New Italian Government Takes Office

New Italian Government Takes Office

Rome - Italy's populist Five Star Movement and far-right League parties swept to power in a spectacular reversal of political fortunes that brings an end to three months of deadlock and opens the way to a period of friction with Europe.

5-Star Movement leader Luigi Di Maio and League leader Matteo Salvini came up with a compromise earlier Thursday that led the president to postpone trying to install a technical government until a new election could be held.

Conte initially dropped his bid to secure cabinet after President Mattarella's blocked Conte's initial choice for economy minister, which cast doubt on the ability of the coalition to form a government.

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.

But in a surprise twist, the populists resurrected the coalition talks and Conte eventually accepted a new mandate for the premiership.

Italian media reported that the lineup will face a vote of confidence on Monday or Tuesday in both houses of parliament, which it is nearly certain to win thanks to Five Star and the League's combined majority in parliament.

Five Star and the League enter their coalition government with plans that pose a challenge to European Union fiscal rules.

The two leaders have named law professor Giuseppe Conte as their choice to remain Prime Minister and lead the coalition government.

Carlo Cottarelli, a former official with the International Monetary Fund (IMF), was then appointed interim prime minister by Mr Mattarella to form a technocrat cabinet on Monday.

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Salvini said he would set straight to work on a campaign pledge to expel many of several hundred thousand asylum-seekers who were rescued at sea from human traffickers over the last few years but are ineligible for asylum. The M5S won 33 percent, making them Italy's single biggest party by some way.

With the new deal on Thursday, Giovanni Tria, a little-known economics professor, will get the key economy ministry job, replacing Savona.

The European Union is treading cautiously as the political crisis in Italy fuels fear of a renewed threat to the long-term credibility of the eurozone.

Italy's populists, like Greece's Syriza party that took power in 2015, have made promises to the electorate to undo EU-driven austerity measures that will inevitably put the country's finances on an unsustainable track.

"But I am fed up of governments with the hat in their hand", Salvini said to cheers.

Five Star leader Luigi Di Maio is minister for economic development and both he and Salvini will be deputy prime ministers. In two trading sessions, the yield on the country's two-year note surged more than 2 percentage points to a high of 2.84 percent on May 29, part of a move that wiped out 66 billion euros from the value of Italian sovereign securities.

Ex-Premier Matteo Renzi, whose Democratic Party suffered its worst-ever thrashing in the March election, wished good luck to the Conte government while vowing to be the "civil opposition".

With nearly 33 per cent of the vote, Five Star became the largest single party in parliament, although it fell short of a majority.

The country's new populist, euroskeptic government is likely to be met with alarm by other European leaders, including French President Emmanuel Macron and German Chancellor Angela Merkel, who are both eager to push for further EU political and economic integration.

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