September 3, 2017 / 9:28 AM / 3 months ago

Italy's 5-Star says euro referendum is 'last resort'

CERNOBBIO, Italy (Reuters) - A referendum on Italy’s membership of the euro currency would be held only as a “last resort” if Rome does not win any fiscal concessions from the European Union, a senior lawmaker from the anti-establishment Five-Star Movement said on Sunday.

FILE PHOTO: Luigi Di Maio of the 5-Star Movement attends a news conference in Rome, Italy March 23, 2017. REUTERS/Alessandro Bianchi

Luigi Di Maio’s comments reflect a striking change of tone by some senior officials in the party in recent months as they have retreated from 5-Star’s original pledge.

Seeking to reassure an audience of bankers and business leaders, Di Maio - widely tipped to be 5-Star’s candidate for prime minister at a general election due by next year - played down the referendum proposal, calling it a negotiating tool with the EU.

“Austerity policies have not worked, on monetary policy we deserve the credit for triggering a debate... this is why we raised the issue of a referendum on the euro, as a bargaining tool, as a last resort and a way out in case Mediterranean countries are not listened to,” he said.

Two years ago the party gathered the signatures from the public needed to pave the way for a referendum that it said was vital to restore Italy’s fiscal and monetary sovereignty. But now, running neck-and-neck with the ruling Democratic Party (PD) in opinion polls and with the election in sight - scheduled to be held by May 2018 - it is hitting the brakes on the idea.

This underlines the crucial challenge facing the party as it seeks to please some core supporters, while trying to shed its populist image and convince foreign capitals and financial markets that it can be trusted in office.

Reuters had access to the comments, which were made behind closed doors.

Highlighting the sensitivity of the issue, Di Maio declined to answer journalists’ questions about the referendum before making his speech inside the Ambrosetti conference in Cernobbio, on the shores of Lake Como, about 40 km (25 miles) from Milan.

‘WE‘RE NOT AGAINST EU’

The party wants several changes to the euro zone’s economic rules to help its more sluggish economies, like Italy. These include stripping public investment from budget deficits under the EU’s Stability Pact and creating a European “bad bank” to deal with euro zone lenders’ bad loans.

“We are not against the European Union, we want to remain in the EU and discuss some of the rules that are suffocating and damaging our economy,” said Di Maio, who serves as deputy speaker of the Chamber of Deputies.

An opinion poll in La Stampa daily on Sunday had 24 percent of respondents saying Di Maio most deserved to run the country in the next five years, against 17 percent for former PD Prime Minister Matteo Renzi and 12 percent for center-right leader Silvio Berlusconi.

Di Maio’s presence at the Ambrosetti meeting, an annual gathering of Italy’s elite business leaders, prompted some 5-Star supporters, including a respected magistrate they had recommended as the next head of state, to accuse the movement of schmoozing with the enemy.

Last year, he turned down an invitation from organizers at the last minute. But with 5-Star expected to announce its candidate for prime minister later this month, he has been rubbing shoulders with the Italian establishment at a string of events.

A couple of days ago he graced the red carpet at the Venice film festival, and later on Sunday he will attend the Italian Grand Prix Formula One race in Monza.

“Five-Star, as a force that is putting itself forward to run the country, must talk to everybody, explaining its own vision for the government and the country. This is why I accepted the invitation,” he told reporters in Cernobbio.

Additional reporting by Elvira Pollina; Writing by Silvia Aloisi; Editing by Isla Binnie and Pravin Char

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