Salvini Ready to End Coalition Unless Five Star Plays Ball
Salvini Ready to End Coalition Unless Five Star Plays Ball
(Bloomberg) -- Deputy Prime Minister Matteo Salvini has told his party that he wants to keep Italy’s fractious coalition government going, but is ready to see it collapse if he cannot push through his flat tax plans and other priority measures.
Two people present at a closed-door meeting in Rome Wednesday said that Salvini told lawmakers from the rightist League that his alliance with the anti-establishment Five Star Movement could last another four years or it could be over within three months. Salvini has the upper hand in the coalition following the League’s victory in Sunday’s European elections.
The future of the pact depends on his coalition partners agreeing to League policy demands, Salvini insisted, and on Five Star leader Luigi Di Maio keeping internal dissent in check following his disastrous result on Sunday, according to the people, who asked not to be named discussing a private meeting. Five Star members are voting online Thursday on whether to confirm Di Maio as their leader.
Salvini told reporters Thursday that either Five Star is committed to implementing the government program -- and the part related to infrastructure in particular -- or the ruling coalition can’t last. However, he also said he doesn’t see the possibility of early elections in September, saying “in September, we prepare a budget,” Ansa news agency reported.
The spread between benchmark Italian 10-year debt and similar-maturity German paper tightened 1 basis point to 281 points. Italy’s 10-year yield fell 1 basis point to 2.64%.
Di Maio saw his party’s support halved in the European ballot compared with the 32% he scored in winning last year’s general election. The result left the Five Star leader fighting for survival and called the viability of the coalition into question.
The alliance is creaking just as the European Commission starts to up the pressure over Italy’s increasing debt load. The commission is heading down a disciplinary track that could end in financial penalties, setting Rome and Brussels on course for a rerun of the budget clash that roiled markets last year.
Early elections could also disrupt the budget process.
Spending plans have to be submitted to both the commission and the Italian parliament in October and lawmakers have to back the bill by year end. If a government crisis prompts President Sergio Mattarella to dissolve parliament in mid-July, elections could be held in late September and so any protracted talks on forming a government would eat into the time available for the budget.
In his address to lawmakers, Salvini said he’ll also pull the plug on the government if Five Star continues the personal attacks directed at him in the last weeks of the European campaign, the two people said.
If Di Maio is supplanted by his rabble-rousing rival Alessandro Di Battista, it will be impossible to work with Five Star, one of the people cited Salvini as saying. In the meantime, Salvini recommended delaying particularly contentious issues given Five Star’s frailty, the lawmaker said.
Salvini has publicly set out his plans for the next phase of the coalition, prioritizing fiscal and economic reforms including a flat tax, the League’s signature election promise. He also wants more powers for wealthy northern regions where his party’s base lies -- a particularly contentious issue for Five Star whose stronghold is in the poorer south.
Also on Thursday, a deputy minister from the League resigned after being found guilty in an embezzlement case, defusing the most recent fight between Italy’s fractious coalition allies. Salvini and Di Maio had been at loggerheads over the official, Edoardo Rixi, with the League defending him and Five Star wanting him out of the government.
A court in Genoa sentenced Rixi to three years and five months in jail and banned him from holding public office in the so-called “Crazy Expenses” probe, news agency Ansa reported. Rixi, who’s denied any wrongdoing, can appeal.
--With assistance from Dan Liefgreen and James Hirai.
To contact the reporter on this story: John Follain in Rome at jfollain2@bloomberg.net
To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Jerrold Colten
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