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Italy’s Conte Forges On in Rocky Attempt to Build Coalition

John Follain

(Bloomberg) -- Italy’s premier-designate Giuseppe Conte, plagued by skirmishes between unlikely bedfellows as he seeks to forge a new ruling coalition, made progress on drawing up a common program for government though tensions remain chiefly over ministerial jobs.

A Florentine lawyer with no political experience when he was catapulted to lead the outgoing populist administration in 2018, Conte is being haunted by the ghost of the punch-ups which destroyed that government. He has until next week to seal a new, messy marriage of convenience between the anti-establishment Five Star Movement and the center-left Democratic Party, or PD.

Senior lawmakers from the two parties struck optimistic tones after Conte, 55, chaired a joint meeting with them Saturday afternoon. The negotiations had faltered Friday after the Five Star Movement’s Luigi Di Maio threatened to force early elections if his 20 policy demands weren’t met.

“We have made more progress, and the premier will take on the task of drawing up an almost-definitive summary,” Graziano Delrio, head of PD lawmakers in the lower house, told reporters after the encounter with Conte.

The PD won support for many of its proposals, including cutting the fiscal burden, averting an automatic sales tax hike in the 2020 budget, a new law on immigration, and boosting infrastructure projects, a party spokesman said.

‘Concrete Answer’

“We’re working to move ahead,” said Five Star’s Francesco D’Uva, adding that policies were broadly agreed on and that he hoped for a definitive accord as soon as possible. “We need to give Italy a concrete answer.”

Five Star obtained support for proposals including a review of highway concessions, a halt to new permits for offshore oil drilling, a cut in the number of lawmakers, and measures to counter illegal immigration and tax evasion, a party official said.

Italian President Sergio Mattarella offered Conte a chance for a new term after Five Star and the opposition Democrats said they’d back him in an abrupt attempt to prevent a snap vote. The unlikely alliance is a setback for Matteo Salvini, the leader of the anti-immigrant League party, who pulled the plug on his coalition with Five Start this month, toppling the government in a bid to force a new election.

Should Conte fail to seal the deal this coming week, Mattarella has signaled he would call elections that would probably be held less than two years after the March 2018 vote.

Read more: Salvini Was Out Partying While Rivals Plotted His Defeat in Rome

After falling as much as five basis points on Friday, Italy’s 10-year bond yield rose two points to 1.01% Friday as investors reacted to Di Maio raising the possibility of new elections. Italy’s FTSE MIB dropped 0.3%, erasing a gain of as much as 0.8%, with banks leading the declines.

Di Maio’s Five Star gave Conte a list of 20 conditions on Friday, including averting the sales tax hike, introducing a minimum wage, cutting the tax burden, separating investment and commercial banks, and speeding up justice.

No Ultimatum

“Clear pacts make for a long friendship,” PD leader Nicola Zingaretti tweeted after Di Maio’s demands, citing an Italian saying. “But enough with unacceptable ultimatums or we’ll get nowhere.”

Di Maio later backtracked, saying there was no ultimatum, and that talks should focus on policies not ministerial jobs. Di Maio has been locked in a tussle with the PD over his insistence that he should keep the job of deputy premier in the new government.

(Adds Democrats on measures in fifth paragraph.)

To contact the reporter on this story: John Follain in Rome at jfollain2@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, John Follain, Ros Krasny

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