July 18, 2019 / 1:02 PM / a month ago

Italy's warring coalition parties warn of government collapse

ROME (Reuters) - The leaders of Italy’s coalition partners the League and 5-Star Movement warned on Thursday the government could collapse following mutual recriminations over the election of the next European Commission president.

FILE PHOTO: Italian Prime Minister Giuseppe Conte and Deputy Prime Minister Matteo Salvini hold a joint news conference following a cabinet meeting in Rome, Italy, June 11, 2019 REUTERS/Remo Casilli

While the League voted against the mainstream German candidate Ursula von der Leyen for the powerful EU post, the 5-Star backed her this week in the European Parliament, with its support proving decisive in guaranteeing her promotion.

Deputy Prime Minister Luigi Di Maio, who heads 5-Star, said the League position risked isolating Italy, while League leader Matteo Salvini accused his partner of betraying ordinary voters after promising to bring radical change to Europe.

“There is a lack of trust, even at a personal level,” said Salvini, who serves as both deputy prime minister and interior minister in the government.

“If there is no further point in continuing with this government, then we will head to elections,” he told reporters.

Di Maio also bemoaned the worsening ties and said the League’s threats to quit the coalition had to stop. “If the League wants to topple the government, then it must say so clearly,” he said in a video posted on Facebook.

Italian political commentators have long speculated that the window for a government collapse would close on July 20, because after that date any new election would be pushed too deep into the autumn to enable the 2020 budget to be approved — key legislation around which the political calendar is built.

Italy has never held an election in the autumn or winter.

Rumors of a possible coalition crisis surged on Thursday evening when it emerged that Salvini had requested to see President Sergio Mattarella, Italy’s political powerbroker.

A senior official said no date had been set for the meeting, adding that the interior minister had not explained what he wanted to talk about. Speaking on a late night TV show, Salvini denied planning to hand in his resignation to the head of state.

“No government is going to fall tomorrow,” he told Rete 4 television. “I am going ahead calmly ... but if I have to hear ‘no’ everyday then it gets difficult,” he said, referring to what he sees as 5-Star foot-dragging on various initiatives.

CALM MARKETS

Salvini is facing significant pressure from within his party to pull the plug on the coalition, which was formed in June 2018 after an inconclusive national election.

Much of the League anger is focused on stalled efforts to hand greater autonomy to the regions — something the party’s northern strongholds have long demanded. The group also accuses 5-Star of hindering major infrastructure projects.

“Game Over. Don’t they understand,” foreign affairs ministry undersecretary and senior League politician Guglielmo Picchi wrote on Twitter.

Past turmoil in the government has immediately fed through to financial markets, with investors nervous that political instability could further damage Italy’s fragile state accounts.

However, there was little sign of anxiety on Thursday, with Italy’s bellwether 10-year bond yields hitting their lowest level in almost three years on Thursday, squeezing the gap on top-rated German bond yields to its tightest in over a year.

Hostility between the League and 5-Star intensified following European parliamentary elections in May when the League jumped above 5-Star to become the largest party in Italy. Support for it is now approaching almost 40 percent.

But Salvini has also come under pressure in recent days over allegations his party sought illegal funding via an advantageous oil deal from Russia to pay for its successful EU election campaign — a charge he has denied.

FILE PHOTO: 5 Star leader and Italian Deputy Prime Minister Luigi di Maio presents his EU election program in Rome, Italy, May 2, 2019. REUTERS/Yara Nardi

5-Star has called on Salvini to address parliament about the accusations, but in a peace offering, Di Maio said he did not believe the League had received illicit cash from Moscow.

“If I had the slightest suspicion that the League had taken money from Russia, I would not be in government with them”, he said on Thursday.

Salvini told Rete 4 he would go before parliament, saying he had nothing to hide. “I have many defects, but stealing oil from Russia is not one of them,” he said.

Additional reporting by Giselda Vagnoni; Writing by Crispian Balmer; Editing by Toby Chopra

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