EXPLAINED: When will Italy get a new government?

Italy has now been without a fully functioning government for more than three weeks. As talks resume, is there an end in sight for the latest political crisis?

EXPLAINED: When will Italy get a new government?
Italy's lower house of parliament in Rome. Photo: Vincenzo Pinto/AFP

These are crucial days in Italian politics, as the former head of the European Central Bank, Mario Draghi, works to form a new coalition to replace the one that collapsed last month. 

With Draghi expected to be officially delcared prime minister in the coming days, here's a guide to how we got here and how long until the country has a functioning government again.

What has happened so far?

Very briefly, a junior coalition partner pulled out of Italy's previous government due to disagreements over Covid-19 recovery plans, leaving Prime Minister Giuseppe Conte without a majority. He resigned in hopes of putting together a new coalition and returning at its head.

That didn't happen, and after several days of failed talks President Sergio Mattarella – who as head of state is refereeing the negotiations – called time and summoned former head banker Mario Draghi to form a new government.

PROFILE: Can 'Super Mario' Draghi lead Italy out of its crisis?

Mario Draghi. Photo: Alessandro Tarrantino/Pool/AFP

But that didn't mean Draghi automatically became prime minister. He needed to get the agreement of a majority of lawmakers, and after nine days of negotiating with Italy's various political parties, he seems to have won their overwhelming approval.

During these talks, each party would have presented him with a list of their priorities and pushed to get them included on his policy agenda.

EXPLAINED: How are Italy's prime ministers chosen?

He had already gained support from most of Italy's larger parties after first round of  talks concluded on Saturday He had tentative backing from the centre-left Democratic Party and Italia Viva – as well as its opponents on the right, the League and Forza Italia. Only the Brothers of Italy, a far-right ally of the League, ruled out joining. 

But it took until Thursday night for Draghi to get the approval of the populist Five Star Movement, who have around a third of seats in parliament.

With M5S on board, Draghi can now begin forming a government.

The talks later in the week focused on who takes which cabinet seat. Most prominent politicians are calling for a “political government”, i.e. one not entirely composed of technocrats, and will be jostling for key portfolios.

It's not yet known which cabinet seats, but speculation is rife in the Italian media as Draghi enters the final stages of forming the government on Friday.

What happens next?

Draghi could visit President Sergio Mattarella as early as Friday evening or over the weekend to be officially named prime minister.

Draghi will need to provide an outline for a new government. That would be followed by a vote of confidence first in the upper and then the lower house of parliament, possibly next week.

READ ALSO: Why do Italy's government's collapse so often?

That timeline is optimistic, however, and delays are likely. If there are any serious hold-ups, Mattarella has the option of installing Draghi as the head of a transitional government until it's safe to hold new elections. 

In this case a new cabinet could take office swiftly, but they would be caretakers tasked with managing Italy's most pressing matters rather than taking any big decisions for the future. 

For now, all signs point towards Draghi being successfully named prime minister by this weekend.

Empty seats in the Italian senate. Photo: Andreas Solaro/AFP

What will the new government need to do first?

Aside from the fact that it's generally a good idea to have a working government, Italy is hurtling towards some important deadlines.

Its current emergency decree, which sets out the nationwide coronavirus restrictions, expires on March 5th, which means that someone needs to work on a review.

READ ALSO: Italy to start vaccinating over-55s and key workers this month under updated plan

Plus there's Italy's vaccination campaign to manage, which is in the process of being rolled out to millions of extra people over the coming weeks.

And emergency protections for workers, including a freeze on lay-offs, are due to expire in March.

Further down the line, Italy has to submit its economic recovery plan to Brussels by the end of April in order to qualify for emergency funding from the European Union, or risk missing out on some €220 billion. That means getting a draft through parliament before then, which proved an impossible task for the last government.

Draghi will have to balance demands for immediate relief against the need for long-term structural reforms in Italy – tensions that brought down the last government.

Meanwhile unemployment – at 426,000 higher than one year ago – risks rising further later this year, if an existing freeze on job dismissals is not extended.

READ ALSO: Italy to start vaccinating over-55s and key workers this month under updated plan

Another priority is speeding up Italy's coronavirus vaccination programme, which made a promising start in December but has since slowed, against a backdrop of rising concern about the spread of new variants.

Beyond that, Draghi has ambitions to reform Italy's public administration, tax and justice systems while strengthening relations with Europe and investing in schools and job creation, according to small parties who spoke to him on Monday.

Who's in charge at the moment?

Italy's outgoing cabinet remains in place to oversee day-to-day matters, including the Covid-19 response and vaccination campaign.

But parliament remains on stand-by, with lawmakers last in session on January 26th.

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What does the shut-off of Russian gas supplies mean for Italy?

After Russian energy giant Gazprom suspended gas deliveries to Italy on Saturday, many are wondering what consequences the stoppage will have on the country’s energy supplies.

What does the shut-off of Russian gas supplies mean for Italy?

What’s going on?

Over the past three days, Italy has received none of the gas supplies it expected from Russian energy giant Gazprom. 

The impasse officially started last Saturday, when Gazprom announced it would not be able to deliver gas to Italy due to “the impossibility of gas transport through Austria” – Russian gas supplies are delivered to Italy through the Trans Austria Gas pipeline (TAG), which reaches into Italian territory near Tarvisio, Friuli Venezia-Giulia. 

READ ALSO: Russia suspends gas to Italy after ‘problem’ in Austria

Though Gazprom originally attributed the problem to Austrian gas grid operators refusing to confirm “transport nominations”, Austria’s energy regulator E-Control said that the Russian energy mammoth had failed to comply with new contractual agreements whose introduction had been “known to all market actors for months”. 

Additional information about the incident only emerged on Monday, when Claudio Descalzi, the CEO of Italy’s national energy provider ENI, said that supplies had been suspended after Gazprom failed to pay a 20-million-euro guarantee to Austrian gas carrier Gas Connect. 

Descalzi also added that ENI was ready to step in and deposit the guarantee itself in order to unblock deliveries to Italy.

Logo of Italian energy regulator ENI.

Italian energy regulator ENI said it was ready to pay Austrian gas carriers a 20-million-euro guarantee to unblock deliveries. Photo by Marco BERTORELLO / AFP

READ ALSO: Italy’s ENI ready to pay guarantee to unblock Russian gas

At the time of writing, however, no agreement between ENI, Gas Connect and Gazprom has yet been reached, with the stoppage expected to continue until Wednesday at the very least.

What would an indefinite stoppage mean for Italy’s upcoming winter season?

Though energy giant ENI appears to be confident that a compromise between all the involved parties will be reached shortly, the “indefinite shutdown” of the Nord Stream 1 pipeline in early September is somewhat of a menacing precedent. 

After fears of a long-term supply suspension cropped up over the weekend, outgoing Ecological Transition Minister Roberto Cingolani publicly reassured Italians that “barring any catastrophic events, Italy will have the whole of winter covered”.

It isn’t yet clear what exactly Cingolani meant by “catastrophic”, but the latest available data seem to suggest that Italy wouldn’t have to resort to emergency measures, chiefly gas rationing, should Gazprom halt deliveries indefinitely. 

Italian Minister for Ecological Transition Roberto Cingolani.

Outgoing Minister for Ecological Transition Roberto Cingolani said that, “barring any catastrophic events”, Italy will have enough gas supplies for the winter. Photo by Andreas SOLARO / AFP

In 2021, prior to Russia’s invasion of Ukraine, Italy received around 20 billion cubic metres of Russian gas per year, which accounted for about 40 percent of the country’s annual gas imports. 

But, thanks to the supply diversification strategy carried out by outgoing PM Mario Draghi and his cabinet over the past few months, Russian gas currently accounts for, in the words of ENI’s CEO Claudio Descalzi, only “about nine to 10 percent” of Italian gas imports.

READ ALSO: Italy’s Draghi criticises Germany over latest energy plan

Granted, Italy still receives (or, given the current diplomatic deadlock, expects to receive) a non-negligible total of 20 million cubic metres of Russian gas per day. But, should supply lines between Rome and Moscow be shut off until further notice, Italy could fall back on existing gas stocks to meet winter consumption demands. 

Last Wednesday, Cingolani announced that the country had already filled up 90 percent of its national gas stocks – Italy has nine storage plants for an overall storage capacity of 17 billion cubic metres of gas – and the government was now working to bring that number up by an additional two or three percentage points.

These supplies, Cingolani said, are set to give Italy “greater flexibility” with respect to potential “spikes in winter consumption”.

Gas storage station in Loenhout, Belgium.

Italy has nine storage plants for an overall storage capacity of 17 billion cubic metres of gas. Photo by Kenzo TRIBOUILLARD / AFP

Finally, Italy is expected to receive an additional four billion cubic metres of gas from North Europe over the winter months – deliveries which will be complemented by the first shipments of LNG (Liquefied Natural Gas) from Egypt.

Both of these developments are expected to further reinforce Italy’s position in the energy market for the cold season.

What about the long-term consequences of an indefinite stoppage?

An indefinite shut-off of Russian gas supplies would effectively anticipate Italy’s independence from Moscow by nearly two years – Draghi’s plan has always been to wean the country off Russian gas by autumn 2024.

However, the Italian government’s strategy is (or, perhaps, was, as a new government is about to be formed) centred around a gradual phasing out of Russian supplies. As such, although not immediately problematic, a ‘cold-turkey’ scenario might create supply issues for Italy at some point during 2023.

READ ALSO: EXPLAINED: How much are energy prices rising in Italy this autumn?

Granted, Algeria, whose supplies currently make up 36 percent of Italy’s national demand, is expected to ramp up gas exports and provide Rome with nine billion cubic metres of gas in 2023.

But, even when combined with LNG supplies from several African partners – these should add up to a total of four billion cubic metres of gas in 2023 – there’s a risk that Algerian gas might not be able to replace Russian gas on its own.

An employee works at the Tunisian Sergaz company, that controls the Tunisian segment of the Trans-Mediterranean (Transmed) pipeline, through which natural gas flows from Algeria to Italy.

Algerian gas supplies, which reach Italy through the Trans-Med pipeline (pictured above), might not be enough to replace Russian gas in 2023. Photo by Fethi BELAID / AFP

Therefore, should an indefinite shut-off be the ultimate outcome of the current diplomatic incident between ENI, Austria’s Gas Connect and Russia’s Gazprom, Italy, this time in the person of new PM Giorgia Meloni, might have to close deals with other suppliers or ask existing suppliers to ramp up production.