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US president Donald Trump weighed into Italy's political crisis on Tuesday, saying he hoped Giuseppe Conte would be reinstated as prime minister, as the climate improved in party talks to form a new government.
The role of Mr Conte has been a sticking point in the negotiations between the Five Star Movement, a member of the outgoing coalition, and the opposition Democratic Party (PD), which has been resisting his reappointment.
“Starting to look good for the highly respected Prime Minister of the Italian Republic, Giuseppi [sic] Conte,” Mr Trump said on Twitter. “A very talented man who will hopefully remain Prime Minister.”
After setbacks early on Tuesday the rollercoaster talks between the anti-establishment Five Star and the centre-left PD appeared to be back on track later in the day, with upbeat comments from both sides prompting a strong market rally.
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Investors betting Italy can avoid a snap election are concerned that it would be won by Matteo Salvini's hard-right League party, which would put the country on a collision course with the European Union over expansionary government spending.
The PD's Senate leader Andrea Marcucci said as he entered a meeting of the party's top brass in Rome that contacts with Five Star had resumed and progress was being made.
Five Star responded that it welcomed signs from the PD that it had dropped its veto against Mr Conte, and Mr Marcucci later announced that parliamentary leaders of the two parties would meet to try to hammer out their differences.
The PD and Five Star are due to report back to President Sergio Mattarella on Wednesday, and if no deal is sealed by then he is expected to name a caretaker government and call early elections.
Mr Conte, who belongs to no party but is close to Five Star, resigned last week after League chief Mr Salvini declared his 14-month coalition with Five Star was dead, seeking to trigger elections and capitalise on his surging popularity.
The move has not gone to plan, as Five Star and the PD seek to form a coalition of their own, pushing the League into opposition.
Tensions
Earlier on Tuesday the PD/Five Star talks seemed to have run into trouble, with the two sides fighting over key jobs as well as being at loggerheads over Mr Conte’s role.
The PD accused Five Star of undermining the formation of a new cabinet by demanding the interior ministry for its leader, Luigi Di Maio. Five Star denied this, and the parties cancelled a scheduled meeting.
Despite the later upbeat comments, tensions remained on Tuesday evening and the situation was fluid and hard to predict.
The PD says Mr Di Maio is insisting on keeping the role of deputy prime minister that he held in the outgoing government, something it considers unacceptable if Mr Conte is to stay on as premier.
It remains to be seen if the exchanges are merely tactics to secure the upper hand in negotiations over cabinet jobs, or whether they have the potential to scupper a deal between the two parties, have always been bitter adversaries.
The picture is complicated by deep internal divisions in both parties, each one split between leadership factions that want a deal and others that would prefer to risk an election.
The great majority of Five Star deputies are in favour of an accord with the PD rather than a snap election that would probably see many of them lose their seats less than 18 months into the current parliament.
Mr Salvini continues to demand elections, and is likely to be disappointed by Mr Trump’s endorsement of Mr Conte, especially as the populist League chief has expressed his admiration for the US president.
Opinion polls suggest the League has lost 3-7 percentage points since collapsing the government, though it remains easily the most popular party, followed by the PD and Five Star. – Reuters