(Bloomberg) -- As prime minister of Italy for just over a year, Giuseppe Conte led an abrasive populist coalition that challenged Europe over budgets, migrants and how to approach an increasingly antagonistic Russia. Now, as he prepares to return in a “Conte 2.0” government, the premier is pledging to play nice.
Conte, 55, on Thursday accepted a mandate from President Sergio Mattarella to lead a coalition of the anti-establishment Five Star Movement and the center-left Democrats, pledging that his new government will be committed to European and Atlantic alliances.
Though the two parties are long-time rivals with little more in common than a desire to avoid snap elections, Conte said he’ll work quickly to put together a common program, with talks beginning immediately with the main parliamentary groups.
“We need to exit the uncertainty that we find ourselves in caused by the political crisis,” Conte said. “We are at a difficult economic juncture that presents some problems. The global economy, especially in Europe, is slowing down.”
Conte has asked Mattarella for about a week to pull together a new team of ministers and a governing program before he can officially take the reigns of the administration, according to an official. Conte’s first priority as premier will be to avoid a rerun of the bitter clash with the European Union over the nation’s budget, which nearly saw Italy receive disciplinary action over its debt levels.
The new Five Star-PD government will seek to keep Italy’s 2020 budget deficit within EU limits, according to officials who asked not to be named discussing confidential plans. That stance has won Conte the support of investors, who pushed Italian yields to record lows as his prospects of a return increased.
The decline in yields is already making the new government’s job easier. That could save the Treasury more than 1% of gross domestic product on an annual basis, according to a back-of-the-envelope calculation by Frederik Ducrozet, global strategist at Banque Pictet & Cie.
While the two sides of the new administration should be more in step on relations with Europe, critics charge that in other matters they have little in common.
The only glue that holds the two long-time rivals together now is “hatred for the League,” according to League party leader Matteo Salvini. Indeed, their unlikely alliance was spurred by a shared desire to avoid an electoral drubbing from the League after Salvini brought down the previous coalition.
With a commanding lead in the polls, Salvini, 46, had been counting on a snap vote to take power himself. Mattarella’s decision to tap Conte once again frustrates Salvini’s own ambition to become prime minister, though he’ll likely now position the League to agitate from the sidelines for new elections, seizing on any rifts in the coalition as a pretext.
As a member of neither of the parties now set to govern, Conte has no base of his own to fall back on, and he’ll need to navigate carefully in the months ahead. The lawyer and former academic had zero political experience before he was drafted just over a year ago to act as mediator between Five Star and the rightist League.
Detractors dubbed him “Mr. Nobody,” but Conte carved out a role for himself as a relatively neutral arbitrator. Drawing on his background as a lawyer, he held cabinet meetings late into the evening, grinding down Salvini and Five Star leader Luigi Di Maio.
The next coalition will also be built on brittle foundations. The Democrats are the party of the center-left establishment and provided three of the past four prime ministers. Five Star grew up in opposition and surged to prominence vowing to do away with the past, pointedly and repeatedly ripping into the Democrats as a corrupt, entitled, out-of-touch force of the past.
Before he can take office, Conte will have to iron out the final details of a coalition agreement.
The Democrats continue to object to Di Maio’s demand to stay on as deputy prime minister, arguing that Conte is essentially a Five Star figure and that the party shouldn’t have the government’s top two jobs. Conte will now have to iron out those differences before he returns to Mattarella with a government program.
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