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Italian Prime Minister Giuseppe Conte (pictured) faced a cabinet showdown today (12 January)with a small coalition partner that could bring down his government and unleash political chaos on Italy as it struggles to contain the COVID-19 pandemic, writes .

Italia Viva, headed by former premier Matteo Renzi, has threatened to withdraw its two ministers in protest over various issues, but talks are still ongoing and Renzi is keeping Italy on tenterhooks over if, and when, he will make his move.

An Italia Viva source told Reuters it is unlikely to come immediately after the cabinet meeting scheduled for 21h30 (20h30 GMT).

The cabinet is due to approve a national plan for spending billions of euros promised by the European Union to relaunch the battered economy, which Italia Viva has strongly criticized.

On Wednesday (13 January) Renzi will hold a news conference, his party said, which is expected to clarify whether or not he remains in the coalition. If Italia Viva pulls its support, Conte would no longer have a working majority in parliament.

A source in Conte’s office said the prime minister would not seek a new coalition deal with Renzi if his ministers quit the cabinet, in a move that appeared to restrict options for the future in case the government falls.

Italian bond yields rose 10 basis points on Tuesday ahead of the cabinet meeting, the biggest daily rise since early November. The gap between the Italian 10-year-bond and the German rose from 110 to 118 basis points.

Days of behind-the-scenes talks have failed to bridge the differences and the leaders of the main coalition parties warned of dire consequences if Renzi, anxious to give his fringe party new impetus, acted on his threat.

“We are against opening a crisis that would prevent the approval of the national recovery plan and the economic aid for so many Italians, for so many businesses and small activities in difficulty,” Nicola Zingaretti, head of the Democratic Party (PD), said in a statement after a party leadership meeting.

SCENARIOS

One possible scenario if Italia Viva quits would be for all the coalition parties to renegotiate a new pact, which would almost certainly open the way for a major cabinet reshuffle, with or without Conte at the helm.

However, upping the pressure on Renzi, the head of the largest ruling party, the 5-Star Movement, rejected that idea.

“If Renzi is guilty of withdrawing his ministers, then there cannot be another government with him and Italia Viva. There is a limit to everything,” Vito Crimi told reporters.

Zingaretti warned that events could quickly get out of control, possibly triggering early elections, which opinion polls say the opposition rightist bloc, headed by Matteo Salvini’s euro-sceptic League, would probably win.

President Sergio Mattarella, who would have to pilot Italy through a political crisis, has said he wants both the cabinet and parliament to approve a project for utilising the EU Recovery Fund money, before opening cross-party consultations.

If the coalition cannot agree on a way forward, Mattarella would almost certainly try to put together a government of national unity to deal with the health emergency, which has killed almost 80,000 Italians, and knock-on economic crisis.

If that failed, the only option would be a national vote.


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