Monday 21 January 2019

Last-minute deal by populist parties averts Italian election

Italy's Prime Minister-designate Giuseppe Conte speaks to the media at the Quirinale Palace in Rome last night. Photo: REUTERS/Alessandro Bianchi
Italy's Prime Minister-designate Giuseppe Conte speaks to the media at the Quirinale Palace in Rome last night. Photo: REUTERS/Alessandro Bianchi

Nick Squires

Italy's populist parties finally reached a deal to form a coalition government last night after nearly three months of political deadlock - a prospect likely to chill the EU and shake financial markets.

After days of intensive negotiations, the anti-immigrant, hard-Right League party and the anti-establishment Five Star Movement ironed out their differences.

The prospect of Western Europe's first populist, Eurosceptic government will unnerve Brussels and could lead to further turmoil on financial markets, not just in Europe but around the world.

Both parties are deeply Eurosceptic and have flirted with the idea of ditching the euro as Italy's currency, although in the 24 hours before the breakthrough they had been at pains to deny that that was one of their objectives.

The opposition Democratic Party warned that the new government would be "Right-wing, populist and dangerous."

Maurizio Martina, the caretaker leader of the centre-Left party, said: "The populist, Rightist government that is about to be born has a programme that is dangerous for our country.

"Their actions so far have been a mix of extremism, anti-Europeanism and inequity."

Five Star and the League had come close to forming a government at the weekend, only for their efforts to be torpedoed by Italy's president, Sergio Mattarella, who refused to approve their choice of economy minister.

Giuseppe Conte, a university law professor with no political experience who was plucked from obscurity by the two parties to be prime minster, was summoned to the presidential palace in Rome last night, where he was to be given a mandate to form a government.

"An accord has been reached for a Five Star-League government with Giuseppe Conte as prime minister," the parties said in a joint note.

"Maybe finally we have made it, after so many obstacles, attacks, threats and lies," Matteo Salvini, the head of The League, wrote on Facebook shortly after the deal was announced.

The key breakthrough for the deal came when the parties dropped their insistence that Mr Savona be made economy minister.

Mr Savona (81) has called Italy's adoption of the euro a "historic error", describing the single currency as "a German cage" and calling for a "plan B" that would allow the country to exit the eurozone.

President Mattarella vetoed him, saying that were he to be appointed there would be such market turbulence, Italians' savings would be put in danger.

Instead, he was likely to be given the consolation prize of European affairs minister. The economy portfolio could go to Giovanni Tria, a little-known economics professor.

Professor Tria has been critical of the EU's economic governance, but unlike Mr Savona he has not advocated a plan to prepare for Italy's possible exit from the currency bloc.

Instead, he has called for a change in the EU's fiscal rules to allow public investments to help growth and, like many mainstream economists, has criticised Germany's persistently large current account surplus.

Mr Salvini of The League, is likely to become interior minister - enabling him to start implementing his campaign pledge to expel half a million unauthorised migrants from Italy. He has called for repatriations to be dramatically stepped up.

A few hours before the agreement was announced, he set the possible tone of his ministry by tweeting a short video of a man whom he claimed was a migrant plucking a pigeon on the side of a road.

"Final hours of work to form a government, we're putting everything into it. Meanwhile the news takes us back to harsh reality, with an immigrant plucking the feathers of pigeons in broad daylight and in the middle of the street...Go home!"

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