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ANALYSIS: Italy’s government survives, but for how long?

Italian Prime Minister Giuseppe Conte's government has survived a political crisis this week, yet it remains in a perilous position. Here's what may happen next.

ANALYSIS: Italy's government survives, but for how long?
Prime Minister Giuseppe Conte (C) leaves Palazzo Madama, the Senate building in Rome, on Tuesday after narrowly winning a confidence vote. Photo: Filippo Monteforte/AFP

The government was plunged into crisis after ex-premier Matteo Renzi withdrew his small Italia Viva party from the ruling coalition.

READ ALSO: Italian PM Conte survives confidence vote on government's future

His move last week opened up a period of political turmoil, while the Covid-19 death toll mounts and Italy must come up with a credible plan to spend 220 billion euros ($266 billion) in EU recovery funds.

Though the government survived a confidence vote on Tuesday, it has been left weakened.

Conte survived Renzi's challenge by securing the backing of the Senate, by 156 votes to 140, but fell short of winning the 161 needed for an overall
majority.

“Conte is saved, but you can't govern like this,” La Stampa newspaper wrote on its front page after Tuesday evening's knife-edge result in the Senate, the upper chamber.

As is so often the case in Italian poltiics, nothing is certain.

While a snap election seems to be off the table for now, there are days or weeks of political wrangling ahead for the government as it tries to find a way forward.

Here's a look at what's on the horizon.

Matteo Renzi addresses the Senate prior to the confidence vote on Tuesday. Photo: AFP



Minority government in charge

The Senate vote left Conte leading a minority government which may struggle to push its agenda in parliament, just as it is dealing with the coronavirus and a severe recession.

The ruling coalition, comprising the populist Five Star Movement (M5S), the centre-left Democratic Party (PD) and a smaller leftist party, is now trying to beef up its numbers.

It hopes to win over some opposition lawmakers, citing the need to preserve stability and avoid snap elections in the middle of the pandemic.

Courting opposition lawmakers

Three senators from opposition parties made the leap on Tuesday night, but several more are needed to give the ruling coalition a more solid parliamentary footing.

READ ALSO: The words and phrases you'll need to understand Italian political discussions

The Senate vote “is clearly not the end goal, but a starting point”, Culture Minister Dario Franceschi, a key member of the PD, told La Repubblica.

“A government is strong if it can count on 170 senators. So we must now work to strengthen it,” he added, calling on centre-right “moderates” to
switch sides.

Reshuffle on the cards?

The ruling parties are keen to avoid snap elections, which opinion polls suggest would hand victory to a right-wing bloc led by Matteo Salvini's
eurosceptic League party.

Most opposition backbenchers are also in no hurry to face voters. Their re-election chances are reduced after recent reforms cut the number of parliamentary seats by one-third.

Conte can offer the incentive of a government job for new arrivals. In his speeches to parliament, he clearly said he was open to a reshuffle in the
coming weeks.

Opposition MPs hold signs reading 'Conte resign' during the PM's speech to the lower house on Monday. Photo: AFP



Fresh trouble in July?

If Conte fails to woo enough opposition forces, his hold on power will become increasingly tenuous, especially once the threat of fresh elections
evaporates.

Under Italy's constitution, parliament cannot be dissolved in the last six months of a sitting head of state's mandate, and President Sergio Mattarella's term ends in January 2022.

This means that in six months' time anyone seeking to unseat Conte could trigger a new political crisis without the risk of elections.

A possible outcome could be a grand coalition government to see Italy through the worst of the pandemic. Renzi said he would be open to this.

What now for Renzi?

The Italia Viva leader quit the government after weeks of criticising Conte's leadership style, the government's record on the pandemic, and its plans for the EU recovery funds.

Renzi has argued that the unprecedented sum risks being wasted on hand-outs rather than long-term investments, despite Conte's promises.

PROFILE: Who is Matteo Renzi, the 'wrecker' of Italian politics?

But critics accused Renzi – whose party is polling at just three percent – of seeking to deliberately destabilise the government so he can play kingmaker.

“I will have fun in opposition. I will hold the balance on everything,” he told reporters on Tuesday.

Conte compared Renzi on Tuesday to “someone who constantly fills the common path with mines” and said he found it “very difficult” trying to govern while being under attack.

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COST OF LIVING

Fuel tax cut and help with energy bills: Italy approves inflation aid package

Italy on Thursday night approved new measures worth around 17 billion euros ($17.4 billion) to help families and businesses manage the surging cost of fuel and essentials.

Fuel tax cut and help with energy bills: Italy approves inflation aid package

As expected, the final version of the ‘aiuti-bis‘ decree provides another extension to the existing 30-cents-per-litre cut to fuel duty, more help with energy bills, and a tax cut for workers earning under 35,000 euros a year.

The package also includes further funding for mental health treatment: there’s another 15 million euros for the recently-introduced ‘psychologist bonus’ on top of the 10 million previously allocated.

READ ALSO: What is Italy doing to cut the rising cost of living?

There are also measures to help agricultural firms deal with this year’s severe drought.

Italian Prime Minister Mario Draghi described the new package as an intervention “of incredible proportions”, which corresponds to “a little over 2 points of national GDP”.

However, he said, no changes were made to the national budget to pave the way for the new measures.

The measures will be funded with 14.3 billion euros in higher-than-expected tax revenues this year, and the deployment of funds that have not yet been spent, Economy and Finance Minister Daniele Franco said.

Italy has already budgeted some 35 billion euros since January to soften the impact of rising fuel costs.

The decree is one of the last major acts by outgoing Prime Minister Mario Draghi before an early general election next month.

Elections are set for September 25th but the former European Central Bank chief is staying on in a caretaker role until a new government is formed.

Draghi said the Italian economy was performing better than expected, citing the International Monetary Fund’s estimate of three percent for 2022.

“They say that in 2022, we will grow more than Germany, than France, than the average of the eurozone, more than the United States,” he told a press conference.

But he noted the many problems facing Italy, “from the high cost of living, to inflation, the rise in energy prices and other materials, to supply difficulties, widespread insecurity and, of course political insecurity”.

Inflation hit 8 percent in Italy in June – the most severe spike the country has experienced since 1976.

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