Italia Viva, a minor party in Italy's coalition government, withdrew its ministers on Wednesday after weeks of simmering tensions
The move, long threatened by the party's leader, former premier Matteo Renzi, could spell the end of the current government which has been in place since 2019.
Such crises are far from unusual in Italian politics. But as the country struggles with the ongoing coronavirus pandemic, here's a look at why this is happening now, and what the outcome is likely to be.
The latest crisis is focused on the political response to the pandemic, but it is yet another example of the chronic instability of Italian governments, which are often minority or built out of shaky partnerships.
Since the Italian republic was founded in 1946, Italy has had 29 prime ministers and 66 different governments – and Conte himself has led two since he took office in 2018.
The first comprised the M5S and Matteo Salvini's far-right League party. But when Salvini pulled his support in August 2019, Conte cobbled together another government comprised of three parties: the populist Five Star movement (M5S), the centre-left Democratic Party (PD) and Renzi's Italia Viva
Italian Prime Minister Giuseppe Conte (L) and former PM Matteo Renzi (R). AFP
EU recovery fund
Renzi has been criticising Conte for weeks over a range of issues but his attacks homed in on the government's 222-billion-euro post-virus recovery plan, largely paid for in grants and loans from a 750-billion-euro European Union fund.
Renzi accuses the prime minister of allying with the anti-establishment M5S and “squandering public money” on vote-winning tax breaks and hand-outs instead of using the windfall to invest in long-term structural reform.
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He also wants Italy to use the eurozone's rescue fund, the European Stability Mechanism (ESM), which could bring in another 37 billion euros, ring-fenced for health spending.
The move is fiercely resisted by the M5S, who fear that seeking ESM help would force Italy to comply with strict austerity rules. EU officials have denied this.
Though there were concerns that Renzi's protests would delay the recovery fund, Conte's government received parliamentary approval for their plan on Wednesday.
The current political turmoil comes down to a contest between two quite different men.
On one side of the table is Conte, a 56-year-old law professor who has never held elected office and was once dubbed “Mr Nobody”, but has approval ratings well above his rivals following his handling of the pandemic.
On the other is 46-year-old senator Renzi, once the bright hope of the PD and prime minister from 2014 to 2016, who started his own Italia Viva party in 2019 but is now polling at just three percent.
Renzi insists he is motivated by a desire to see Italy prosper, but critics see it as sniping from the sidelines in an attempt to win more power in Conte's government.
One analyst described his overtures as a “game of poker” – but it has high stakes, with several politicians condemning Renzi for politicking in the middle of a coronavirus pandemic that has claimed almost 80,000 lives in Italy.
What happens now?
Conte could resign, there could be a reshuffle or even snap elections – all the options remain on the table as of Wednesday, although it is in the interests of all the ruling parties, including Italia Viva, to find a deal.
The leader of Italia Viva's senators, Davide Faraone, indicated Wednesday that the party had no intention of toppling the government, but called for a “new executive” and legislative programme.