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Italy PM-designate Conte gives up bid for government Italy PM-designate Conte gives up bid for government
(about 1 hour later)
Italian PM-designate Giuseppe Conte has given up his bid to form a government after the country's president vetoed his choice of economy minister.Italian PM-designate Giuseppe Conte has given up his bid to form a government after the country's president vetoed his choice of economy minister.
The decision was announced following a meeting between the two men. President Sergio Matarella said he had agreed to all proposals but could not back Paolo Savona, a eurosceptic.
Mr Conte, a political novice, was chosen by two populist parties in an attempt to end 11 weeks of political deadlock. Mr Matarella's move angered populist parties trying to form a coalition. Luigi Di Maio, the leader of 5-Star, called for the president's impeachment.
Italy has been without a government since elections on 4 March, because no political group could form a majority. Italy has been without a government since elections on 4 March.
Mr Conte took his list of cabinet choices to President Sergio Mattarella on Sunday evening in the hope of finally being able to form a coalition government. Two populist parties, 5-Star, which won 32% of the vote, and the far-right League party, which won 18%, had agreed earlier this month after days of talks to form a coalition.
But Mr Mattarella rejected his candidate for economy minister, Paolo Savona, a strong eurosceptic. What happened on Sunday?
Under Italian law, the president has the right to reject the appointment of a cabinet member but his decision angered the two-party populist coalition of the League and 5-Star parties, who were hoping to form a government. Mr Conte, a political novice, was proposed by the two parties as prime minister in an attempt to break Italy's 11-week political deadlock.
He went to meet Mr Mattarella to put forward picks for his cabinet but the president vetoed Mr Savona as finance minister, citing his fierce opposition to the European Union.
Under Italian law, the president has the right to reject the appointment of a cabinet member but his decision was a controversial one.
Mr Di Maio called for impeachment under article 90 of the constitution, which allows parliament to demand a president step down based on a simple majority vote.
If a vote were to be successful, the country's constitutional court would then decide whether to impeach or not.
"After tonight, it's truly difficult to believe in the institutions and the laws of the state," Mr Di Maio said.
Speaking after the meeting, Mr Conte said: "As you have already heard, I have rejected the mandate to form a government that had been offered to me by President Mattarella."Speaking after the meeting, Mr Conte said: "As you have already heard, I have rejected the mandate to form a government that had been offered to me by President Mattarella."
He went on to thank Mr Mattarella and said he had applied himself "to the utmost in this task".He went on to thank Mr Mattarella and said he had applied himself "to the utmost in this task".
What happens next?
Mr Mattarella said he had "agreed and accepted all the proposals except that of the economy minister".Mr Mattarella said he had "agreed and accepted all the proposals except that of the economy minister".
"No-one can claim that I have stood in the way of the formation of the so-called government for change," he said."No-one can claim that I have stood in the way of the formation of the so-called government for change," he said.
He said he would wait before deciding whether to call fresh elections. He said he would wait before deciding whether to call fresh elections, and summoned Carlo Cottarelli, a former director of the International Monetary Fund (IMF) fiscal affairs department, for talks on Monday.
What are the parties saying? Mr Cottarelli, 64, worked at the IMF from 2008 to 2013, gaining the nickname "Mr Scissors" for making cuts to public spending in Italy.
Luigi Di Maio, the leader of the anti-establishment 5-star party, said Mr Mattarella's rejection of Mr Savona was "unacceptable". What else are the parties saying?
"It's an institutional clash without precedent," Mr Di Maio said in a live Facebook video. Mr Di Maio said Mr Mattarella's rejection of Mr Savona was "unacceptable".
Matteo Salvini, the leader of the far-right League party, called for a new election. "It's an institutional clash without precedent," he said in a live Facebook video.
Matteo Salvini, leader of the League, called for a new election.
"In a democracy, if we are still in democracy, there's only one thing to do, let the Italians have their say," he told supporters in a speech in central Italy."In a democracy, if we are still in democracy, there's only one thing to do, let the Italians have their say," he told supporters in a speech in central Italy.
How did Conte emerge as a candidate?How did Conte emerge as a candidate?
Italy has been without a government since elections on 4 March, with no political group able to form a majority. Then earlier this month, after days of talks, League and 5-Star agreed to form a coalition.Italy has been without a government since elections on 4 March, with no political group able to form a majority. Then earlier this month, after days of talks, League and 5-Star agreed to form a coalition.
Five days ago Mr Conte, a 53-year-old law professor, former leftist and devout Catholic, was nominated as prime minister - a compromise choice to bring together the two coalition parties. Five days ago Mr Conte, a 53-year-old law professor, former leftist and devout Catholic, was nominated as prime minister - a compromise to bring together the two coalition parties.
There were fears among some in Italy that he would end up a figurehead, operating at the direction of Mr Salvini and Mr Di Maio. Left-wing newspaper La Repubblica in an editorial branded him "a prime minister who will not count".There were fears among some in Italy that he would end up a figurehead, operating at the direction of Mr Salvini and Mr Di Maio. Left-wing newspaper La Repubblica in an editorial branded him "a prime minister who will not count".
"What authority will he have when he goes to meet [German Chancellor] Angela Merkel and [French President] Emmanuel Macron?" the editorial asked."What authority will he have when he goes to meet [German Chancellor] Angela Merkel and [French President] Emmanuel Macron?" the editorial asked.
Mr Conte's decision on Sunday may now have put Italy's electoral process back to square one. "Hold our nerve and solidarity with President Mattarella," tweeted Italy's outgoing prime minister, Paolo Gentiloni. "Now we must save out great country." Mr Conte's decision on Sunday may now have put Italy's electoral process back to square one. "Hold our nerve and solidarity with President Mattarella," tweeted Italy's outgoing Prime Minister, Paolo Gentiloni. "Now we must save out great country."
What do the markets make of the crisis?What do the markets make of the crisis?
Mr Savona, who served as industry minister during the 1990s, has been an outspoken critic of the EU and an opponent of austerity programmes, prompting concern over the proposed government's commitment to the EU and ability to rein in the country's massive national debt - equal to 1.3 times its annual output.Mr Savona, who served as industry minister during the 1990s, has been an outspoken critic of the EU and an opponent of austerity programmes, prompting concern over the proposed government's commitment to the EU and ability to rein in the country's massive national debt - equal to 1.3 times its annual output.
The League party had proposed to cut personal and business taxes and roll back planned pension reforms designed to cut government spending, at a cost running into tens of billions of euros. The League had proposed to cut personal and business taxes and roll back planned pension reforms designed to cut government spending, at a cost running into tens of billions of euros.
President Mattarella warned on Sunday that the prospect of a populist government had "alarmed Italian and foreign investors" and worsened the "spread" - the gap between Italian and German 10-year government bond yields.President Mattarella warned on Sunday that the prospect of a populist government had "alarmed Italian and foreign investors" and worsened the "spread" - the gap between Italian and German 10-year government bond yields.
The spread rose to 215 basis points on Friday - the widest in four years. Ratings agency Moody's warned that it might downgrade Italy's sovereign debt rating to "Baa3" - one notch above the junk rating.The spread rose to 215 basis points on Friday - the widest in four years. Ratings agency Moody's warned that it might downgrade Italy's sovereign debt rating to "Baa3" - one notch above the junk rating.