Italy’s caretaker PM assembles a cabinet almost certain to be rejected

Italy's caretaker prime minister Carlo Cottarelli worked to assemble a cabinet on Tuesday, in the face of resistance from far-right and anti-establishment parties.

Italy's caretaker PM assembles a cabinet almost certain to be rejected
Carlo Cottarelli speaks to press at the presidential palace on Monday. Photo: Andreas Solaro/AFP

Financial markets plunged into a frenzy as Cottarelli was left in charge after efforts to end months of political deadlock hit their latest setback.

President Sergio Mattarella on Monday blocked a cabinet proposed by the anti-immigrant League and their allies in the Five Star Movement (M5S). That left Cottarelli, a former IMF economist known as “Mr Scissors”, tasked with naming a technocrat government. He was expected to present his cabinet to Mattarella within hours.

Five Star and the League, who hold a majority in both houses of parliament, have vowed to reject Cottarelli's proposed technocrat government.

New elections could be held as early as September as the most likely outcome of the political saga sparked by an inconclusive poll in March.

On Sunday evening, the president vetoed the League-Five Star pick for economy minister, eurosceptic Paolo Savona. The populists cried foul and abandoned their joint bid for power.

The fresh uncertainty in the eurozone's third largest economy caused alarm on financial markets. Italy's ten-year bond yields surged to over 300 basis points higher than Germany's on Tuesday morning – a sign of surging investor doubts over Italy's financial stability.

The Milan stock exchange plunged more than three percent on Tuesday morning. The euro also fell in Asian trade on Tuesday and was in danger of falling below the $1.16 level last breached in early November. 

Profile: Italian president Sergio Mattarella, the country's 'political referee'
Photo: Alberto Pizzoli/AFP

Mattarella's veto and subsequent nomination of Cottarelli as caretaker prime minister sparked angry calls for the president's impeachment, since most lawmakers backed Savona.

Mattarella said that an openly eurosceptic economy minister was counter to the parties' joint promise to simply “change Europe for the better from an Italian point of view”. Savona has called the euro a “German cage” and said that Italy needs a plan to leave the single currency “if necessary”.

League leader Matteo Salvini, a fellow eurosceptic who was Savona's biggest advocate, said his side's joint plan for a government failed because of pressure from the “powers-that-be, the markets, Berlin and Paris”.

“This isn't democracy, this isn't respect for the popular vote. It's the latest slap in the face,” Salvini said, from those that say “Italy should be a slave, scared and precarious”.

Five Star chief Luigi Di Maio called on party supporters to attend a rally in Rome on Saturday, the anniversary of Italy's transformation into a republic in 1946, after what he called “Italian democracy's darkest night”.

Five Star Movement leader Luigi Di Maio. Photo: Andreas Solaro/AFP

Elections 'after August'

Cottarelli, 64, was director of the International Monetary Fund's fiscal affairs department from 2008 to 2013 and became known as “Mr Scissors” for his public spending cuts in Italy.

He said that should his technocrat government win parliamentary approval, it would stay in place until elections at the “start of 2019”. 

But if parliament fails to approve his government, a new election would be held “after August” – the most likely outcome given the populists' strength in parliament. Only the centre-left Democratic Party has announced that it would vote in favour.

READ MORE: What's next for Italy after proposed populist government collapse?

Salvini and Di Maio furiously denounced the presidential veto, blasting what they called meddling by Germany, debt ratings agencies, financial lobbies and even lies from Mattarella's staff.

“Paolo Savona would not have taken us out of the euro. It's a lie invented by Mattarella's advisors,” Di Maio said in a live video on Facebook. “The truth is that they don't want us in government.”

Elections could benefit Salvini, however, as recent polling by IndexResearch put the League at 22 percent, five points up from their vote share in the March 4th ballot.

Impeachment 'almost certain'

Under the Italian constitution, the president nominates both the prime minister and, following proposals from the premier, the cabinet. The most famous example of a president denying a PM's choice was in 1994 when Eugenio Scalfari refused then prime minister Silvio Berlusconi's choice of his own lawyer, Cesare Previti, as justice minister.

However, Di Maio said that Mattarella, himself a former constitutional court judge, had “gone beyond his legal prerogatives”. He said an impeachment trial for Mattarella, 76, would be “almost a certainty”.

Most analysts however say impeachment is only possible in cases of “high treason” or constitutional breaches.

“President Mattarella has only exercised his constitutional powers”, said Massimo Luciani, president of the Italian Constitutionalists Association.

READ MORE: How much power does the Italian president actually have?

By Lucy Adler


Italian rivals pitch abroad in trilingual vote videos

Days after Italy's far-right leader made a multilingual appeal to foreign commentators to take her seriously, her main rival in September elections issued his own tit-for-tat video Saturday condemning her record.

Italian rivals pitch abroad in trilingual vote videos

Former prime minister Enrico Letta, leader of the centre-left Democratic Party, declared his pro-European credentials in a video in English, French and Spanish, while deriding the euroscepticism of Italy’s right-wing parties.

It echoes the trilingual video published this week by Giorgia Meloni, tipped to take power in the eurozone’s third largest economy next month, in which she sought to distance her Brothers of Italy party from its post-fascist roots.

“We will keep fighting to convince Italians to vote for us and not for them, to vote for an Italy that will be in the heart of Europe,” Letta said in English.

His party and Meloni’s are neck-and-neck in opinion polls ahead of September 25 elections, both with around 23 percent of support.

But Italy’s political system favours coalitions, and while Meloni is part of an alliance with ex-premier Silvio Berlusconi and anti-immigration leader Matteo Salvini, Letta has struggled to unite a fractured centre-left.

Speaking in French perfected in six years as a dean at Sciences Po university in Paris, Letta emphasised European solidarity, from which Italy is currently benefiting to the tune of almost 200 billion euros ($205 billion) in
post-pandemic recovery funds.

“We need a strong Europe, we need a Europe of health, a Europe of solidarity. And we can only do that if there is no nationalism inside European countries,” he said.

He condemned the veto that he said right-wing Hungarian Prime Minister Viktor “Orban — friends and allies of the Italian right — is using every time he can (to) harm Europe”.

In Spanish, Letta highlighted Meloni’s ties with Spain’s far-right party Vox, at whose rally she spoke earlier this summer, railing at the top of her voice against “LGBT lobbies”, Islamist violence, EU bureaucracy and mass

In English, he condemned the economic legacy of Berlusconi, a three-time premier who left office in 2011 as Italy was on the brink of economic meltdown, but still leads his Forza Italia party.

Letta’s programme includes a focus on green issues — he intends to tour Italy in an electric-powered bus — and young people, but he has made beating Meloni a key plank of his campaign.

Meloni insisted in her video that fascism was in the past, a claim greeted with scepticism given her party still uses the logo of a flame used by the Italian Social Movement set up by supporters of fascist leader Benito Mussolini.

In a joint manifesto published this week, Meloni, Berlusconi and Salvini committed themselves to the EU but called for changes to its budgetary rules — and raised the prospect of renegotiating the pandemic recovery plan.

Elections were triggered by the collapse of Prime Minister Mario Draghi’s government last month, and are occurring against a backdrop of soaring inflation, a potential winter energy crisis and global uncertainty sparked by
the Ukraine war.