- Italy’s tentative ruling coalition has unraveled after President Sergio Mattarella rejected the appointment of euroskeptic Paolo Savona as economics minister.
- Prime Minister designate Giuseppe Conte quit his attempts to form a government following the decision.
- The country could be headed for another election in coming months.
Politics in Italy have taken a dramatic turn with the tentative right-wing coalition, which formed after a March election, unraveling.
Italy’s Prime Minister-in-waiting Giuseppe Conte has quit attempts to form a government following President Sergio Mattarella’s blocking of his choice for economy minister.
Under Italian law, the president can reject the appointment of an elected official. Mattarella agreed to all cabinet proposals except for Paolo Savona, a euroskeptic whose name was put forth by both coalition parties — the anti-establishment Five Star Movement and far-right League.
By blocking Savona the populist parties were unable to form a government, which Italy has struggled to form a government since the elections on March 4.
Luigi Di Maio, Five Star’s leader, has called for Mattarella’s impeachment.
According to a report in Politico, it’s not the first time an Italian president has used their authority to refuse an appointment — although this is the first time the euro currency has been cited as a reason.
Mattarella told reporters that it’s important for confidence in broader financial markets that Italy signals its intentions to remain part of the euro. “Membership of the euro is a fundamental choice for the future of our country and our young people,” he said.
Elections are looming for troubled Italy
Now the mandate to form a new government has been rejected, the president has two options:
- Call early elections, which would be held in the coming months; or
- Appoint a technocratic government to rule for the remainder of 2018, with elections delayed until early next year.
Reuters reported that Mattarella is expected to put forth former International Monetary Fund official Carlo Cottarelli as a stopgap prime minister.
However, any new government has to receive the approval of the Italian parliament.
While a technocratic government would likely be approved by the centre-left Democratic Party and Forza Italia —the party run by former prime minister Silvio Berlusconi — those two parties alone don’t have enough votes.
The Five Star/League coalition has a majority in both houses of parliament. If Mattarella fails to get the support of parliament, the time-frame for follow-up elections will be pushed forward to the coming months.
Five Star and League parties have said they will support earlier elections, and electoral polls indicate they would garner even more votes a second time around.
For now, political chaos in Italy reigns supreme. In currency markets, the euro has clawed back a little bit of ground in early Asian trade. A short time ago it was up 0.33% against the greenback to $US1.1688.
European markets will be watched closely this week to see how the fallout affects the euro currency along with Italian stocks and bonds. Since the formation of the populist ruling coalition, Italian stocks have lost almost 9%. The MIB stock index in Milan was one of the best performing global asset classes in 2017.
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