By Giovanni Legorano
ROME -- Italy was thrown into political turmoil Sunday evening,
as the Italian president blocked the formation of a new government
supported by two anti-establishment parties due to concerns the
coalition could endanger Italy's membership in the single
currency.
Italian President Sergio Mattarella blocked the ascent to power
of a government supported by the maverick 5 Star Movement and the
hard-right League after they proposed a euroskeptic figure as
economy minister, an especially delicate job for a country with a
EUR2 trillion public debt.
The dramatic developments sparked immediate calls Sunday evening
from the two maverick parties for fresh elections.
But Mr. Mattarella instead will likely on Monday ask Carlo
Cottarelli, a former International Monetary Fund official, to
attempt to form a new government. But even if Mr. Cottarelli
succeeds in forming a new government, fresh elections in Italy are
now increasingly likely.
Nearly three months after parliamentary elections, 5 Star and
the League appeared poised to form a government that would bring an
antiestablishment, euroskeptic coalition to power in the eurozone's
third-largest economy. They proposed Giuseppe Conte, a political
neophyte and little-known academic, as prime minister.
However, the coalition also insisted on appointing Paolo Savona,
an 81-year-old economist and former industry minister, to become
Italy's new economy minister, an especially delicate job in a
country with the world's third-largest public debt, a weak banking
sector and an economy that is the only Group of Seven nation still
smaller than before the financial crisis which began in 2008.
Concerns over the nomination and the coalition's economic
program -- including bold promises to radically revamp the rules
underpinning the single currency -- have driven Italian bond yields
higher in the last week, potentially ratcheting up the cost of
servicing Italy's enormous debt.
Mr. Savona, a former Bank of Italy official, won over the 5 Star
and the League for strongly euroskeptic views. "Germany has not
changed the vision of its role in Europe after the end of the Nazi
era, although it has abandoned the idea of impose it militarily,"
Mr. Savona wrote in an autobiography. He also wrote that Italy
should prepare for the eventuality of leaving the euro "whether we
are forced, willingly or unwillingly, to do so," a stance he has
often repeated.
Such views alarmed Mr. Mattarella. In remarks Sunday evening,
Mr. Mattarella said he had asked the parties for another figure,
one who "isn't seen as supporting a position that could possibly or
even inevitably lead to Italy's exit from the euro.
"That is quite distinct from a strong Italian position that
favors changing the European Union," he said. "But there was an
unwillingness to accept my request."
Sunday's developments underscore the disruptive power unleashed
by the March parliamentary elections, in which more than half of
Italians cast votes for populist parties. It is the first time
political parties have refused to accept an Italian president's
request to change a ministerial pick.
"We were ready to govern and we were told 'No'," said 5 Star
leader Luigi Di Maio Sunday evening. "This is unacceptable. This is
an institutional clash unseen before."
Mr. Di Maio said he plans to make a request in parliament to
have Mr. Mattarella impeached for allegedly betraying the state. A
spokesman for Mr. Mattarella declined to comment.
On Sunday, Matteo Salvini, the 45-year-old leader of the League,
suggested Italians should now go back to vote.
"If we have a minister who is not appreciated in Berlin, it
means he's the right minister ... In Italy, Italians decide," Mr.
Salvini told supporters Sunday. "In a democracy -- if we are still
in a democracy -- there's only one thing to do: Let the Italians
have their say."
Mr. Mattarella will likely ask Mr. Cottarelli to attempt to form
a government that would remain in power for a short time and could
be charged with specific reforms -- possibly including a new
electoral law aimed at producing more durable governments. However,
assembling support for such a government could prove exceedingly
difficult.
The impasse now leaves Italy in a political vacuum nearly three
months after parliamentary elections. The League and the 5 Star
Movement emerged from the vote victorious by giving voice to
Italians' deep worries over the direction of a country that has
borne the brunt of Europe's twin economic and migration crises.
Earlier this month, the two parties struck an agreement to form
a new government, pledging to deliver on bold promises to rewrite
the rules for the single currency, deport hundreds of thousands of
immigrants, enact deep tax cuts and establish a universal basic
income for Italy's poor and unemployed.
If Italy returns to the polls, both 5 Star and the League could
emerge even stronger, particularly if Italians blame the political
establishment for preventing the pair from coming to power.
The League won 18% of the popular vote in March and has since
risen further in the polls, with about 23% of support. Five Star,
which got 32% of the popular vote and is Italy's biggest single
party, has also seen its support edge higher.
Write to Giovanni Legorano at giovanni.legorano@wsj.com
(END) Dow Jones Newswires
May 27, 2018 17:05 ET (21:05 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.