Published: Fri, June 01, 2018
Global Media | By Jackie Banks

Italy renews attempt to form a government to end turmoil

Italy renews attempt to form a government to end turmoil

Italy's two main anti-establishment parties could yet form a government, after the man nominated as interim prime minister said politicians, rather than technocrats like himself, might be able to steer the country out of deadlock.

After the president turned to Cottarelli to form a neutral government that would lead Italy until an early election was held, stock markets plunged Tuesday in both Europe's third-largest economy and around the world.

Mr Conte previously quit as PM designate because the president wouldn't accept an anti-euro candidate for economy minister.

The League and 5-Star, which had spent days drawing up a coalition pact aimed at ending a stalemate following inconclusive elections in March, responded with fury to Mattarella, accusing him of abusing his office.

But Cottarelli failed to present a cabinet and received no support from any of the major parties.

Brothers leader Giorgia Meloni renewed her call that Mattarella give the center-right a mandate to try to form a government that can win a parliamentary majority. None of the parties obtained the majority required to form the government.

"We may now be in for an extended period of heightened uncertainty ahead of fresh elections" in Italy, Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney, said in a note.

That prospect has rocked financial markets, with the euro sinking to multi-month lows on fears that snap elections would lead to a eurosceptic government in Rome.

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Italy's populist Five Star Movement (M5S) and far-right Lega party proposed to Mattarella the candidacy of Conte on Monday. If Cottarelli fails to win parliamentary backing, as expected, elections are expected to follow in September or October.

"All the conditions have been fulfilled for a political, 5-Star and League government", 5-Star chief Luigi Di Maio and League leader Matteo Salvini said in a joint statement after several hours of talks in central Rome. On Sunday night, the party's political leader, Luigi Di Maio, seemed genuinely apoplectic.

Mattarella's veto and subsequent nomination of Cottarelli as caretaker prime minister sparked angry calls for the president's impeachment, since most lawmakers backed Savona.

Conte had been expected to teach at Florence University on Friday morning, but with signals that the 5-Stars and League might get another shot at forming a government, he grabbed a train for Rome.

Savona was vetoed by President Sergio Mattarella, who feared that the former industry minister's anti-euro views would spook markets.

The former International Monetary Fund economist was tasked with putting together an interim government after the failure of the anti-establishment Five Star Movement (M5S) and anti-immigrant League party to form a coalition. The Italy-Germany 10-year spread reached the widest since 2014 last week on prospects of a Five Star/League government, and widened further Monday as Cottarelli prepared to meet Mattarella.

"Without promising any miracles, I can say that, after the first months of this government of change, I would like us to have a country with a little less tax and a little more security, a few more jobs and a few less illegal immigrants", said a gleeful Salvini at a rally after the announcement.

The earliest date at which elections could happen is July 29th, if Mattarella dissolves parliament on Wednesday.

A new opinion poll showed the League, which argues that fiscal rules governing the euro zone are "enslaving" Italians, would boost its share of the vote to a quarter, from around 17 percent on March 4. "I hope that we can give the floor to Italians as soon as possible, but first we need to clear things up".

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