has called for a debate on the euro in both Italy and in the rest of Europe.

“People who call for unconditionally leaving the euro as a cure for all ills aren’t right, but neither is the European Central Bank President Mario Draghi when he says ‘the euro is irreversible,’ if he doesn’t clarify the conditions and the timing for the reforms which are necessary for its survival,” Tria wrote in a March 2017 article in newspaper Sole-24 Ore.

Former campaign rivals Di Maio and Salvini, who also leads a broader center-right alliance with ex-premier Silvio Berlusconi as a junior partner, had agreed on a government program which includes a guaranteed “citizen’s income” for the poor, scrapping a pension reform which raised the retirement age, and strong curbs on immigration.

The old order buckled at the March 4 elections as the center-left Democratic Party of ex-premier Matteo Renzi suffered its worst ever result, and Berlusconi, 81, was eclipsed as leader of the center-right by the more hard-line League. Five Star became the single biggest party.

Di Maio and Salvini have been pressuring the president, who upset their bid for power by vetoing Savona. Mattarella placed Cottarelli on standby as he awaits news from the populist leaders on their attempt to revive plans for governing together.

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