Italy in limbo as caretaker PM stalls on cabinet lineup

Carlo Cottarelli is charged with forming a caretaker government but populists have vowed to block it

Italy was on tenterhooks Wednesday awaiting news on a new government amid speculation of snap elections and the rumoured return of a populist coalition that collapsed at the weekend.

The continuing political turmoil nearly three months after an inconclusive election has raised concerns about the stability of the eurozone while talks between President Sergio Mattarella and his nominee for prime minister Carlo Cottarelli drag on.

Cottarelli, a former IMF economist, left the presidential palace without making a statement after informal talks with Matterella, not long after anti-establishment Five Star Movement leader Luigi Di Maio ended his own meeting with the head of state.

The president’s office released a statement saying that no announcements would be made Wednesday.

Di Maio and nationalist League leader Matteo Salvini abandoned their government coalition at the weekend after Mattarella rejected their proposed eurosceptic economy minister, Paolo Savona, despite parliamentary approval.

Cottarelli on Sunday pledged to deliver a list of ministers “as soon as possible” but by Wednesday, had still not unveiled his team.

Di Maio’s palace visit strengthened speculation that Mattarella was mulling fresh talks with Five Star and the League.

Five Star leader Luigi Di Maio said the only solution was to approve the original lineup put together by the two parties and headed by their little-known PM pick Giuseppe Conte who renounced his mandate at the weekend.

But the League has so far refused to countenance a cabinet without Savona managing the eurozone’s third-largest economy.

Other than that, the only option was “immediate elections”, he said.

– Parliamentary anger –

Italy: 61 governments in 70 years

Mattarella’s veto of Savona and subsequent nomination of Cottarelli as caretaker prime minister angered lawmakers, most of whom had been ready to back the eurosceptic as economy minister.

Italian media reported that if Cottarelli does manage to pull together a caretaker government, most were preparing to abstain — which would have handed him just a few dozen “yes” votes — but Di Maio said Five Star would vote against.

Parliamentary factions were trying to reach agreement over how long Cottarelli’s mandate should last before new elections are held, with officials from the centre-left Democratic Party calling for the country to the polls as early as July.

That could only happen if the parliament was dissolved before Friday.

A more likely scenario is Cottarelli holding on until autumn, with new elections likely in early October.

– ‘Second-rate governments’ –

The ongoing political crisis has angered Italy’s parliament, where most lawmakers had been ready to back eurosceptic Paolo Savona as economy minister

At a Naples rally on Tuesday evening, Di Maio appeared to revive the idea of a coalition government with the League.

“There is a majority in parliament. Let this government begin. We are fed up with second-rate governments,” he said.

But Salvini did not seem to be interested. “I spent weeks in Rome trying to form a government. It was a futile effort,” he retorted while campaigning in Pisa.

Instead, he said he would be ready for new elections “as soon as possible,” while rejecting the idea of holding them in July.

Salvini’s anti-euro, anti-immigrant party has risen in opinion polls in recent days.

Central to the party’s agenda is reform of the EU, spooking markets worldwide and caused a flurry of reaction in Brussels.

– Anti-EU uproar –

On Tuesday, European Budget Commissioner Gunther Oettinger said he hoped Italy’s poor economic situation would keep populist parties out of government.

“I can only hope that this will play a role in the election campaign.. sending a signal to voters not to hand power to populists on the right and left,” he told German broadcaster Deutsche Welle.

His comments caused uproar in Italy, prompting European officials to scramble to calm anger at the perceived meddling by Brussels.

Financial markets have been on a rollercoaster ride over the past few days, but Milan stocks closed up 2.09 percent on Wednesday, and the bond market strengthened slightly.

But investor doubts over Italy’s financial stability were far from eased, with the country strugging under a debt mountain of 2.3 trillion euros.

Central bank chief Ignazio Visco had on Tuesday warned about the impact of the turmoil.

“We are only ever a few steps away from the very serious risk of losing the irreplaceable asset of trust.” Source AFP

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