In World Economy News 12/12/2016
Matteo Renzi has signaled he does not want to stay on as premier and is expected to play a role in choosing his successor as he remains a kingmaker in the government crisis despite a crushing referendum defeat.
After three days of talks with political leaders, President Sergio Mattarella said he would soon take steps to resolve a government crisis. He may reach a decision this weekend, ahead of the European Union summit in Brussels on Thursday. Renzi formally handed in his resignation on Wednesday after losing a constitutional referendum, but Mattarella hasn’t yet accepted it.
“Our country needs a government fully exercising its role soon,” Mattarella told reporters, adding that Italy faces challenges domestically, at the European and global level, which he did not specify.
Italy’s political establishment is under pressure to resolve the government crisis after the European Central Bank decided on Friday not to allow Banca Monte dei Paschi di Siena SpA to extend a deadline on a 5 billion-euro ($5.3 billion) capital increase, fueling worries that political instability could weigh especially on the troubled banking sector.
While Mattarella held his talks, Renzi hosted meetings of his own. The outgoing premier met ministers including Foreign Minister Paolo Gentiloni and Finance Minister Pier Carlo Padoan, both seen as possible successors if Renzi supports them. Although dealt a blow by last week’s vote, Renzi is still a figure to be reckoned with as leader of the biggest party in parliament.
During the talks with ministers and officials of his party, Renzi told them he’s not planning to stay on as premier, Italian newswire Ansa reported. Renzi’s spokesman did not immediately respond to a request for comment on the report.
Berlusconi Talks
“We need quick approval of a new electoral law” before early elections, ex-premier Silvio Berlusconi, leader of the center-right Forza Italia party, said after talks with Mattarella on Saturday. His party would collaborate on a new electoral law, he said, but it would not back a broad-based government as called for by Renzi.
Earlier on Saturday, Interior Minister Angelino Alfano, whose New Center-Right party is part of the ruling coalition, urged Berlusconi to join a new government of national unity. Alfano said his party was available for such a scenario. The anti-establishment Five Star Movement, which wants a referendum on Italy’s membership of the euro area, called for elections as soon as possible.
Early Elections
Early elections in the first half of next year are likely. Luigi Zanda, chief whip in the Senate for Renzi’s Democratic Party, said after talks with Mattarella that the aim for his group was to “have elections as soon as possible.”
Mainstream parties want to first change the electoral law because it is now different for each house, and it gives an automatic majority to the leading party in the lower house. They fear that Five Star could be the winner under this system.
In a speech to his party leadership on Wednesday, Renzi outlined two options: either early elections in early 2017 after a verdict by the Constitutional Court, one of Italy’s highest, on the electoral law for the lower house, or the formation of a grand coalition that would change that law.
Source: Bloomberg
