Italy's anti-establishment leaders revive governing coalition

Italy’s two anti-establishment parties revived their coalition plans on Thursday, promising to end three months of political turmoil with a government that aims to ramp up spending, challenge European Union fiscal rules and crack down on immigration.

The coalition deal, following inconclusive elections in March, removes the risk of a repeat vote, a prospect that had sparked a big selloff in Italian financial markets this week.

The leaders of the right-wing League and the 5-Star Movement patched up their alliance after agreeing to substitute a eurosceptic they had initially proposed as economy minister, a nomination that had been rejected by the head of state.

“All the conditions have been fulfilled for a political, 5-Star and League government,” 5-Star chief Di Maio and far-right League leader Salvini said in a joint statement after several hours of talks in central Rome.

Laura Silvia Battaglia speaks toTRT World from Milan.

The deal followed an extraordinary few days in which Di Maio called for the head of state to be impeached, two successive prime ministers-designate were tasked to form a government, one of whom quit only to be reinstated on Thursday evening.

Giuseppe Conte, a little-known law professor close to 5-Star, will become prime minister, the leaders said.

Rome resident Vincenza Cariano summed up the exasperated mood on the street: “I can’t stand it anymore. The country needs certainties, security and equilibrium.”

The breakthrough came after the League and 5-Star agreed to drop economist Paolo Savona as their choice for economy minister. Savona, an 81-year-old economist, had said previously that Italy should have a contingency plan to abandon the euro.

He will be substituted by economics professor Giovanni Tria, another little-known figure, party sources said.

Global financial markets have been recovering over the past two days after tumbling on the spectre of repeat elections dominated by debate over Italy’s future in the euro zone.

Italy, with debts totalling 130 percent of its economic output, is the most heavily indebted euro zone nation after Greece and is often described as “too big to fail”.

Though investors were relieved to avoid repeat elections, which they feared could have become a de facto referendum on the euro, they are now likely to refocus on the big spending plans of the League and 5-Star, which would add to its debts.

The coalition has also said, in a joint policy manifesto signed during their first attempt at a union, that they will push the European Union to review the bloc’s fiscal rules, which Salvini says have “enslaved” Italians.

The parties’ new economics minister-designate, Tria, has been critical of the EU’s economic governance, but unlike Savona he has not advocated a contingency plan for exiting the euro.