Route to power still unclear for Italy's Draghi ahead of key weekend

ROME (Reuters) - Italy’s largest parties are weighing whether to support Mario Draghi’s efforts to form a government ahead of crucial meetings with the prime minister designate on Saturday, as mutual vetoes still block his way to power.

Former European Central Bank President Mario Draghi leaves Monte Citorio, in Rome, Italy February 3, 2021. REUTERS/Remo Casilli

The head of state Sergio Mattarella asked the former European Central Bank chief on Wednesday to try to form an administration after the previous one, led by Giuseppe Conte, was brought down due to the collapse of the ruling coalition.

While a handful of parties have pledged support, including traditional foes, the centre-left Democratic Party (PD) and centre-right Forza Italia, Draghi needs to find broader backing to secure a majority in both houses of parliament.

Much attention is focused on the anti-establishment 5-Star Movement, the biggest parliamentary group, which has yet to decide what to do. Without its help, it will be extremely difficult for Draghi to assemble a coalition.

Beppe Grillo, who founded 5-Star in 2009, will lead it at Saturday’s meeting, setting up an intriguing encounter between the former comedian and the central banker who personifies the euro project that 5-Star used to rail against.

Italian financial markets have rallied on the expectation Draghi will succeed. On Friday Italy’s 10-year bond yield headed for its biggest weekly drop since July, while the gap over the German Bund yield narrowed to its lowest in five years.

Investors hope the man widely credited with saving the euro during the 2012 sovereign debt crisis can spearhead reforms to boost growth in a country that has long underperformed its European peers, weighing down the whole euro zone.


However the parliamentary arithmetic still does not add up, with a series of apparently non-negotiable party conditions blocking any obvious route to a majority.

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The second largest group in parliament, the right-wing League, has said it will not support any government backed by 5-Star, while the PD has voiced its opposition to joining a majority with the League.

Former premier Matteo Renzi, who triggered Conte’s downfall when he withdrew his centrist Italia Viva party from the coalition, urged the other parties to get behind Draghi.

“Those who are now imposing vetoes are rejecting the appeal of head of state” for a broad parliamentary majority, he said after meeting Draghi on Friday.

Matteo Salvini, the League’s firebrand leader, dismissed speculation his party would abstain in the key confidence votes needed to launch a government. “We are either in or out,” he told RAI state television in an interview.

He is due to see Draghi on Saturday.

Salvini’s conservative ally, Forza Italia, which is led by former prime minister Silvio Berlusconi, said on Friday it wanted in after long talks with the veteran banker.

“Forza Italia expects a high level executive that is capable of representing to the utmost the unity of the country,” deputy party leader Antonio Tajani said, adding he wanted to see a cross-party coalition get behind a “government of the best”.

It may take some time before the situation becomes clear. Politicians said after meeting Draghi on Friday that he planned to hold a second round of talks with parties next week, and would also consult trade unions and employers’ groups.

Mattarella did not give the former ECB chief a deadline to report back when he gave him a mandate, but the head of state will not want to see things drag on too long.

Minutes before summoning Draghi to his palace in a shock announcement on Tuesday, the president stressed a new government must take office rapidly to avoid Italy missing out on more than 200 billion euros ($243 billion) from a European Union fund designed to help overcome the economic slump.

Additional reporting by Giselda Vagnoni and Giuseppe Fonte; Editing by Angus MacSwan, Philippa Fletcher and Crispian Balmer