Markets take breather as Italian leaders attempt solution

Daniel Fowler
May 31, 2018

Italian President Sergio Mattarella received prime minister-designate Giuseppe Conte in a meeting that aimed to resolve a days-long standoff over the composition of Italy's next cabinet or lead to the appointment of a caretaker government.

The president's choice as prime minister, unelected former International Monetary Fund official Carlo Cottarelli, continued to hold talks about forming a caretaker government despite both populist parties saying they would refuse to back him.

The deadlock follows an aborted attempt by the 5-Star Movement and right-wing League to form a government.

"The earlier we vote the better because it's the best way to get out of this quagmire and confusion", he told reporters. A League source said the party would not block any quick political solution that would enable Italy to deal with possible "emergencies".

Cottarelli, a 64-year economist, was given the mandate to form a technocrat cabinet on Monday, after a bid of two populist parties failed following the president's veto to appoint their nominee for finance minister.

An agreement reached this month for a shared agenda was focused on plans to increase spending, cut taxes and take a far tougher approach on immigration than the previous centre-left government, including by creating new detention centres across Italy.

League leader Matteo Salvini and 5-Star chief Luigi Di Maio responded angrily, saying the president was acting beyond the powers the constitution assigns to him.

While he had approved all their other ministerial picks, Mattarella said he had the right to block nominations that could harm the country.

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Even before the fracas over Savona's appointment, the marriage of convenience between Di Maio and Salvini had looked tenuous since the 4 March election.

Breitbart News former executive chairman Stephen K. Bannon, who is now in Rome, had been invited by the Center for American Studies to give a public address on Italy's historic populist moment Monday afternoon, but organizers cancelled the event Sunday night out of fear of riots.

"I asked for that ministry an authoritative political figure from the coalition parties who was not seen as the supporter of a line that could provoke Italy's exit from the euro", Mattarella said.

Salvini, who has been blowing hot and cold on reviving the populist government project, told a rally in Genoa in northern Italy: "If it's wanted, there's a government contract with a team which is ready".

However, Italians could be heading back to the polls as Mr Mattarella said he was considering political party leaders' requests for another election.

The IPSOS poll, in the Corriere della Sera newspaper, showed support for the League's would-be coalition partner, the 5-Star Movement, steady at about 32.6 percent - implying a much more comfortable majority if the pair were to try again to govern.

"Why don't we just say that in this country it's pointless that we vote, as the ratings agencies, financial lobbies decide the governments", a livid Di Maio said in a video on Facebook. "We are part of a very large and deeply integrated economic area, whose development determines that of Italy and at the same time depends on it", he said.

In currency markets, the euro has clawed back a little bit of ground in early Asian trade.

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