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AS IT HAPPENED: Italy prepares for caretaker government and early elections

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AS IT HAPPENED: Italy prepares for caretaker government and early elections
Italy's newly appointed prime minister, Carlo Cottarelli. Photo: Andreas Solaro/AFP
10:30 CEST+02:00
Italy has appointed an interim prime minister to lead the country after the president vetoed a eurosceptic finance minister, prompting the two populist parties that had been poised to govern to call for his impeachment.

18:00: Today's summary

We're closing this live blog for tonight and will be back tomorrow morning with the latest developments. In the meantime, here's what happened today:

  • President Sergio Mattarella appointed Carlo Cottarelli the interim prime minister and asked him to form a government.
  • Cottarelli said he would present a "neutral" cabinet shortly.
  • The next stage is hold a confidence vote in parliament: if most lawmakers vote no confidence, as they're expected to, Cottarelli has promised to hold new elections in the autumn. Otherwise there'll be another vote in early 2019.
  • The Five Star Movement, furious about Mattarella's decision, has called for nationwide demonstrations on June 2nd.

17:15: What happens next?

Ah, the billion-euro question. We know some of what's coming: interim PM Carlo Cottarelli will appoint a "neutral" government, he'll present it to parliament for approval and lawmakers will most likely give a vote of no confidence. In that case Cottarelli has said he'll plan to hold new elections after the summer break.

But many unknowns remain. Such as, will the League drop its allies on the centre-right (or be dropped by them) and run a joint campaign with the Five Star Movement? How many people would vote for them if so? Or will Italy find itself facing a hung parliament once again?

Here's a look at what could be next for Italy after the upheaval of the past few days. 

16:35: The view from Berlin

Reactions from Germany, unlike those from France or far-right commentators from the US or the UK (see below), have been notably cautious. 

According to AFP, German Chancellor Angela Merkel's spokesman Steffen Seibert said Berlin's"respect for Italian democracy and democratic institutions requires us to wait and see which government will lead the country and which ideas it will present to its EU partners".

"The German government is always ready to work well and closely with an Italian government – that is our fundamental stance," he added.

Despite the measured tone, Germany, the focus of much of Italian eurosceptics' anger, clearly has skin in the game. The German junior foreign minister, Michael Roth, had earlier said that Berlin was hoping for "a stable and pro-European government in Italy". 

Meanwhile Germany's EU commissioner Guenther Oettinger called for eurozone partners to do what they could to convince Italian voters of the value of the single currency by exercizing "positive influence on decision-making" in Italy, the DPA news agency said. 

16:20: The alt-right is watching Italy's crisis

Steve Bannon, the former White House strategist who proved too toxic for US President Donald Trump, is in Rome for a scheduled talk and has some thoughts about Italy's ongoing upheaval. (Though according to one journalist who was there, the audience didn't necessarily agree.)

Bannon, a conservative Catholic who has criticized the European Union, came to Italy ahead of the March election to offer his support to Italian populists threatening to upend the established order. He described a coalition between the League and Five Star Movement as "the ultimate dream".

Italy's two populist parties have also had support today from the leader of the French far-right, Marine Le Pen, who accused President Mattarella of a "coup".

"The European Union and the financial markets seize democracy once again. What's happening in Italy is a coup d'état, a robbery of the Italian people by illegitimate institutions. Faced with this denial of democracy, the people's anger is growing all over Europe!"

Meanwhile Nigel Farage, the former UK Independence Party leader who campaigned for Britain to leave the EU, has been busy retweeting the League's Matteo Salvini and calling for Italy to hold "more elections and bigger votes".

15:50: Paris praises Italian president's 'courage and responsibility'  

From AFP:

French President Emmanuel Macron praised his Italian counterpart Sergio Mattarella on Monday, saying he was fulfilling his role as the guarantor of the country's institutions with "courage and responsibility."

"I reiterate my friendship and support for President Mattarella who has an essential task to undertake, [ensuring] the institutional and democratic stability of his country, which he is doing with a lot of courage and responsibility," Macron said, after the Italian leader rejected a eurosceptic nominee for economy minister which led to the collapse of the populists' bid to form a government. 

Macron, a pro-Europe centrist, is watching Italy's unfolding political crisis closely, aware that his plans for deepening the European Union depend largely on a stable and like-minded government emerging in Rome. 

"Italy is an important partner for France at every level: a historic partner, a present partner and a future partner, that we respect and that we need for our European projects, as well as our bilateral relationship which is fundamental," he added. 

15:30: What does the constitution have to say about Italy's crisis?

Depending on who you listen to, President Sergio Mattarella is either the hero or the villain of Italy's latest drama. (Rival hashtags, along the lines of "president, resign" and "I stand with Mattarella", have been battling it out on Italian social media since the weekend.)

The head of state's actions are based on a single article in the Italian constitution, Article 92, which reads:

"The Government of the Republic is made up of the President of the Council and the Ministers who together form the Council of Ministers. The President of the Republic appoints the President of the Council of Ministers and, on his proposal, the Ministers."

It sounds innocuous enough, but the key is the detail: the prime minister proposes a cabinet, the president appoints one. The article has been the subject of fierce debate since Mattarella put the kibosh on the populist alliance's plans to install eurosceptic Paolo Savona as finance minister, but most constitutional experts seem to agree that if Article 92 gives the president the right to appoint ministers, it also gives him the right not to appoint them. And that's certainly how it's been interpreted on at least three other occasions in the past 24 years.

The other section of the Italian constitution that it's worth (re)reading today is Article 94:

"The Government must receive the confidence of both Houses of Parliament. Each House grants or withdraws its confidence through a reasoned motion voted on by roll-call. Within ten days of its formation the Government shall come before Parliament to obtain confidence. 

"An opposing vote by one or both the Houses against a Government proposal does not entail the obligation to resign. A motion of no-confidence must be signed by at least one-tenth of the members of the House and cannot be debated earlier than three days from its presentation."

In other words, the interim government formed by Carlo Cottarelli on Mattarella's instruction must seek the approval of both the Chamber of Deputies and the Senate. In both houses, the M5S and the League have the seats between them to make a majority. But even if they vote against Cottarelli's caretaker cabinet, as they're widely expected to, he won't have to step down right away. 

As Cottarelli has already said, in that case he'll steer the country through the summer recess to the autumn, asking for new elections "after August". But the duty of dissolving parliament and triggering a new vote, according to the constitution once again, is Mattarella's.

14:45: How did Italy get here?

In case you missed the past two and a half months in Italian politics, here's a recap on how an inconclusive general election, followed by fraught coalition talks, produced the turmoil in which Italy finds itself today. 

READ HERE: How did Italy end up in political crisis?

14:25: Italy's crisis rattles the markets 

From AFP: 

European stock markets and the euro dipped as chaos in Italy rattled investors who feared the nomination of a technocrat prime minister may fail on the long run to avert a eurozone crisis, analysts say.

The Paris and Frankfurt equities markets, which had opened in the green, dropped into the red in early afternoon trading after the Milan FTSE MIB stock exchange had a rollercoaster day. After opening nearly two percent up, it suffered a dramatic plunge, before coming off its worst levels in mid-afternoon.

Just ahead of Carlo Cottarelli's nomination, Italy's debt-risk premium had soared to its highest level since November 2013. Italy's ten-year bond yields – the return an investor gets on holding the bond – spiked to 233 points above that of German debt which is the eurozone's benchmark. Yields typically rise at times of stress as investors demand higher returns if they are to buy a country's bonds. 

Meanwhile the euro also dropped against the dollar in mid-afternoon trading after earlier positivity gave way to fear of a drawn-out crisis.

"The planned eurosceptic governing coalition will not initially be possible. However, it looks like there will be new elections in the autumn, which could see the populists emerge with a bigger share of the votes," Commerzbank Commodity Research analysts said in a note. 

13:25: EU officials hoping for 'stable, pro-European government' in Italy

Italy's neighbours have been calling for calm at a meeting of foreign ministers in Brussels, according to AFP.

"We are hoping we will soon reach a stable and pro-European government in Italy," Germany's junior foreign minister Michael Roth. "We in Germany shouldn't be giving advice on forming governments because we needed six months to form a new government ourselves," he added.

Belgian Foreign Minister Didier Reynders said the priority should be "putting in place a stable government".

"The ideal would be a government that the EU could work with effectively," he said.

Federica Mogherini, the EU's foreign policy chief and a former Italian foreign minister, said she had "full trust in the Italian institutions".

"I am confident that the Italian institutions and the president of the republic will prove to be, as always, serving the interests of Italian citizens which coincide with the strength of the European Union," she said.

13:05: A cordial meeting between Mattarella and Cottarelli

The presidential press office has released photos of the meeting between President Sergio Mattarella and caretaker PM Carlo Cottarelli. 

From the looks of the pictures, it was a cordial (and brief) encounter. 




Photos: Paolo Giandotti/Ufficio Stampa Presidenza della Repubblica/AFP

12:50: Italy to hold new elections by early 2019

Speaking from the presidential palace, Italy's new prime ministerial nominee Carlo Cottarelli has given his first comments since receiving a mandate.

"I will present parliament with a programme that proposes the budget and will take the country through to elections at the start of 2019 if I have its confidence or after August if I don't," he said.

"I will present the list of ministers very shortly. The government will be neutral, ensure that public spending is managed responsibly and hold that Italy's membership of the eurozone is essential."

He added that he would not run for office when Italy next votes.

12:35: Cottarelli has a mandate

The Italian president has officially given economist Carlo Cottarelli a mandate to form Italy's new government. 

"The President of the Republic Sergio Mattarella this morning received at the Quirinal palace Carlo Cottarelli, to whom he gave the mandate to form a government. Cottarelli decided to accept," a presidential spokesman told reporters. 

As prime minister, the former IMF director is expected to pick a cabinet of technocrats to lead the country until the next elections, which seem inevitable by now.

11:40: Stocks rise after veto of eurosceptic minister

European stock markets and the euro breathed a sigh of relief Monday after Italy's president vetoed the nomination of a fiercely eurosceptic economy minister, averting a potential eurozone crisis, analysts said.

The Italian government bond market also rose as did the euro which stood around 0.3 percent higher against the dollar amid relief that a eurozonevcrisis had been averted for now. However analysts said the euro's gains were limited by fears that  Monday's positivity may not last.

"Mr Mattarella's refusal on Sunday to approve a proposed eurosceptic economic minister gave the euro a much-needed push," said Hussein Sayed, chief market strategist at FXTM.

"However, it is far from certain that Mattarella's current move will end Italy's drama."

From AFP

11:15 Cottarelli arrives for talks

Fifteen minutes early and wheeling a small suitcase behind him, Cottarelli is now at the presidential palace. 

10:56: The power of the president

For anyone wondering how the Italian president, usually seen as acting as a figurehead, was able to veto a minister backed by most parliamentarians, here's an explainer of how much power the president has in these situations.

It's not the first time a president has rejected a ministerial nominee. Two of Silvio Berlusconi's nominees were rejected, by different presidents, in 1994 and 2001, and Matteo Renzi's first choice of Justice Minister was rejected as recently as 2014.

Some observers are suggesting the choice of the populist parties to dig their heels in, rather than pick an alternative finance minister, might be a tactic in order to force new elections and potentially get a larger majority.

10:50: Cottarelli to meet Mattarella

President Sergio Mattarella has summoned former IMF director Carlo Cottarelli for talks at 11:30, where they'll discuss the possibility of a temporary technocratic government.

Cottarelli, 64, was director of the IMF's fiscal affairs department from 2008 to 2013 and became known as "Mr Scissors" for making cuts to public spending in Italy.

The question is whether he'll be able to get parliamentary approval, since the League and M5S between them have a majority in both Italy's houses of parliament.

READ MORE: Who is Carlo Cottarelli, the technocrat who could be Italy's next PM?

10:30: The story so far

Last week, it looked as if Italy was finally about to get a new government after almost three months of political deadlock following inconclusive elections back in March.

Two populist parties, the Five Star Movement (M5S) and League, agreed on a coalition deal and prime ministerial nominee, lawyer Giuseppe Conte. Italian president Sergio Mattarella approved Conte as PM, but the stumbling block came when the latter nominated a fierce eurosceptic as finance minister.

Mattarella vetoed the nomination, but the M5S and League refused to back down, both calling to impeach the president. Conte gave up his mandate, and the possibility of a technocratic government is now on the table, with elections later this year looking likely.

We'll be updating this blog with the latest updates throughout Monday, and you can also follow us on Facebook and Twitter.

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