Italian Prime Minister Conte resigns, what comes next?

Italian Prime Minister Giuseppe Conte handed in his resignation to the head of state on Tuesday, hoping he would be given an opportunity to put together a new coalition and rebuild his parliamentary majority.

The deepening political crisis is playing out against the backdrop of the coronavirus pandemic, which has killed more than 85,000 Italians — the second highest death toll in Europe after Britain and the sixth highest in the world.

Conte lost his absolute majority in the upper house Senate last week when a junior partner, the Italia Viva party headed by former premier Matteo Renzi, quit in a row over the government’s handling of the coronavirus crisis and economic recession.

Efforts to lure centrist and independent senators into the coalition to fill the hole left by Renzi have met little success, leaving Conte no choice but to resign and open a formal government crisis that will give him more time to find a deal.

President Sergio Mattarella will start a rapid round of consultations with party leaders on Wednesday afternoon to test the political waters, his office said.

If he thinks Conte can secure the necessary backing to pull together a new administration, the president will likely give him a few days to try to finalise a deal and draw up a new cabinet.

Financial markets edged higher despite the latest political tumult, with investors hopeful that Conte might eventually emerge with a more stable government.

Until now the main coalition parties — the anti-establishment 5-Star Movement and centre-left Democratic Party (PD) — have backed Conte’s efforts to stay in power.

“Conte is the essential element and we need to broaden and relaunch the government’s action,” Debora Serracchiani, the deputy head of the PD, told state broadcaster RAI.

EARLY ELECTION?

However, if Conte cannot find new allies, Mattarella will have to come up with an alternative candidate deemed capable of piecing together a workable coalition.

If all else fails, the president will have to call an election, two years ahead of schedule, although political analysts say this is the least likely scenario.

Italy’s coronavirus crisis has triggered its worst recession since World War Two and the government has been struggling to draw up a plan on how best to spend some 200 billion euros ($240 billion) of European Union funds to help the economy recover.

Renzi has accused Conte of lacking a strategic vision, saying he risked squandering the unprecedented EU bonanza on hand-outs rather than long-term investments.

Conte is a lawyer with no direct political affiliation, but is close to 5-Star, the largest party in parliament.

He first came to power in 2018 after 5-Star formed an unexpected coalition with the far-right League. When that pact unravelled a year later, he stayed on as head of a new administration involving the 5-Star and leftist parties.

Opinion polls show that Conte is Italy’s most popular leader, with an approval rating of 56%, almost 20 points above the next closest politician, according to a poll published by Corriere della Sera daily on Saturday.

If he is ousted from office, political sources have suggested he might try to cash in his popularity by forming his own party or else by taking charge of 5-Star.

Possible Scenarios?

CONTE CONTINUES, RENZI GOES

Mattarella will most likely give Conte the first opportunity to forge a new government and will probably allow him a few days to see whether he can find a solid majority in parliament.

Conte could try to convince a group of centrist and unaligned senators to join the government’s ranks, replacing those of former premier Matteo Renzi’s Italia Viva party which caused the crisis when it quit the ruling coalition.

Conte has tried to do this since Renzi’s walkout, without any apparent success, but formal consultations will give him more time and room for manoeuvre to offer them government positions and policy concessions.

CONTE AND RENZI PATCH THINGS UP

Alternatively, Renzi could return to the fold, agreeing to back Conte again in return for a new policy platform and a cabinet reshuffle giving him more influence. For this to happen both men would need to eat humble pie after strongly criticising each other during the coalition rupture. Moreover the largest ruling party, the 5-Star Movement, has ruled out forming a new government with Renzi.

CONTE GOES, RENZI RETURNS

If Conte fails to rebuild his majority, the coalition that backed him (the Democratic Party, 5-Star, the leftist LEU and Italia Viva) might agree among themselves to choose a new prime minister, possibly getting support from centrist lawmakers who were unwilling to back Conte.

NATIONAL UNITY GOVERNMENT

If Conte fails, Mattarella might seek to put together a broad, cross-party coalition including both the ruling parties and those from the rightist opposition alliance led by Matteo Salvini’s League. This would probably be led by an unaffiliated technocrat such as former European Central Bank chief Mario Draghi. Most parties across the political spectrum are currently ruling out this option.

URSULA GOVERNMENT

Another option sometimes mooted is a new coalition, conceivably led by Conte, formed of the parties that backed his government plus 4-times prime minister Silvio Berlusconi’s conservative Forza Italia party. This “Ursula government” would be made up of the main Italian parties that voted for Ursula von der Leyen as president of the European Commission. However, it would require Berlusconi to break ranks with the centre-right bloc, something he has shown no willingness to do. 5-Star has also always refused to countenance governing with Forza Italia.

NEW ELECTIONS

If all the options above prove enviable, Mattarella would be forced to dissolve parliament and call elections two years ahead of schedule, in the midst of the coronaries pandemic and as Italy is struggling to put together a Recovery Plan it must present to the European Commission to obtain more than 200 billion euros ($242.76 billion) of EU help to support its virus-battered economy. The centre-right, which leads in the polls, is calling for elections, while 5-Star and the PD say they do not fear them and they cannot be ruled out.