Italian populist PM nominee bids to finalise cabinet

Rome (AFP) –


Italy's prospective new prime minister Giuseppe Conte laboured Friday to finalise his government team as a battle heated up over the populist coalition's eurosceptic pick for economy minister.

President Sergio Mattarella on Wednesday approved Conte's nomination to be prime minister of a government formed by the anti-establishment Five Star Movement and the far-right League.

After talks with parliament's political leaders on Thursday, 53-year-old Conte headed Friday morning into a meeting with Five Star leader Luigi Di Maio and League chief Matteo Salvini to discuss their cabinet picks.

Mattarella must next endorse the nominations before the government can seek parliamentary approval.

"I will dedicate the whole day tomorrow (Friday) to developing a proposal of government ministers to submit to the President of the Republic," the future premier said Thursday.

Italian media reported that Salvini was expected to become interior minister, while M5S leader Di Maio M5S, would head an expanded Ministry of Economic Development and Labour.

However the key sticking point has become Salvini's favourite for the Ministry of the Economy, noted eurosceptic Paolo Savona, who once described the euro as a "German cage".

On Thursday Salvini said that he couldn't see "why anyone would say no to Savona", who is 81.

- 'No vetoes' -

He added that "there can't be any vetoes" on the ministerial team.

However, without approval from Mattarella -- who is considered hostile to Savona -- the new government can't get off the ground.

Salvini's comments irritated Mattarella's staff, who underlined that as per the Italian constitution the discussion over ministers was now a matter for Conte and the head of state.

"The issue isn't vetoes but the unacceptability of diktats towards the prime minister and president of the republic," the president's office said in a statement.

The suspense over the name of the future finance minister of the third largest economy in the eurozone is causing concern in Brussels and on the financial markets.

On Friday the difference in yield on Italian 10-year sovereign bonds compared to Germany's crossed the 200-mark level before falling back slightly.

Officials in Brussels have voiced concern that Italy could trigger a new eurozone crisis by refusing to stick to the bloc's public spending and debt targets.

The joint government programme unveiled by Five Star and the League last week pledges anti-austerity measures such as drastic tax cuts, a monthly basic income and pension reform rollbacks, which Di Maio and Salvini claim will boost growth.

The European Commission's vice-president for the euro, Valdis Dombrovskis, issued a new warning to Italy on Friday as he arrived at a meeting with EU finance ministers.

"Our message from the European commission is very clear: that it is important Italy continues to stick with responsible fiscal and macro-economic policies," Dombrovskis told reporters.

That was the second time in a week that he had warned Italy against "irresponsible" spending, and on Thursday the European Central Bank (ECB) offered similar guidance.

"A loosening of the fiscal stance in high-debt countries could impact the fiscal outlook and, by extension, market sentiment" towards governments when they try to sell bonds, it said in its bi-annual financial stability report.

The ECB holds around 17 percent of Italy's 2.3-trillion-euro ($2.7-trillion) public debt.