`New possibilities´ emerge over new Italian government

Financial markets rallied for a while on the news that Italy’s economy, the euro zone’s third-biggest, would not be guided by a government hostile to the single currency.

On Thursday evening President Sergio Mattarella gave a mandate for the second time to Giuseppe Conte – the populists’ pick for prime minister.

“We will work intensely” to implement the alliance’s electoral program and “with determination to improve the quality of life of all Italians”, he said.

Di Maio’s palace visit strengthened speculation that Mattarella was mulling fresh talks with Five Star and the League.

Nearly three months after inconclusive elections on March 4, Di Maio and Salvini finally sealed a deal during a meeting at the Rome parliament on Thursday. The 5-Stars, by contrast, polled 32%.

But sources close to some of Italy’s main parties said late on Tuesday that there was now a chance the president could dissolve parliament in the coming days and send Italians back to the polls as early as July 29.

But on Wednesday, Cottarelli said in a statement that “new possibilities for the birth of a political government had emerged” during his consultations.

Reports on Wednesday said that the anti-establishment Five Star Movement and far-right League had renewed efforts to form a coalition government after the president rejected their choice for the economy ministry over the weekend. Yanis Varoufakis, a leftist Greek economist and former finance minister who had his own battles with Brussels, criticized Mattarella’s decision to thwart the populists on their selection of a finance minister – rather than Salvini’s explicit program to carry out mass deportations.

The move led the country’s Prime Minister-elect to step down, meaning the collapse of a bid by the populist Five Star Movement and the far-right League to form a government.

There were even calls for Mattarella’s impeachment earlier in the week from the M5S, but the party’s leader has now said that option is off the table. Perhaps we’re finally there after so many obstacles, attacks, threats and lies.

The timing of any new government was unclear, but developments were moving quickly. In response, government officials expressed solidarity for Mr. Mattarella.

After months of stalemate followed an inconclusive parliamentary election in March, the Italian political landscape has shifted into overdrive.

“They’ve replaced a government with a majority with one that won’t obtain one”, said Mr. Di Maio.

Cottarelli, a former International Monetary Fund economist, left the presidential palace without making a statement after informal talks with Matterella, not long after anti-establishment Five Star Movement leader Luigi Di Maio ended his own meeting with the head of state.

Later on an Italian television, he called for impeaching Mattarella.

“You will have to be patient”, Salvini told reporters at Rome airport when asked about a possible solution to the crisis. That would be a symbolic defeat for Mattarella, who had hoped to calm financial markets with the appointment of a neutral government.

That is what ultimately happened after Mattarella on Sunday night refused to approve the populists’ choice of an economy minister who has raised the spectre of Italy having to someday exit from the euro, the European Union currency shared by 19 countries.

But a top adviser to Salvini said a breakthrough was unlikely because the League was not prepared to abandon Savona.

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