What to expect as Italy begins talks on new government coalition

Filippo Monteforte, AFP | A general view shows the Quirinale presidential palace in Rome on August 20, 2019.

Italy began talks on Wednesday on forming a new government coalition after the resignation a day earlier of Prime Minister Giuseppe Conte, who presided over a tenuous détente between the right-wing League party and the 5-Star Movement.


As Italy's Premier Giuseppe Conte steps down, the question is whether hardline, anti-migrant Interior Minister Matteo Salvini can force new elections in hopes of grabbing the premiership.

In announcing his resignation Tuesday before the Senate, Conte blamed Salvini for pulling the plug on a coalition forged only 14 months earlier between his right-wing League and the anti-establishment 5-Star Movement.

Conte, who has mainly acted as a mediator between the two coalition's litigious partners, blasted Salvini for being "irresponsible" and following his "own personal interests" in his push for early elections   a hazardous move that could plunge Italy into political instability, alarming international investors and European partners.

Salvini fired back, saying he doesn't fear "Italians' judgment" and saying that he would do it all again. But his political gamble could backfire.

Even though Salvini has softened his stance over the past few days, a new deal between the League and the 5-Stars' coalition remains far-fetched. However, there are several scenarios in which a new government could be formed without Italians having to head back to the polls.

The president steps in

Now that the premier has stepped down, President Sergio Mattarella will meet with party leaders to explore alternative coalitions.

To complicate matters, this is happening just ahead of talks on a difficult budget law that could trigger a new confrontation between Italy and the European Union over deficit targets.

The 2020 budget has to line up financial resources worth 23 billion euros to avert a massive VAT sales tax hike that could plunge Italy into a new recession. It has to be submitted to the European Commission in mid-October and must be approved by parliament by the end of the year.

Since Mattarella's priority is safeguarding Italy's public finances, he is unlikely to greenlight a government that isn't based on a solid political alliance simply to avert early elections. The president has some options.

The Odd Couple

Earlier this month, the League failed to win support in the Senate for a confidence motion against Conte when the 5-Stars joined forces with the opposition Democratic Party and smaller left-wing groups to block it. That move appeared to have caught Salvini off-guard and showed that an alliance between the 5-Stars and the Democratic Party   who are traditionally bitter rivals   is possible.

In theory, those two parties could form a new government with the support of the smaller parties that helped them block the no-confidence motion. However, both would face stiff opposition from their own ranks.

Some leading Democrats, including former Premier Matteo Renzi, say a partnership with the 5-Stars is the only way to save Italy from a Salvini-led government. Others, including current leader Nicola Zingaretti, fear it could seriously damage the party in the next parliamentary elections. Critics also worry that Renzi's proposal hides a plan to regain power and then found his own political group.

The Ursula option

Some political analysts have suggested a stronger government could be forged through a grand coalition between the left, the 5-Stars and Forza Italia   the shrinking center-right party led by 82-year-old Silvio Berlusconi.

That scenario is known in Italian political circles as the "Ursula" option, because it would bring together the Italian parties that joined forces to back German politician Ursula von der Leyen as president of the European Commission. Salvini's party voted against her.

>> Read more: Can a left-wing alliance stop Salvini from forming a far-right government in Italy?

Backers of the "Ursula" scenario include former Commission President Romano Prodi, who has said it would have more long-term potential than a 5-Star and Democratic tie-up.

A caretaker government

If coalition talks fail, Mattarella could still ask the main parties to form a caretaker or "institutional" government. Such a plan would likely include the same forces as a grand coalition, but with a shorter time-span.

A caretaker government   possibly headed by a politically neutral figure or by Conte himself   would be in charge of delivering the new budget. That remains a challenging option for any party, as approving tough economic measures ahead of possible elections may eventually favor the League.

Analysts believe that a caretaker government or a grand coalition would be "market friendly" scenarios, as they would soothe investor worries over a League-dominated budget that would likely spark a new row with Brussels.

New elections

If no viable alternatives to the current government materialize, the president will have no choice but to call new elections, possibly as soon as late October.

That's the scenario that Salvini wants, because it could make him prime minister. Judging by recent polls, his League could win more than 50 percent of the vote in a right-wing alliance with Forza Italia and the far-right Brothers of Italy.

Salvini has repeatedly accused his opponents of doing everything possible to avoid new elections in a "desperate" attempt to cling on to their seats in Parliament.


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