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POLITICS

Italy’s new PM Gentiloni races to form new cabinet

Italy's premier-designate Paolo Gentiloni raced to put together a cabinet team on Monday as the market welcomed the apparent rapid resolution of the country's political and banking crises.

Italy's new PM Gentiloni races to form new cabinet
Newly-named PM Paolo Gentiloni gives his first press conference. Photo: Alberto Pizzoli/AFP

Gentiloni, 62, was asked by President Sergio Mattarella on Sunday to form a new centre-left government that will guide Italy to elections due by February 2018, following the resignation of outgoing Prime Minister Matteo Renzi.

Opposition parties slammed the softly-spoken former foreign minister as little more than a Renzi puppet, but Milan's FTSE Mib saluted the move, up 1.04 percent at 2:00 pm (1300 GMT).

It was also buoyed by relief over the news the Italian government would intervene to recapitalize Italy's Monte dei Paschi di Siena bank (BMPS), should it fail to raise the money from private investors needed to stay afloat.

Silver-haired Gentiloni, a one-time student radical from an aristocratic family, is expected to keep the cabinet largely untouched and present his final list to the president by the close of play Monday.

He will then seek parliamentary approval of his new government on Tuesday or Wednesday.

The biggest cabinet seat to fill is the one left vacant by Gentiloni himself, that of foreign minister.

Reshuffle

Political watchers say it could go to Piero Fassino, a member of Renzi's centre-left Democratic Party (PD) who has previously held the justice and foreign commerce portfolios.

Interior Minister Angelino Alfano, who was Renzi's deputy and heads the New Centre-Right (NCD) party, is also tipped for the post.

Should it go to Alfano, the interior portfolio could be handed to Domenico Minniti, the state secretary with responsibility for the security services under Renzi.

Analysts say Gentiloni could also keep the foreign minister job for himself, at least in the short term. Pier Carlo Padoan is expected to stay on as finance minister to reassure Europe that the eurozone's third-largest economy is on solid ground.

Among the most pressing issues facing the new government is the fate of the troubled BMPS.

READ MORE: Here's what you need to know about Italy's banking crisis

The institution, the third largest in Italy, had requested extra time from Europe to plug a gaping hole in its finances, but reports on Friday that the European Central Bank had refused spooked the markets.

'Super speed'

But just hours after Gentiloni was named as prime minister, the bank said it could avoid appealing for a government bailout, with BMPS shares up 6.46 percent in early afternoon trading on Monday.

Oanda analyst Craig Erlam said investors were “more optimistic” the bank could raise the 5 billion euros ($5.29 billion) needed to avoid a handout and were relieved political uncertainty had been removed in the short term at least.

Gentiloni is now rushing to resolve the political crisis sparked by Renzi's crushing referendum defeat and downfall in time for Italy to attend the European Council meeting in Brussels on Thursday, where the pressing issue of migration is on the table.

Italy is on the frontlines of the migrant crisis, with a record 175,000 people landing on its shores this year alone.

“The Gentiloni-Padoan government is coming together at a super speed to prevent the implosion of the Siena bank (BMPS) and to make sure Italy does not turn up at the European Council with an incomplete government,” La Stampa daily said.

Renzi may be down and out for now, but analysts said he had tapped Gentiloni to replace him because he trusts him to keep his seat warm for the next general elections, which could be brought forward to early next year.

READ MORE: We haven't seen the last of Matteo Renzi

 

By Ella Ide

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ITALIAN POLITICS

Italian government rocked by Five Star party split

Italy’s government was plunged into turmoil on Tuesday as foreign minister Luigi Di Maio announced he was leaving his party to start a breakaway group.

Italian government rocked by Five Star party split

Di Maio said his decision to leave the Five Star Movement (M5S) – the party he once led – was due to its “ambiguity” over Italy’s support of Ukraine following Russia’s invasion.

He accused the party’s current leader, former prime minister Giuseppe Conte, of undermining the coalition government’s efforts to support Ukraine and weakening Italy’s position within the EU.

“Today’s is a difficult decision I never imagined I would have to take … but today I and lots of other colleagues and friends are leaving the Five Star Movement,” Di Maio told a press conference on Tuesday.

“We are leaving what tomorrow will no longer be the first political force in parliament.”

His announcement came after months of tensions within the party, which has lost most of the popular support that propelled it to power in 2018 and risks being wiped out in national elections due next year.

The split threatens to bring instability to Draghi’s multi-party government, formed in February 2021 after a political crisis toppled the previous coalition.

As many as 60 former Five Star lawmakers have already signed up to Di Maio’s new group, “Together for the Future”, media reports said.

Di Maio played a key role in the rise of the once anti-establishment M5S, but as Italy’s chief diplomat he has embraced Draghi’s more pro-European views.

READ ALSO: How the rebel Five Star Movement joined Italy’s establishment

Despite Italy’s long-standing political and economic ties with Russia, Draghi’s government has taken a strongly pro-NATO stance, sending weapons and cash to help Ukraine while supporting EU sanctions against Russia.

Di Maio backed the premier’s strong support for Ukraine following Russia’s invasion, including sending weapons for Kyiv to defend itself.

In this he has clashed with the head of Five Star, former premier Giuseppe Conte, who argues that Italy should focus on a diplomatic solution.

Di Maio attacked his former party without naming Conte, saying: “In these months, the main political force in parliament had the duty to support the diplomacy of the government and avoid ambiguity. But this was not the case,” he said.

Luigi Di Maio (R) applauds after Prime Minister Mario Draghi (L) addresses the Italian Senate on June 21st, 2022. Photo by Filippo MONTEFORTE / AFP

“In this historic moment, support of European and Atlanticist values cannot be a mistake,” he added.

The Five Star Movement, he said, had risked the stability of the government “just to try to regain a few percentage points, without even succeeding”.

But a majority of lawmakers – including from the Five Star Movement – backed Draghi’s approach in March and again in a Senate vote on Tuesday.

Draghi earlier on Tuesday made clear his course was set.

“Italy will continue to work with the European Union and with our G7 partners to support Ukraine, to seek peace, to overcome this crisis,” he told the Senate, with Di Maio at his side.

“This is the mandate the government has received from parliament, from you. This is the guide for our action.”

The Five Star Movement stormed to power in 2018 general elections after winning a third of the vote on an anti-establishment ticket, and stayed in office even after Draghi was parachuted in to lead Italy in February 2021.

But while it once threatened to upend the political order in Italy, defections, policy U-turns and dismal polling have left it struggling for relevance.

“Today ends the story of the Five Star Movement,” tweeted former premier Matteo Renzi, who brought down the last Conte government by withdrawing his support.

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