Italian Prime Minister-designate Carlo Cottarelli says that discussions to form an interim government are moving ahead. He was chosen after the failure of populist parties to get their cabinet approved.
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Two days after he was asked to try to form a caretaker administration, Italy's prime minister-designate, Carlos Cottarelli, said on Wednesday that "new possibilities for the birth of a political government have emerged."
His statement followed a short meeting with President Sergio Mattarella to discuss his progress, as the country tries to form an interim government following an inconclusive election in March.
Cottarelli added: "This circumstance, also considering market tensions, has compelled me to wait for further developments." His statement gave no further details.
The former IMF economist was tasked with putting together an interim government after the failure of the anti-establishment Five Star Movement (M5S) and anti-immigrant League party to form a coalition.
After months of negotiations, Italy finally has a government with Giuseppe Conte at the helm. Conte's swearing in ended weeks of turmoil that rocked financial markets, but concerns among Italy's EU partners remain.
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Conte: Novice at the helm
Giuseppe Conte, a little-known law professor with no political experience, was picked by the League and 5-Star Movement (M5S) as their candidate for prime minister. He was forced to temporarily give up his leadership bid after the parties' cabinet selection was initially blocked. However, after the two parties struck a deal with President Sergio Mattarella, Conte was eventually sworn in on June 1.
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Mattarella: President with the final say
President Sergio Mattarella faced calls for his impeachment after he prevented the populist alliance from taking office. He singled out its choice for finance minister, Paolo Savona, warning that an openly euroskeptic minister in that position went against the parties' joint promise to simply "change Europe for the better." After the parties agreed to replace Savona, Mattarella gave the go-ahead.
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Di Maio: Anti-austerity advocate
M5S chief Luigi Di Maio secured his party 32 percent of the vote in the March election. With the populist M5S-League coalition in power, Di Maio assumed the role of joint deputy prime minister and took over the economic development portfolio. The M5S leader has come under fire for his anti-immigration rhetoric, including calling rescue missions to save migrants from drowning a "sea-taxi service."
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Salvini: 'The Captain'
Matteo Salvini is the leader of the anti-immigrant, euroskeptic League, which won 17 percent of the vote in the March election. A former MEP, he and his party have no experience in governing. Salvini has taken on the position of interior minister within Conte's Cabinet. Known for his hostile rhetoric toward immigrants and the EU, Salvini once described the euro a "crime against humanity."
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Savona: Anti-euro radical
Paola Savona, initially tipped to lead the Finance Ministry, has called the euro a "German cage" and said that Italy needs a plan to leave the single currency. The 81-year-old's stance won him the backing of most Italian lawmakers but that wasn't enough to stop his appointment being vetoed. In his place steps Giovanni Tria, an economics professor without any previous government experience.
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Cottarelli: Temporary caretaker
Carlo Cottarelli was set to become Italy's caretaker prime minster after the M5S-League alliance failed to have its controversial cabinet picks approved. The former IMF economist's time in the spotlight was short-lived, however. Political uncertainty in Italy rocked Europe's financial markets and prompted Mattarella to swiftly renegotiate and approve Salvini and Di Maio's governing coalition.
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Berlusconi: Vanquished enabler
Silvio Berlusconi (right) and his Forza Italia entered a four-party electoral alliance including League in the March election that secured the bloc 37 percent. Berlusconi is now upset at his right-wing ally Salvini after the League leader moved to work with M5S. Berlusconi has said he would act as a "reasonable and scrutinizing opposition."
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Finance appointee blocked
The president rejected their nominee for finance minister, 81-year-old Paolo Savona, a euroskeptic economist who has described the euro as "Germany's cage."
The parties have vowed to use their parliamentary majority to sabotage any government with Cottarelli at the helm, raising the specter of another national vote as early as July.
M5S leader Luigi di Maio on Wednesday backed away from a call for the president's impeachment, saying instead that voters — and not Germany or the rating agencies — should decide Italy's future.
League leader Matteo Salvini called Cottarelli's appointment "the final blow from those above, who want an enslaved, scared and poor Italy."
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No parliamentary support
Any new government will need parliamentary approval — Cottarelli may not even receive support from Italy's traditional mainstream parties. That would be a symbolic defeat for Mattarella, who had hoped to calm financial markets with the appointment of a neutral government.
The political uncertainty rattled European stock markets on Tuesday, and led to a spike in the yield on 10-year Italian government bonds, although the price dropped back on Wednesday.
The Reuters news agency on Wednesday cited three sources as saying that the European Central Bank sees no reason to intervene in the crisis as there are no signs of stress among banks. One source said the ECB does not have the tools or mandate to solve what is a domestic issue.
Italy, the eurozone's third-largest economy, has struggled since the 2007-2009 financial crisis under an enormous debt pile. Investors are worried that euroskeptic parties could form a future government that would abandon the euro, or commit to public spending that would see Italy become the next Greece.
The instability could well boost support for both populist parties in any fresh elections. An IPSOS poll in the Corriere della Sera newspaper on Wednesday showed the League on 25 percent support, compared to around 17 percent in March. Support for M5S was steady at about 32.6 percent.
