Italy’s Conte Seeks Path to Retain Power After Junior Ally Quits

(Bloomberg) -- Italian Prime Minister Giuseppe Conte is struggling to hold onto power after a junior partner in his coalition pulled out, robbing him of his majority in parliament.

Former Premier Matteo Renzi said Wednesday night that ministers from his Italy Alive party would quit the cabinet, attacking Conte for failing to do enough to tackle the country’s problems. Though the party is tiny, Conte relied on it to maintain his majority. Conte may seek a confidence vote in Parliament next week, newspapers including la Repubblica reported.

Renzi’s decision sparks a government crisis which could last days or even weeks, and has no clear solution in sight. Before making any other moves, Conte will have to formally accept the resignations of Renzi’s two ministers.

Still, Conte has several paths to remain in power, or to return later as premier:

• He could seek to win a confidence vote with support from parties both inside and outside the current government, and unaffiliated lawmakers. That could mean relying on forces like Silvio Berlusconi’s Forza Italia party to keep the government in power. Conte has agreed with President Sergio Mattarella to avoid a confidence measure until new relief and deficit legislation is passed, la Repubblica reported.
• He could step down, which would trigger a new round of talks among parties. That could eventually lead to a new administration headed by Conte.
• President Mattarella, whose mostly ceremonial role also includes responsibilities for safeguarding political stability, could install a caretaker administration to manage the government until eventual elections. A placeholder administration could give Conte time to organize a future election campaign.
• A broad alliance including coalition parties and possibly center-right forces could also try to forge a government under a figure such as ex-European Central Bank President Mario Draghi.
• Snap elections, although a risk, appear to be only a remote possibility for now. The president -- who holds the authority to call a new ballot -- is said to be reluctant to see the country vote during the pandemic. “A snap vote, the worst scenario for investors, remains unlikely at this stage,”said Lorenzo Pregliasco, a political analyst at YouTrend.

‘Act of Courage’

Pulling out at a such a crucial moment for the country amounts to “an act of courage,” Renzi said at a news conference in Rome. Conte’s government has not done enough to resolve problems from education to infrastructure, as well as the virus, the ex-premier said.

The timing of the crisis for Conte could hardly be worse, with Italy battling a worsening pandemic and a recession. At a cabinet meeting due Thursday Conte is set to sign off on a plan to widen the country’s deficit by about 24 billion euros ($29 billion), while overnight his government extended its emergency powers to battle the pandemic through April 30.

Renzi had been dialing up the pressure on Conte since late last year, slamming the prime minister’s plans for managing and spending European Union rescue funds. Renzi says the plan has been improved following his demands, but he’s been insisting on further conditions, including that Italy tap a European Stability Mechanism credit line for health spending.

“The real issue is, should we spend more money on health with the ESM?” Renzi said following his announcement on Wednesday.