Italian President invites populist coalition to form a government

Italy’s president has given his blessing to the creation of a new populist government in Rome to be led by Giuseppe Conte, a political newcomer who will serve as Italy’s next prime minister.

The ascension of a virtually unknown law professor to Palazzo Chigi, who will lead a government that has been cobbled together by two rival populist parties – the anti-establishment Five Star Movement (M5S) and the far-right League – represents an unprecedented development in one of Europe’s biggest economies.

The decision by Sergio Mattarella, Italy’s president, to grant Conte a mandate to form a government, despite serious last-minute questions about the professor’s academic credentials, means he will now be given the power to choose ministers for a new government, which could be sworn in in coming days.

“I am conscious of confirming Italy’s European and international position,” Conte said, in his first remarks to the nation on Wednesday evening. “I propose being the defence lawyer of the Italian people.” He made the short address in front of cameras in the presidential palace following a two-hour meeting with Mattarella.

For weeks, it was uncertain whether the M5S’s Luigi Di Maio and the bombastic Matteo Salvini of the League, who is expected to take the role of interior minister, would be able to form a government.

But the agreement of a shared agenda late last week, which included slashing taxes, increasing spending, and tougher laws on migration, followed by the decision to nominate Conte, has put the coalition on track to lead Italy, albeit with a slim parliamentary majority.

Mattarella, the head of state, reportedly had doubts about Conte’s nomination but on Wednesday evening gave his blessing to the choice after both Di Maio and Salvini indicated that the professor, who has served as a lawyer for Di Maio, was the only candidate they could agree on. Mattarella has also voiced concern about the pair’s choice for finance minister, Paolo Savona, an 81-year-old Eurosceptic economist who has said that Italy’s entry into the eurozone was a mistake.

The question dominating Italy now is how Conte, an enigmatic figure who is a member of the M5S but has never been seen as a political force within the anti-establishment party, will govern and what the rise of two non-traditional populist parties, who won the most votes in Italy’s 4 March election, will mean for the eurozone’s third largest economy.

Markets have dropped sharply in recent days on concerns about whether the new government is on a collision course with Brussels over its spending plans, with Italy’s 10-year bond yield, a measure of the market’s concern, hitting a 14-month high.

“The big issue is, how do you govern a country like Italy, an industrial giant, with a populist government, in a large democracy within the constraints of the eurozone?” said Sergio Fabbrini, director of the LUISS School of Government in Rome.

“This is a laboratory in a way. Nobody knows what will happen, because this is a government without precedent, and the two parties of this government are virtually incompatible,” he added.

The March election split Italy in two. The wealthy north sided with the League, a formerly secessionist party that campaigned on a xenophobic platform and has called for mass deportations of undocumented migrants. Poor regions in southern Italy voted for the M5S, which has called for a basic minimum income and is a proponent of so-called “direct democracy”, in which big decisions are put to online votes for members to decide.

Experts say voters in both parties are united by anger towards Brussels and the view that economic constraints have held Italy back. Both parties also support building closer ties to Russia and have accused the EU of abandoning Italy in the face of the migrant crisis.

“The first thing, of course, is that this is totally unprecedented. One party [the M5S] has never governed, and another has governed under different leaders, and the political system has been uprooted,” said Giovanni Orsina, a political historian.

Among the many unknowns were the leadership style of the new prime minister and whether the M5S-Lega coalition would be able to govern cohesively, he said.

Italy was – not unlike the UK’s Brexit vote – possibly on the precipice of a sweeping change that would steer the country toward a far more antagonistic relationship with the EU, Orsina said. But the new government’s slim majority, and fiscal limits, made it more likely that sweeping change would be constrained, he added.

“My expectation is that this thing cannot go on for a very long period of time. And of course there are very strong limits of what they can do because they have a lot of objective limits. So my expectation is that in a few months time someone will say, we pull out.”