Italy’s populist Five Star Movement said it would not support Prime Minister Mario Draghi’s national unity government in a critical vote on Thursday, threatening another bout of political turmoil.
In a meeting late on Wednesday night, Giuseppe Conte, the leader of the Five Stars, said he could no longer support Draghi’s cross-party government, which he accused of not doing enough to help families hit by spiraling food costs and energy.
“I very much fear that September will be a time when families will be faced with the choice of whether to pay their electricity bill or buy food,” he said after a day of frenzied policy consultations.
Italian shares sold off on Thursday morning, with the FTSE index of the country’s shares falling more than 1 percent. The yield on Italy’s 10-year government bond rose 0.16 percentage points to 3.3%, sending the gap with German 10-year yields to a monthly high as investors demanded a rising premium to hold Italy’s debt.
Conte had presented the prime minister with several policy demands at a meeting last week, including scrapping a controversial waste-to-energy plant proposed for the capital, Rome.
Although the administration has yet to respond to his requests, he said, he raised the possibility of further talks to resolve the differences. “We are absolutely ready to have a dialogue, to give our constructive contribution to the government, to Draghi, but we are not ready to write a blank check,” Conte said.
The collapse of the government of national unity, which could trigger early elections that had been set for spring next year, would come at a sensitive time for Italy, which is expected to be the biggest single recipient of the EU’s recovery fund from Covid of 750 billion euros.
The fall of the government would raise doubts about Italy’s ability to pass its budget in the autumn and introduce critical reforms to help accelerate the country’s long-term growth trajectory – on which the dispersal of EU money depends.
Other parties indicated that they could call for early elections and that it was untenable for Draghi to remain in power if Five Star withdrew.
“If a coalition party doesn’t support a government decree, that’s enough, it seems clear that we have to go to elections,” said Matteo Salvini, head of the right-wing League.
Conte, who was prime minister before Draghi, has been unhappy since Foreign Minister Luigi Di Maio quit Five Star last month, taking around a third of the party’s MPs with him, over differences over Rome’s response to the war in Ukraine.
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Draghi has reoriented Italy’s foreign policy and is a strong supporter of Kyiv. He was one of the main architects of the EU’s tough sanctions against Moscow, a sharp break with the country’s traditional sympathies for Russia.
While Di Maio stood firmly behind Draghi, Conte questioned whether military aid to Ukraine was simply perpetuating the war.
Draghi, formerly president of the European Central Bank, has repeatedly said he would only lead a cross-party government of national unity and could not head an administration that did not include Five Star, which was the largest party in parliament before a recent split.
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