U.S. Markets

Italy president rules out June elections, wants stopgap government: source

ROME (Reuters) - President Sergio Mattarella has ruled out calling early national elections in June and wants to unblock Italy’s political logjam with a short-term government, a presidential source said on Wednesday.

Italian President Sergio Mattarella speaks to the media at the Quirinal Palace in Rome, Italy, April 13, 2018. REUTERS/Tony Gentile

Italy held an inconclusive election in March in which a center-right alliance led by the League won the most seats and the 5-Star Movement emerged as the biggest single party. The center-left Democratic Party (PD) came a distant third.

All efforts to forge a coalition have so far failed and, with few options left on the table, 5-Star leader Luigi Di Maio this week demanded an immediate return to the polls.

That spooked financial markets, which fear new elections might bolster the far-right League and anti-establishment 5-Star at the expense of already bruised mainstream parties in the euro zone’s third largest economy.

Mattarella serves as the supreme arbiter in Italian politics and a source in his office said the head of state would not call a June vote, preferring instead to bide his time and try to find a government to put together a 2019 budget.

“The president feels strongly we need to get a budget approved,” the source said, adding: “that presupposes having a government that can last until at least December.”

However, the source said elections could not be ruled out in September or October if no other solution was found.

A short-term government could only take office with the support of either 5-Star or the League, and both parties, to varying degrees, have been hostile to the idea.

“At this point for me there is no other solution. We have to go back to the polls as soon as possible,” Di Maio said on Monday after the prospect of a deal with the PD dwindled due to staunch opposition from its former leader Matteo Renzi.

5-Star originally pinned its hopes on hooking up with League leader Matteo Salvini, but it insisted he should first abandon his old ally, former prime minister Silvio Berlusconi, who it views as a symbol of political corruption.

Salvini has so far refused.

In a sign of growing friction, Di Maio accused Salvini on Wednesday of going back on a previous pledge to ditch Berlusconi, suggesting he was only standing by him because he needed funding from the billionaire businessmen.

Salvini rejected this: “I am not going to reply to insults about money ... for us loyalty and consistency are worth more than becoming ministers.”

The PD, which has governed since 2013 but was trounced at the March ballot, is due to meet on Thursday to decide whether to open government negotiations with 5-Star.

Renzi, who still wields strong influence over his group, has come out against any deal, exacerbating long-running party tensions between those who want to talk to 5-Star and those who don’t and reviving speculation the PD might split apart.

The PD’s interim leader Maurizio Martina on Wednesday told Renzi supporters to shutter a new website that ruled out any possible dealings between the two parties. “Have we come to this? ... There is a limit that should never be crossed,” Martina wrote.

Writing by Crispian Balmer; editing by John Stonestreet