Italian President Sergio Mattarella has agreed to swear in the coalition government after blocking it just days ago

By Daniel Herborn

Posted on June 1, 2018

Days of negotiations have ended and Italy will have a coalition government after all.

Earlier this week, Sergio Mattarella invited former economist Carlo Cottarelli to form government.

In an abrupt U-turn, he has now abandoned this idea and assented to Giuseppe Conte leading Italy and forming a coalition government consisting of anti-establishment parties Five Star (M5S) and the League.

“All the conditions have been fulfilled for a political, Five Star and League government,” said Matteo Salvini (the League leader) and Luigi Di Maio (leader of M5S), in a joint statement.

In the most recent Italian elections, held in March, no party gained enough of the vote to rule on its own.

The M5S and the League joined forces and were set to form government with Independent candidate Giuseppe Conte as leader. Both the M5S and the League are broadly populist parties and have been characterised as eurosceptics. The popularity of these parties had surged in a nation beset by high unemployment rates and a sluggish economy.

Mattarella had objected to the coalition nominating anti-euro politician Paolo Savona as Minister of Economy and Finances and used his veto as President to block Conte from forming government. This led to Conte briefly resigning his position as leader of the coalition.

The coalition then revised its Ministry list and has now put forward another candidate, Giovanni Tria, for the contentious Ministry position.

Relatively little is known about Tria, an economist who currently teaches at Tor Vergata University, Rome. Tria has been critical of the euro in his work at various times. Crucially, however, he has supported Italy remaning part of the euro, Europe’s single currency and is acceptable to Mattarella.

Matteo Salvini (League leader) will be Italy’s new Interior Minister, while Luigi di Maio (M5S leader) will be Industry Minister in the new government. Both will share the title of Deputy Prime Minister.

In a somewhat confusing twist, Paolo Savona, the politician at the heart of the stand-off, will still be part of the new government. The 81-year-old Savona has now been named as EU Minister in the revised ministry list.

The roller-coaster series of recent events in Italy also included a separate controversy over Giuseppe Conte fabricating his resume.

Will the Conte government provide stability in Italy?

The decision of the coalition to back down and nominate an alternate Minister for Economy and Finances signals an end to the leadership crisis. However, experts have forecast the new government may still be in for a torrid time.

Both the M5S and the League have promised widespread tax cuts and advocated increased spending to revive Italy’s flagging economy. These ambitious new economic plans may fall foul of EU rules on spending, however.

Italy currently has a debt of 2.3 trillion euros. This represents 132 per cent of its gross domestic product, meaning it has the highest debt ratio of any country in Europe besides Greece.

Jean-Claude Juncker, President of the European Commission, said on Thursday that Italy should not look to attribute all the blame for its economic woes to the EU.

“Italians have to take care of the poor regions of Italy,” Juncker said.

“That means more work, less corruption, seriousness.”

The new Italian government has been termed Western Europe’s first populist government. As such, all of Europe will be watching Italy with intense interest to see if this new type of political leadership can be effective.